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Published: Friday, 7/13/2001

High energy prices raise the bill for eating out

BY BRIAN CROCKER
BLADE STAFF WRITER
Chi-Chi's Mexican Restaurant has instituted a temporary charge to offset rising energy costs. Chi-Chi's Mexican Restaurant has instituted a temporary charge to offset rising energy costs.
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Skyrocketing energy costs already have made many things more expensive. Now they're making it more expensive to eat at some area restaurants.

Businesses nationwide are scrambling to defray the dramatic increase in their energy costs by raising prices or tacking an “energy surcharge” onto customers' bills.

Energy surcharges, most common at hotels and restaurants, add a fee to a consumers bill.

Chi-Chi's Mexican Restaurant, which has two locations in the Toledo area, instituted an energy surcharge July 2 at all of its establishments, which span 19 states. The charge is 25 cents per entr e and shows up on the bill as “TEMP ENERGY CHRG.”

“We didn't want to raise prices because we understand this to be a temporary situation, and once a restaurant's prices go up, they don't tend to come down,” said Robert Carl, a vice president and spokesman for Prandium, Inc., which operates Chi-Chi's.

“We saw radical changes in energy prices about three months ago,” said Mr. Carl. “At first, we thought it was just a catch-up factor from the winter. But it has continued.”

Many customers don't take note.

“I didn't even notice it,” said Tom Clifton, who dined this week at the Talmadge Road Chi-Chi's. “It doesn't seem like that big a deal.”

Labib Hajjar, who owns the Beirut and Byblos and is president of the Northwest Ohio Restaurant Association, said the issue has not come up at association meetings. He has seen energy costs rise at his restaurants but has not yet raised prices.

In some areas of the country, especially California, electric and natural gas costs are climbing.

Electricity rates have been frozen in the Toledo area since January, 1998, and will continue to hold until December, 2005, according to Chuck Krueger, Toledo Edison's area manager.

But increases in the cost of natural gas, which most restaurants depend on for heat and cooking, have been dramatic.

Columbia Gas, which supplies the majority of natural gas in northwest Ohio, has experienced an increase in its base natural-gas price from slightly more than 48 cents per hundred cubic feet in January, 2000, to the current level of slightly more than 87 cents per hundred cubic feet.

“In the 12-month period ending January, 2001, natural-gas prices for commercial establishments jumped 76 percent,” said Kristin Nolt, vice president of media relations for the National Restaurant Association.

Barry Greenblatt, owner of nine Barry Bagels restaurants in the Toledo area, said his natural-gas bill for one restaurant went from $700 in January, 2000, to $4,000 last January. He raised prices in response to rising natural gas costs.

Kevin Lent, operating partner of Wholesome Food LLC, which operates six Panera Bread establishments in northwest Ohio and southeast Michigan, agreed that natural gas was the main reason for his firm's decision to raise prices.

Other area restaurants also have suffered rapid increases in energy costs.

“Energy costs were 20 percent higher last year than before, and they've increased even more this year,” said Gus Mancy, a partner in Mancy's Steak House. “When we redo the menus in September, you're going to see higher prices. When you combine the huge increase in energy costs with the increased costs of labor, it's necessary.”

The natural-gas bill is not the only place increasing energy costs are taking their toll on restaurants. “Food purveyors - the guys we get our food from - they're tacking on energy surcharges to their bills,” Mr. Mancy said.

Tony Packo's, Navy Bistro, Real Seafood Co., Hoster Brewing Co., and Arnie's Eating and Drinking Saloon have experienced the dramatic rise in energy costs but aren't planning to raise prices yet.

“Natural-gas costs for Navy [Bistro] this year have been triple what we projected they would be, but so far we've tried to deal with it by being better operators,” said Tom Cousino, president and chief executive officer of several Cousino's restaurants in the Toledo area. “If things don't stabilize, though, I don't think many of the restaurateurs can go on without passing the cost onto their customers.”

Mr. Cousino said he might consider the path Chi-Chi's took. “What I would be inclined to do is add a surcharge,” he said.

“If gas gets much higher, then we'd have to do it,” said Arnie Elzey, owner of Arnie's. “We would take it off if gas prices dropped.”

The price increase at Barry Bagels, which Mr. Greenblatt put at about 7 percent, was the chain's first in 21/2 years, and also was affected by rising labor costs.

He said he would consider lowering prices if natural gas costs decline.

Restaurants in northwest Ohio and southeast Michigan also are coping with rising energy costs.

The Angry Bull Restaurant and Orchard Inn, both near Sandusky, as well as the Landeck Kountry Kafe, near Lima, have seen their energy costs rise, though none has decided on what action to take.

“It was just unbelievable this year what I had to pay,” said Paulette Hendricks, who owns the Orchard Inn. “I don't know what I'm going to do. I haven't raised prices yet, but I don't know how long I can go without it.”

Corey Yacklin, who with his parents owns the Brass Lantern Restaurant in Adrian, said they are paying about $800 a month for utilities - $300 for gas and about $500 for electricity.

He said the increases have not been passed on to patrons through higher menu prices. Instead, the restaurant is trying to cut costs by turning off lights, regulating heating and air conditioning use, and turning off kitchen equipment when it is not needed.

“We have not done anything to counter the increase,” Mr. Yacklin said. “We have pretty much capped out for menu prices.”

Chi-Chi's plans to abolish its energy surcharge when natural gas prices fall, which, according to Columbia Gas, they will in August when base prices are slated to drop more than 30 percent.

“We're trying to manage our way through our problems with utilities,” Mr. Carl said. “The people we talked to at the gas companies said that prices should fall and, when they do, the surcharge will go.”

Blade staff writers George Tanber and Mark Reiter contributed to this report.



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