At the beginning of July, Boulder restaurant group Big Red F opened a fifth location of its popular fried-chicken restaurant, The Post Chicken and Beer, in Estes Park. The plan was for the Estes Park restaurant, like The Post’s four other locations in Boulder, Longmont, Lafayette and Denver, to be open seven days a week.

The problem was finding people to work there. Because of staffing shortages, The Post had to do a soft launch for its Estes Park location, closed on Tuesdays and Wednesdays and operating with limited hours on the days it is open.

“We are only open five days a week because we just don’t have the staff to open a restaurant right now,” said Dave Query, CEO of Big Red F. Big Red F also operates Jax Fish House and Oyster Bar, Lola Coastal Mexican, West End Tavern and Centro Mexican Kitchen.

It shouldn’t be this way. Restaurants that managed to survive a year of lockdowns and government-imposed restrictions were supposed to be in a position to thrive after the COVID-19 pandemic, ready to take in the eager masses of customers who desperately wanted to get back to their old lives.

But although the customers have come, few pandemic-related problems show signs of being resolved. Inflation of good prices is eating into their bottom lines. That is, when restaurants can get those goods at all. Wage inflation is doing even more damage. And most critically, a shortage of labor is forcing restaurants to operate with minimal staff at a time when customers are surging through their doors. For Boulder-area restaurateurs, it’s become increasingly obvious that they may never again reach their pre-pandemic equilibrium.

All of these factors have restaurateurs considering opening Pandora’s Box: raising menu prices, and passing that inflation on to the consumer.

“When do we get back to some level of commerce normalcy?” Query said. “I don’t think there is a new normal anymore. This is nuts.”

The increase in goods prices has been staggering. According to the U.S. Department of Agriculture’s 2021 food price outlook, the average price of all food increased 2.2% from May 2020 to May 2021. The USDA predicts that it will only get worse through the rest of the year. These are its projected price increases during the rest of 2021 for the wholesale food products on which restaurants depend:

• Flour: 9%-12%.
• Fruits and vegetables: 10%-13%.
• Beef: 10%-13%.
• Pork: 14%-17%.
• Poultry: 15%-18%.
• Fats and oils: 31%-34%.
• Wheat: 35%-38%.
• Soybeans: 58%-61%.

“Everything is more expensive,” Query said. “Everybody is struggling to run their business.”

While the inflation of goods prices has become an issue for Boulder-area restaurants, those who run the restaurants see that inflation as a symptom of the true problem, rather than the problem itself.

And that problem is labor. Particularly, the shortage of it. Boulder-area restaurateurs said that the lack of workers in their restaurants is the biggest problem they are facing right now. They are struggling to even get people in the door to interview for open positions. Oftentimes, those who do apply are inexperienced and underqualified.

“I’ve never experienced the difficulties I now have staffing,” said Alec Schuler, founder of the breakfast restaurant Tangerine, which has locations in Boulder and Lafayette, plus a recently opened restaurant in Longmont. “People are either not applying, or if they are applying, they’re complete rookies.”

Said Query: “There are no people, and the people who are there are tanked because they’re working too much. At this point, there is nobody we’re not looking for. Used to be, you’d never hire anybody without experience.”

No one is quite sure why this labor shortage is so intense and has lasted so long.

“We’ve never been through this before, so it’s hard to say ‘This is the one issue,’” said Mary Ann Mahoney, CEO of the Boulder Convention and Visitors Bureau.

Mahoney said the bureau is taking an all-hands-on-deck approach to trying to address this, working with associations such as the Colorado Lodging Association, Colorado Restaurant Association, Workforce Boulder County, and the bureau’s partner restaurants to come up with solutions to improve employee recruitment and retention. A task force is expected to come up with a plan by next month, Mahoney said.

But the labor shortage is not only affecting restaurants. Schuler said he has a friend who owns a landscaping company who is experiencing the same difficulties hiring and retaining employees. Query said the same about a friend who runs a doctor’s office. Beyond those anecdotal examples, the labor shortage is hitting every industry, and Boulder restaurateurs think it is at least partly to blame for the supply chain issues they are facing.

Query said that the supply-chain issues experienced by Big Red F restaurants are brought on not by a shortage of goods, but by a shortage of people to process and transport those goods. For example, he said, both the seafood supplier and chicken wing supplier for Big Red F told him their prices were increasing because they simply didn’t have the workers to process them.

“Inflation is being driven in part by the labor shortage,” Query said. “There’s nobody to do the jobs. There’s nobody to move the goods. At what point do we stop blaming this on the pandemic?”

At Tangerine, Schuler said these supply issues are relatively minor, but still annoying and costly. One week, he said, he couldn’t get capers from any supplier, so he had to buy them from the grocery store, where they’re sold in small jars at a huge markup from what he normally paid wholesale. Gluten-free muffins were nearly impossible to get for a while as government restrictions eased. At one point, Tangerine’s supply of corned beef completely dried up, and when it became available again, it was 25% more expensive, Schuler said.

“These are just tiny little anomalies that are costing us more money,” he said.

And even if these staffing shortages and supply-chain issues were less acute, wage inflation and the pay structure of the restaurant industry is putting restaurateurs between a rock and a hard place, adding another cost pressure and forcing them to make decisions that, no matter what, could negatively impact some staff.

Schuler said that the passing by Colorado voters in 2016 of Amendment 70, which increased the state’s minimum wage, has had a major hit on Tangerine’s finances. Amendment 70 also included an increase in tipped minimum wage, which has jumped from $6.28 an hour in 2017 to $9.30 an hour in 2021, a nearly 50% increase in just three years.

Schuler said that costs Tangerine about an extra $24,000 per year per restaurant. It has also created a dynamic where the restaurants’ front-of-house staff, which because of the labor shortage is less experienced than it used to be, now make far more money than the experienced veteran professionals in the kitchen.

“COVID was just another hurdle, but this has been bigger, I think,” Schuler said. “When it passed [in 2016], it scared me.”

Schuler said that restaurateurs all over the country are experimenting with new pricing models, such as automatic gratuity added to the bill and no-tip restaurants. He’s considered going to a model where tips are pooled and shared amongst front-of-house and kitchen staff, but that would first require a further minimum wage increase to front-of-house employees, one that would be even more detrimental to Tangerine’s bottom line. And it would mean that hosts and wait staff would have to take a pay cut from receiving fewer tips.

At Big Red F, Query saw that dynamic play out firsthand. The group’s restaurants went to a tip-pooling model to share them between front-of-house and kitchen staff.

“(That tip money) comes from somewhere, and it came from the front-of-house,” Query said. “That is tricky.”

Indeed, Query said that many hosts and wait staff at Big Red F restaurants were happy for kitchen workers to be better compensated, even if it meant they took a pay cut. But he said some also quit when the change happened.

And all of this is leading restaurateurs to consider something they never want to do: raising menu prices. At Tangerine, Schuler said he added a 4% kitchen surcharge to all bills at the end of May, money that is then distributed to kitchen staff based on how many hours they work. Schuler said he felt he had to do that just to give those workers some extra form of compensation. He’s also contemplating raising menu prices altogether.

“We need to raise prices,” he said. “I actually haven’t yet, but I’m about to.”

That idea is worrisome.

“We were already on the higher end of prices for breakfast places in the Boulder area,” Schuler said. “Now we really will be. I’m worried about counter-service restaurants. They will probably not have to inflate menu prices as much, and that’s where I can lose market share to them.”

At Big Red F, Query said he’s doing everything possible to not have to raise prices at the restaurants run by the group. He said that Big Red F is trying to cut costs in other areas, such as being open for fewer hours, as much as possible so that raising prices remains a last resort. But he acknowledged that may have to happen anyway.

“I don’t know [how much we can cost-cut] before we have to start raising prices,” he said. “Raising prices is a point of no return. You don’t raise them and then lower them later. Menu prices don’t fluctuate, they go up. Raising prices is really, really tricky.”

And for the average customer in a restaurant, going back to their favorite places for the first time after a year of lockdown, all they see is the higher prices and the shortages of the goods they want to eat, not the labor shortages, the supply chain issues, the shrinking bottom line. They just want to eat the same food they always ate, pay the same price for it and have it arrive in the same amount of time.

“Ninety-eight percent of the public has no idea what is going on,” Schuler said. “I just hope for my customers and all restaurant customers to be understanding. We’re just trying to survive.”