by Springfield Lewis/Gulf Seafood News
For Louisiana restaurants, certain seafood costs have risen so much that once-standard fares, such as oyster sandwiches and pastas, are no longer served.
“I would much rather have somebody upset with me because I don’t have an oyster sandwich on my menu rather than paying $30 for one,” said Tommy Cvitanovich, owner of Drago’s Seafood Restaurant in Metairie and other fine-dining and casual restaurants.
Restaurants were invited to develop their own unique oyster dish using Louisiana oysters to honor Mike Voisin. Drago’s was one of the first to add the item to their menu. Photo Illustration: Drago’s & Ed Lallo/Gulf Seafood News
According to the renown oyster restauranteur; fried oysters, Oysters Voisin (named for iconic oysterman Mike Voisin) and oyster pasta are not offered at present. There’s not enough profit per plate.
“Gotten to the point where I can’t afford them. And afford to sell them,” said Cvitanovich, a second-generation restauranteur and originator of classic, charbroiled oysters.
And because of their popularity, Cvitanovich knows he cannot take charbroiled and raw oysters off the menu. “They’re acting like loss leaders now.”
From the Water to the Plate
The water-to-the-plate supply chain has gotten too expensive as costs climb, fueled by increases in labor and transportation. Oysters being unload at Empire. Photo: Ed Lallo/Gulf Seafood News
The challenges at Drago’s represent a microcosm of an industry-wide dilemma. The water-to-the-plate supply chain has gotten too expensive as costs climb, fueled by increases in labor and transportation. Something has to give or traditional dining places for Louisiana seafood won’t pay the exorbitant prices.
It’s another chapter in the ongoing saga of the state’s ravaged seafood industry, where reoccurring themes of devastation and resurrection play out year after year.
In Louisiana, seafood is a “Lazarus” industry, rising from one disaster only to encounter another. Time and again, it defies destructive forces, both natural and man-made. And it’s where leaders of complementary businesses—fishing, food processing, dining and tourism—regroup to revitalize their operations.
Rising Again to the Challenges
Each time, though, it gets harder. Takes longer to recover, with mounting expenses shouldered by businesspeople generations strong who resolve to carry on. All of which brings rising costs to the fore, which impact the harvesting, production and serving of seafood today.
What’s needed is a recalibration of seafood costs from end to end to normalize the supply chain, making it sustainable, affordable and still allow each step of the chain to earn a reasonable profit. Photo: Ed Lallo/Gulf Seafood news
Said Stan Harris, president and chief executive officer, of the Louisiana Restaurant Association and a member of the Louisiana Fishing Community Recovery Coalition, “Our seafood focused restaurants make up a significant portion of our overall membership. Our operators first focus on every manageable cost or operating expense before considering an increase in their menu pricing. Or as noted above, pausing the offering of seafood items that are well above historical price points. And it isn’t just Gulf seafood. Live lobsters are also at historical high prices.”
As much as we love to promote our Gulf seafood, the type of challenges the harvesters experience make it harder for them to stay in business. Resiliency is one thing, but there has to be a means to the end.
What’s needed is a recalibration of seafood costs from end to end to normalize the supply chain, making it sustainable, affordable and still allow each step of the chain to earn a reasonable profit. We don’t believe we are experiencing widespread price gouging, just the opposite. The demand is high and the harvesters would love to sell all the market wants. Their labor, fuel, insurance, packaging and transportation are all at historical highs.
Facing Industry-wide Hardships
From his Drago’s Metairie office, Cvitanovich puts things in perspective, citing statistics from the National Restaurant Association. Photo: Ed Lallo/Gulf Seafood News
From his Drago’s Metairie office, Cvitanovich puts things in perspective, citing statistics from the National Restaurant Association. Quoting industry figures, he pointed out there are 1.7 million job openings in restaurants, 40% still not operating at full capacity and 90% say food costs are higher.
As the numbers add up, Cvitanovich paused, musing: “I want to know the 10% who said their food costs didn’t go up.”
Opening spreadsheets, he runs through figures of recurring costs, seasonal sales and reduced margins—issues all Louisiana restaurateurs now face, some better than others.
Cvitanovich explained the annual business cycle: The first half of the year needs to be flush. Because the summer months—June, July and August—tend to be slow and lean. With the holidays, fourth-quarter sales pick up, making up the difference with the heaviest profits.
“That’s just how the business runs.”
Recalibrating Costs, Rethinking Menus
A bad start in the first two quarters, however, can upset profit-and-loss for the entire year, compounding current, industry-wide problems.
The price of seafood—from the water to the dock to final destination has to be re-examined. The upward trajectory cannot continue. Cost compromises up and down the supply chain are required. Oysterman Tony Tesvich harvest oysters from his lease. Photo: Ed Lallo/Gulf Seafood News
Hourly wages have increased payroll costs by as much at several dollars per hour for workers, from the kitchen to the table, Cvitanovich said. For meals, he has adjusted menu prices three times in nine months. He is thankful that his patrons continue to pay. At least, for now.
Such price hikes are occurring across Louisiana seafood. Costs must be recalibrated and menus rethought for restauranters and related businesses to remain competitive, and yes, survive.
Speaking with an industry insider’s perspective, Cvitanovich said several changes need to occur:
- The price of seafood—from the water to the dock to final destination has to be re-examined. The upward trajectory cannot continue. Cost compromises up and down the supply chain are required.
- Believing current costs probably won’t go down much, restauranteurs must get inventive and create affordable dishes. Drago’s is researching fish tacos, which would be a first for the restaurant.
- Patrons have a limit to their disposable income. They might need to readjust their dining choices. Vary their meals among high-end restaurants, crawfish boils and fast food to balance their budgets. As our local seafood has historically been priced as a value item, especially in season, that is not the case any longer.
Taking a Windshield View
As noted, Louisiana seafood is Lazarus industry, reborn with renewed purpose whatever befalls it. Cvitanovich’s joie de vivre (joy of living) philosophy personifies that spirit as he takes stock of things— the pandemic, aftermath of Hurricane Ida, and deckhands and diesel being more expensive.
Louisiana seafood is Lazarus industry, reborn with renewed purpose whatever befalls it. Photo: Ed Lallo/Gulf Seafood News
All are givens to overcome with faith, belt-tightening and the right attitude.
“I’m very optimistic that we’re going to get through this. Just like truckers, the doctors and nurses. I think the service staff, cooks and restauranteurs are going to get through this by working together and being innovative.”
Working through the pain, he believes progress is being made. “We’re going to be better people because of all of this. I think a closer people because of all of this.”
Forward-thinking and a vision of the future are what’s needed. “All of this will be in the rear-view mirror. And the cool thing is, the windshield is bigger than the rear-view mirror.”
More Transparency, Understanding Needed in Seafood Pricing
Asked what restaurants can do to help the seafood industry, Tommy Cvitanovich, owner of Drago’s Metairie, turned the question around: “How is the seafood industry going to help the restaurant industry?”
To him, it’s a bigger, supply-chain issue. One owned by everyone involved, from the water to the plate. The solution requires more transparency and understanding in structuring costs. That way, everyone can get a fair price—fishermen, dock buyers, processors and restauranteurs.
“Just like I’m working on a much smaller margin, I would expect them to work on smaller margins,” said Cvitanovich, a straight-talker and self-admitted restaurant brat who grew up in the family business started by his parents, Drago and Klara.
The Real Cost of an Oyster
Driving home the point, Cvitanovich explained why Drago’s charges $2.75 an oyster. Oysterman shucks at the dock. Photo: Ed Lallo/Gulf Seafood News
Driving home the point, he explained why Drago’s charges $2.75 an oyster. “People don’t realize you got to open it, store it, ship it here. Pay for the middleman, the butter, the guy to repair the cooler. How about the insurance, the paint on the walls?”
Cvitanovich is talking total costs that impact the bottom line and margins, hard-pressed this past year.
Elaborating further, he said during the pandemic, restaurants curtailed operations or shut down. That meant fewer oysters were eaten. Unharvested oysters grew too big for market size. Now, there are not as many edible oysters for sale.
Keeping Costs Manageable
For instance, Drago’s pays about $48 for a sack of oysters, which today contain fewer shellfish. That’s the going rate. A restauranteur can pay the price or not. Pass it along to the customer or not.
Or the restaurateur can decide not to buy it, and substitute cheaper seafood on the menu. That’s the elasticity of commerce. But sometimes, things only stretch so far and too high a price is a put-off. And maybe even a shutdown of trade with certain suppliers.
Given the toughness of the times, Cvitanovich said a little give-and-take is in order to reduce prices, keep costs manageable and businesses open.
Looking at Profit Per Plate
Drago’s famed charbroiled oysters with the cooks in background at the grill. Photo: Ed Lallo/Gulf Seafood News
In the seafood industry these days, most talk centers on escalating costs for product, processing, shipping and meals. All valid business concerns.
There’s another figure worth noting and calculating, though. “The number that we don’t look at enough is profit per plate,” said veteran restaurateur Tommy Cvitanovich.
For instance, a high-end dish might be a $30 food cost, but it’s only a $20 plate. That means less profit. Another menu item, however, is a 50% food cost, with a profit of $25 per plate.
With higher seafood prices and operating expenses, restauranteurs are rejiggering menus. Deleting some meals and adding less expensive dishes to balance the equation and increase margins. Call it reinventing in place.
As Cvitanovich said: “More money per plate means there’s more money in the till to help with everything else.”
Excellent stories – especially the article about Drago’s and the oyster/seafood crisis. 95% of our Gulf shrimping fleet remains tied to the dock. Now, many of us are losing our good, experienced crew. One crisis creating a 2nd crisis.