MELISSA BLOCK, host:
California's Sonoma County is known all over the world for its wines and its cuisine. Now the area's restaurants are joining the long list of businesses affected by high gas and high food prices.
NPR's Richard Gonzales recently visited Sonoma and its struggling restaurants.
RICHARD GONZALES: A meager lunch crowd has dissipated at Syrah, a chic California French bistro in downtown Santa Rosa, about an hour north of San Francisco. And chef-owner Josh Silvers is running his fingers through his hair.
Mr. JOSH SILVERS (Chef-Owner): We depend on the San Francisco Bay area tourists come up here and enjoy a weekend in wine country. And if it cost you $70, $80 to fill up your tank, you might stay home a little, you know, and not go so far from home. So that hurts.
GONZALES: Silvers opened Syrah nine years ago. His bread and butter, if you will, is an artful cuisine based on fresh, organic and locally produced food delivered daily. But Syrah's manager, Ken Goldfine, says the gas surcharges on those deliveries is adding up fast.
KEN GOLDFINE (Manager): Ten deliveries a day, with a $3 surcharge on every one, we're looking at 10 grand a year added on fees because of a high price of gas.
Mr. SILVERS: I mean right now we're absorbing most of them.
GONZALES: And there are a lot of costs to absorb. The Bureau of Labor Statistics says the prices on the basic building blocks of a restaurant, wheat, eggs, cheese, rice and milk, are all up sharply. We're talking about the highest food price hikes seen in almost 30 years. And that leads Silvers wondering how much he can raise his prices.
Mr. SILVERS: And it's such a fine line. It's such a balancing act. You know, how do you raise prices but not out-price yourself? And it's scary. I mean, I'll be honest. As a small business guy, raising prices is a scary thing.
GONZALES: Other restaurateurs throughout this county are asking the same question, from white tablecloth wine bars to family-focused steak houses.
Unidentified Woman: Hello. Welcome to Cattleman's.
GONZALES: Cattleman's is a locally owned chain that takes pride in its big portions and big restaurants.
Mr. JOHN FRANZEL (Marketing Director): We're one of the few places that somebody could walk in on a Friday night with a party of 20 people and get seated within 10 minutes.
GONZALES: John Franzel(ph) is a marketing director for Cattleman's. He says the chain used to do a brisk business, hosting banquets for building trades groups - carpenters, painters, electricians and dry wallers.
Mr. FRANZEL: We've also seen a plumber group that's been coming to us for over 10 years, with 60-65 people dropped to 12 because of their layoffs.
GONZALES: So Cattleman's has shaved some prices and introduced week night specials - $2 draft beer on Monday, 20-ounce T-bone steaks for $20 on Tuesday, and on Thursday kids can eat free steak. Still, Franzel says keeping costumers coming is a big challenge.
Mr. FRANZEL: If people are having a hard time making their house payment and affording gas, they're obviously going out to dinner less often.
GONZALES: It all adds up to a perfect storm, says Jot Condie, president of the California Restaurant Association. He says some restaurateurs would like to absorb their increased cost to keep price conscious customers happy.
Mr. JOT CONDIE (California Restaurant Association): Competition really for us is the rising mortgage rates and the increased costs of getting from point A to point B; that's the competition.
GONZALES: When it comes to the business climate here, restaurant operators quote a local scribe, Jim Sullivan, who says the best thing you can say about 2008 is that it will be over in eight months.
Richard Gonzales. NPR News.
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