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Troubled waters

Chefs fear BP oil spill will spawn catastrophic price increases for Gulf seafood

Gulf of Mexico seafood prices often peak with summertime demand. But chefs and restaurateurs across the nation are facing even substantially higher fish and shellfish costs as the catastrophic BP leak continues to spew oil into the Gulf.


As a result of the ever-
expanding toxic spill, the costs of shrimp, crab, finfish and oysters already have surged by as much as 25 percent above the norm. 


And, many believe, prices will climb even further before the damage has been contained.


In an effort to manage the resulting price hikes, some chefs and operators say they may cut portion sizes to maintain menu prices, while others expect to pass on the cost to customers. 


Still others, like Greg Reggio, partner at two Louisiana restaurant companies, Zea and Semolina, may eliminate some Gulf seafood options altogether. 


“Shucked oysters are up to $45 bucks a gallon, and the ones we’re getting now are small,” Reggio said. Normally, he pays 30 percent less. “In my restaurants, I hate being over 10 bucks for an appetizer, and if this keeps going, oysters may not come in that cost range.”


Gulf oyster costs are troubling Jeff Tunks as well. The chef-owner of five restaurants in the Washington, D.C., area knows he’s got to do something to protect the margin on the po’ boy sandwiches served at his Acadiana restaurant.


“We’re paying about 72 cents per oyster and we’re serving about 12 on a po’ boy, which comes to $8.64 just for the oysters,” Tunks said. “We’re at the tipping point. What do we have to do to keep the same perception of abundance we give with that sandwich? Raise the price or cut the portion?”


Crab costs are hurting Tunks, too, hovering in the $20 per pound range when they should be closer to $14. And the price change in Gulf shrimp, found alongside crab on seafood bars in two of his restaurants, is due for a menu price adjustment.


“We have a table d’hôte style brunch for $29, and for $6 more, you can go to the raw bar and eat all the oysters and shrimp you want,” Tunks said. “Now we’re having to re-engineer our menus and rethink the price on that.”


According to the Louisiana Seafood Marketing and Promotion Board, 7 percent of the shrimp consumed in the United States comes from the Gulf. And while that may sound insignificant, any reduction in market supplies impacts shrimp prices internationally, said Miles Atchison, category manager for Pacific Seafood, a Clackamas, Ore.-based distributor. Not only are current world supplies tight enough to send prices skyrocketing with perceived or real shortages, domestic wild-shrimp prices are coming off historical lows in 2009, which signaled a correction was inevitable, he said.


“Last year, we were buying 16-20 Gulf white shrimp in the upper $4 [per pound] range, but this year it’s in the $6-to-$7 range,” Atchison said. Producers didn’t build inventory when prices were low, he said, so with Gulf shrimp production down nearly 70 percent due to the disaster, small increases in demand boost prices. “So when you have a world market now used to buying on the spot, you get into a feeding frenzy.”


John Howie, chef-owner of Seastar Restaurant and Raw Bar in Seattle, saw white gulf shrimp as “an extremely strong value before the BP disaster,” so he locked in on a favorable price through October. And while he’s happy to be $1 a pound below current market rates, he said, “October looks to have been
too optimistic at this time. I expect that to get worse.”


Howie doesn’t want to raise prices, but he fears that’s inevitable unless the Gulf situation improves dramatically. He’s considering a portion-pricing structure that allows guests to choose between smaller, less expensive portions or larger, more costly portions of the same dish. He hasn’t decided when he might try it out.


Finfish is up, but holding steady


London Lennie’s in Queens, N.Y., buys oysters from the Northeast Coast and shrimp from Caribbean waters, but Gulf finfish take regular slots on the menu at the 50-year-old restaurant. Les Barnes, president of Lennie’s, said prices have held steady for grouper, snapper and redfish since their fishing grounds have not been contaminated yet by the oil.


“I have not seen an effect on my pricing yet,” he said. Still, the fish is costly. “I’m paying $6 or $7 on the bone, which means a fillet costs $14 to $16 a pound. But, really, they haven’t been
inexpensive in a long time.”


While this generation of finfish may survive the disaster by fleeing elsewhere, Barnes, like many, is concerned the oil may ruin spawning grounds, compromising future generations and increasing prices. He says he’ll raise prices accordingly, if necessary.


“I’ve learned that if you have a particular portion size, you should keep it the same and raise the price,” he said. “People don’t recognize a dollar or so increase in the menu price at my restaurant because we serve the best fish we can get.”


Barnes recommended restaurateurs be nimble with prices by printing their menus every day to reflect market moves.


“You can absorb some fluctuation in prices if you build that into your menu, but never just take a loss,” he said. “As my mother always reminded me, ‘We are not a not-for-profit
operation.’”


Chris Lusk, executive chef at Café Adelaide in New Orleans, has realized only minimal changes in Gulf seafood prices and supplies since the BP oil rig explosion in April. He also said that based on what he’s heard from his chef peers in the area, news stories about soaring 
prices are overblown.


“It’s not been some huge fluctuation in prices, nothing drastic like the media would make you think,” he said. “Yes, there’s some concern about oysters, but they’ve opened a few beds
up recently … and the safety
inspections overall are even
better than before.”


But Reggio, whose operations are just across town from Café Adelaide, is telling a different story.


“I can get drum [a finfish variety] normally at $5.95 a pound, but now I’m seeing it at $8.95,” he said. “Availability is even a little light. … There is some farm-raised redfish available at $11.95 a pound, but that’s out of my price range right now and will be for quite a while.”

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