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'We’re Dying': Higher Food, Labor Costs Hurt Independent Phoenix Restaurants

By Christina Estes
Published: Wednesday, August 19, 2020 - 4:21pm
Updated: Wednesday, March 17, 2021 - 1:23pm

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employee making pizza
Organ Stop Pizza
Organ Stop Pizza in Mesa.

New data from Yelp show a 23% increase in restaurants that permanently closed between mid-June and mid-July. The review site’s Economic Average Report found the restaurant industry experienced the highest total business closures. For local, independent restaurants, the biggest challenges are supply and labor costs.

Meat Prices

Miracle Mile Deli in central Phoenix is all about meat.

“Our top three products that we sell are hot pastrami, hot corned beef and brisket,” says Josh Garcia, vice-president.

man holding plate of food
Miracle Mile Deli
Josh Garcia is vice president of Miracle Mile Deli in Phoenix.

He buys more than 5,000 pounds of meat every month. Some processing plants aren’t operating at full capacity due to coronavirus outbreaks and that’s led to higher prices. But there’s another reason Garcia says, he’s paying anywhere from 15-50% more.

Processors can make more shipping some products overseas. For example, he said, pastrami navel is used in rice bowls.

“A beef processor here can sell a pastrami navel, let’s say to us, or to our manufacturer for, let’s say $3 or $4 a pound, but they can send them to Japan and the Asian countries that use that cut of beef for a different process and they can triple their profit by sending it overseas because what the Asian countries don’t have is a lot of space and the technology that we have here to create that product,” he says. “So, if they’re limited on the supply are they going to sell it to somebody that can purchase it for four dollars a pound or are they going to sell it to someone who can purchase it for $20 a pound?”

Labor Costs

At Organ Stop Pizza in Mesa, Jack Barz is not only paying more for cheese and pepperoni but labor.

“We have one or two people every night just walking around cleaning, that’s all they do is wipe all the surfaces down on a constant basis, they go into the bathrooms and thoroughly clean those every 20 minutes," he says.  “We now have hosts and seaters that are taking people to their seats and giving them all of their plates and napkin holders and all that stuff, so that stuff isn’t just out in the open like it’s always been.” 

Compared to this time last year, Barz says he has 50% more employees working while business is only 30% of normal. During Organ Stop’s peak season from December to March, Barz says the restaurant sees 1,200 to 1,500 customers. His best night since the pandemic was last Saturday with about 270 customers.

“Honestly, we’re losing money every night,” he says. “We’re dying. All of the industry executives are predicting that 70-80% of all the independently owned restaurants will be closed by the end of this year in America. People are going to the chains, but they’re not going to mom and pop places and, you know, we’re kind of the lifeblood of the industry.”

The Future

It’s a very dicey time,” Garcia says. “This is something that we’re just going to continue to battle and that’s, you know, been our constant struggle is trying to surf this wave and the wave changes on a daily basis.”

"It’s a very dicey time."
— Josh Garcia, Miracle Mile Deli

Miracle Mile reopened its dining room Aug. 3 and recently started monthly deliveries to the East and West Valleys.

"We have to take things week by week and see where our costs are to ensure that we can at least cover the cost of the menu item and ensure that we can still keep our doors open and our lights on," says Garcia.

Organ Stop is a destination restaurant that’s been a Valley staple for nearly 50 years. The pizza parlor with a pipe organ opened in central Phoenix in 1972 and moved to Mesa in 1975, where it’s been home to a Wurlitzer organ that was originally built for the Denver Theatre and installed in 1927.

“I have the faith it’s going to get better at some point,” Barz says. “I don’t know when but, it’s going to at some point and I just have to believe that.”

"I have the faith it’s going to get better at some point."
— Jack Barz, Organ Stop Pizza

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