Friday used to be Manny’s busiest day. But today it’s “a ghost town,” says Dan Raskin, the fourth-generation co-owner of the beloved Jewish deli, a longtime favorite among its devoted regulars, out-of-towners and power-brokering political figures.
Like just about everything these days, a lot of things on the menu are pricier than they used to be. The quintessential Manny’s order is a corned beef sandwich boasting a pile of meat stuffed between two pieces of rye with mustard and a pickle on the side.
Two years ago, that sandwich cost $15.95. Today, it’s $17.95.
And people are starting to grumble, Raskin says.
The nation’s fastest-rising inflation in 40 years has put value-minded delis and diners in a quandary. They can raise prices too little and face even thinner margins or raise prices too much and lose customers.
Many have cut back on hours and portion sizes, taken items off the menu and raised prices in the face of higher costs on everything that goes into getting a sandwich — or anything else — onto a customer’s plate, says Sam Toia, president and chief executive officer of the Illinois Restaurant Association.
“When you’re working in an industry and it’s just pennies — you gotta cut corners here or there a bit,” Toia says. “You’re seeing price increases everywhere.”
The restaurants being hit the hardest are mid-scale family establishments, like Manny’s, that don’t serve alcohol.
For Raskin, raising prices is a tightrope act. People have less disposable income than they did a year ago and less patience, too.
He tells of a customer who bought a 12-ounce sandwich and complained there wasn’t enough meat on it.
“It’s got three-quarters of a pound of cooked meat on it, but you could tell she was frustrated,” Raskin says.
He says Manny’s hasn’t cut back on quantity or quality.
And he says the $2 price increase for a corned beef on rye doesn’t come close to covering higher costs for all that goes into the sandwich: the grain for the cattle, the cattle itself, higher wages for slaughterhouse workers and truck drivers, much more expensive fuel for those trucks, more expensive packaging that the meat is shipped in, higher costs for electricity and property taxes, higher wages for the deli workers, more expensive wheat, cheese — you name it.
The price of flour has nearly doubled the past two years — from $10 to $12 a bag to almost $24, Raskin says.
But Chicago isn’t New York, he says. You can raise prices only so much.
“People don’t want a $25 sandwich,” he says.
A turkey sandwich with pickles — another Manny’s staple — is $12.95, the same as it was two years ago.
But pay for employees has gone up about 30% over the past three years, Raskin says. And turkey is about 2.5 times more than it cost in 2019, according to the Federal Reserve Bank of St. Louis.
Raskin kept the turkey sandwich price flat and raised prices on other items. Compared to 2020, a pound of sliced turkey from the deli display case is up $4. Beef stew is up $3 ($16.95 in 2020, $19.95 now), and salads and other soups are more expensive, too.
Manny’s has been pushing online orders, which quadrupled when the pandemic came and have stayed that way.
“You have to keep evolving,” Raskin says.
Margins were tight for small restaurant owners before the pandemic, with 97% to 99% of an average restaurant’s money going to food and labor, according to Toia.
With higher costs, 68% of Illinois restaurants have cut hours, and 41% have closed on days they’d normally be open, according to the Illinois Restaurant Association. Yet many still are understaffed.
“It’s a strange economy we’re in right now, with a high inflation and a strong labor market and strong economy,” says Phillip Braun, a finance professor at Northwestern University’s Kellogg School of Management.
The combination of customers having less money and food prices being very high “doesn’t look good” for restaurants, Braun says.
Nationally, people are already starting to cut back on restaurant visits, according to NPD, a global market research company.
Family establishments like the 50-year-old Golden Nugget Pancake House — a classic Chicago diner with big, yellow signs and a 13-page menu of crepes, pancakes and burgers available at all hours — are feeling the sting.
“It’s hard for all of us,” Golden Nugget owner Cathy Guzman says. “For people coming out to eat, for people just trying to run a business. It’s getting impossible. There’s no margin anymore.”
The Golden Nugget has raised prices a little, she says, but has very little headroom before it would be losing customers.
“You need to pay someone to make that food for you, someone to clean up the dishes,” Guzman says. “One thing just fires up 10 more. Some people understand with raising prices, and others, they probably will not.
“It’s very hard right now — the economy’s not great, there’s a lot of people without jobs still. To live daily life is not easy for people right now.”
Jim D’Angelo, chief operating officer of Lou Malnati’s Pizza, who’s been with the company for 40 years, says the chain has raised prices more in one year “than ever in our history” — an 8% across-the-board increase since last year.
But that still doesn’t make up for a 20% increase in wheat prices because of the war in Ukraine, a 30% increase for tomatoes, a 20% increase for dairy and a 40% increase for vegetables, D’Angelo says.
A large, cheese, deep-dish that cost about $22 in the suburbs last year is up to $26.19 as of November, D’Angelo says.
The Federal Reserve is trying to tamp down inflation by boosting interest rates, so D’Angelo says Lou Malnati’s executives are thinking strategically about when and where to expand and whether to borrow money — given the higher rates — or to tap cash reserves. D’Angelo says he’s hopeful the Fed’s policy is working and that the worst has passed.
At Manny’s, yellowed newspaper clippings line the walls, reminders of the restaurant’s storied past and the political powers who came there, including former President Barack Obama. A plaque proclaims one spot as “David Axelrod’s table” — the former Obama adviser.
In August, the restaurant celebrated its 80th anniversary.
For many years, Manny’s was a favored breakfast stop for political power brokers. Now, it’s closed for breakfast.
Over lunch, Mark Stroud, 76, who lives in Hinsdale, says he’s been coming to Manny’s for 50 years.
“The food is always the same and good,” Stroud says, patting a to-go bag for his wife. “So we’re good for the day.”
A couple of other regulars, Richard Sabonis, 90, and his friend Alan Cohen, 71, likewise have been coming to Manny’s for a long time. Sabonis — who calls himself “the Lithuanian prince from Bridgeport” — was trying to settle a debate with Cohen about whether a deli in Northbrook is better than Manny’s. The dish they were using for comparison? The sweet-and-sour cabbage.
“I said, ‘They’re both good, but this place uses a little bit more vinegar in their sweet-and-sour, which is a good idea,’ but just a whisper,” Sabonis says. “That’s the end of the story.”
Do higher prices mean they stop in less often? Even for Sabonis, that’s a tough one. He considers the question as he chews.
“Which one do we prefer?” he says. “Ah. There’s psychiatrists and religious people been trying to figure that one out for a long time.”
His friend laughs. And Sabonis takes another bite of beef and wipes his mouth with the paper napkin tucked into his shirt.
