Why are restaurants so expensive right now in San Francisco?
It feels like only a few years ago a Saturday night at a cool restaurant in San Francisco might set you back $100. These days, it seems more like $150 and up. Menu prices have been rising, while local diners are eating out less, at least according to OpenTable. This might mean that if it’s your only night out this week or this month, it’s even easier to experience sticker shock. Twenty-eight dollars dollars for a burger? In this economy?! And that’s before you even dare to look at the impenetrable fog of fees at the bottom of your bill.
Listen, restaurants have reasons behind their prices. “The people who complain about prices at restaurants, if they saw my P&L, they would probably have a heart attack,” jokes chef Sayat Ozyilmaz, who together with his partner and wife Laura Ozyilmaz, owns the stunning new Dalida inside Presidio National Park. In all seriousness, Ozyilmaz believes menu prices have risen reasonably. “It’s a perception adjustment after the pandemic,” he explains. “It’s a lagged reaction of price sensitivity.” He works hard to meet diner expectations and pay his team a living wage, while putting out a creative menu on a finely honed margin.
Labor is the biggest cost
Ozyilmaz estimates that labor at Dalida is about 50 percent or a whopping half of his costs (with the disclaimer that Dalida is still new and adjusting). San Francisco has one of the highest minimum wages in the country at $18.07 per hour, paired with one of the highest costs of living. So for cooks to actually be able to live where they work, many restaurants have to offer more than the minimum, and in job postings, pay rates now range from $20 to $25. “We’re in the people business, and people cost a lot,” Ozyilmaz says. But, “Laura and I have been through some hardship. We’ve been cooks on minimum wage.” Because of that, they want to offer their team more.
Ingredients Come in Second
Ozyilmaz estimates that ingredients cost Dalida another 25 percent or a solid quarter of expenses. Nationally, food prices increased at historic rates last year, jumping 9.9 percent in 2022 according to the USDA. In the past few years, there have also been shortages of certain ingredients, including butter, flour, and eggs. That said, speaking locally, many chefs have always paid top dollar for local and organic ingredients, and Ozyilmaz hasn’t seen the prices of his ingredients spike. Others haven’t been so fortunate. Tracy Goh from Damansara says she’s paying more for local produce following the winter floods, and for imported anchovies due to rising fuel costs.
Rent it Still Damn High
Rent remains high in an expensive city. Leases vary widely by location, foot traffic, and more, according to Santino DeRose and Catherine Meunier of Maven Commercial, who work with restaurants across the city. To give a rough range, they say restaurant space runs $3 to $6 per square foot. So a relatively cozy spot at 2,000 square feet might cost up to $12,000 a month. The Maven team has not seen rent go up, however. “We don’t think rent is breaking the bank,” DeRose says. In fact, they’re seeing a trend toward “percentage rent structure,” with landlords asking for roughly 4 to 8 percent of tenants’ revenue. “That’s been a very useful tool,” Meunier says. “When a landlord wants to support a tenant, but also protect themselves, they can share in profits.”
Digging Into a Specific Dish
At Damansara, the one-year-old Malaysian restaurant in Noe Valley, a few early diners expressed feelings about spending $25 on a bowl of noodles. But once they get a taste of Tracy Goh’s laksa, they tend to go quiet. “Anyone who has ever cooked a Malaysian recipe would say there’s so much prep and so many ingredients,” Goh says. It takes two days of labor to cook all of the separate components, including a spice paste, anchovy stock, noodles, toppings, and sambal. There are 15 different ingredients in her spice paste alone, and the bowls arrive brimming with proteins; chicken, puffed tofu, large prawns, and an egg.
And it’s all richly flavored with more invisible proteins, including dried and cleaned anchovies in the aromatic broth, and dried shrimp in the umami-rich sambal, both imported from Malaysia.
Even back when she ran a pop-up, Goh knew she could never charge less than $20 a bowl. These days, most diners can taste the difference, but at the beginning, a few commenters complained they could find bigger bowls elsewhere for less. Goh says they’re often referring to completely different cuisines and counter service. “I really love noodle soups, and I often eat other types of Asian noodles,” Goh says. “I have a lot of respect for all kinds of noodles, but I think it’s very unfair to compare prices like that. It’s apples and oranges.”
Perusing a Tasting Menu
In terms of tasting menus, Dalida falls on the affordable end of the spectrum with a “chef’s menu” at $75. Ozyilmaz says that’s the exact same price as at their pop-up Istanbul Modern, started back in 2016. “It’s an accessible first experience to give you a taste of the menu,” Ozyilmaz says. So he started with what diners like to spend, then backed into a creative Eastern Mediterranean menu: about eight plates in total, including a couple of cold apps, a couple of hot apps, the “breaking bread” platter full of dips (opposite page), one “lavish large entrée” of fish or lamb, and dessert.
To crunch those numbers, Ozyilmaz can’t use the most outrageous proteins or anything too labor intensive — if you want the Cali-style tahdig of crispy rice topped with uni, or the teeny tiny manti dumplings each pinched individually, you’ll have to pay more. Guests occasionally yelp about getting charged for the chubby pita. They still expect free bread, but this puffed pillow of flatbread takes a full day to ferment. “We don’t want people to fill up!” Ozyilmaz says. “So we have a pita charge.”
But Wait, Don’t Forget Fees
Unfortunately, all of that is before you even take a sobering look at the bottom of the bill. According to a highly opinionated sample of five of this writer’s favorite tasting menus, they cost an average of $76 in 2018. They now average $117 in 2023, reflecting a 54 percent increase. Throw in a couple of glasses of wine (let’s say $17 each), plus tip (20 percent), sales tax (8.625 percent) and the Healthy SF mandate (around 5 percent), and you, my friend, could be holding a bill for $202. And you might be wondering how you’re going to make rent, pay bills or eat out ever again.
Or maybe not, if you’re among the fortunate. Ozyilmaz sees the current situation as somewhat Dickensian. “It’s important to consider the dichotomy of income in San Francisco — there’s the techies and the others.” He offers an analogy. “It’s A Tale of Two Cities, if you will.” Some diners drop a credit card without breathing, while others are more sensitive. He hopes to serve both, with a range of affordable à la carte options and more luxurious add-ons.
But the chef himself admits to having recently gone to a Michelin-starred restaurant in San Francisco, which shall remain unnamed, and left slightly unsatisfied and wondering how he could have just dropped $180 on dinner. “I hear diners. It can be hard to really identify value.”
Becky Duffett is a writer living and eating in San Francisco. Her work has appeared in Bon Appétit, Eating Well, the SF Chronicle, Eater SF, and Edible SF. Her favorite food is butter.
