Argentina: Running a Restaurant With 40 Percent Inflation

Food Features Inflation
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Argentina: Running a Restaurant With 40 Percent Inflation

My parents like to reminisce about how much gas prices have changed since their childhood. In Argentina, we talk with the same sense of nostalgia about grocery prices from six months ago.

In the four years I’ve lived in Buenos Aires, a café con leche has gone from an average of 10 pesos (US$2.50 at the time) to well over AR$40 (still US$2.53 at today’s exchange rate) The value in US dollars hasn’t changed significantly over the years, but the impact on Argentines’ wallets is amplified by the fact that salaries (in pesos) rarely keep pace with inflation, making it harder and harder to afford the same food items over time.

Inflation, which hovers over 40 percent yearly at the moment, is not new to Argentines, who have lived the tumultuous economic roller coaster of hyperinflation both before and after the country’s 2001 economic crisis.

With food prices increasing faster than any other category, nowhere is inflation more present than in the kitchen. So what is it like to run a restaurant in a place where you’re not sure how much a keg of beer or a kilo of beef will cost you next week, let alone next year?

Mariano Gilligan co-owns La Puerta Roja, a punky bar with a rock vibe and great spicy Indian curry, and El Banco Rojo, which offers creative burgers, craft beer and inspired empanadas with curious ingredients. Puerta Roja has been around for almost 10 years, while Banco has just turned 5. Both are well-known favorites in the historic San Telmo neighborhood of Buenos Aires, and they’re both always full.

Paste9_PuertaRojaBar.JPG Puerta Roja’s chalkboard menu—for easy erasing when prices change. Photo: Annie Bacher

Mariano says he’s not always aware of inflation’s relationship with menu prices until, “sometimes the manager of Banco will come to me and say, ‘hey Mariano, because of the price increases for this empanada, which we sell for 15 pesos, is costing us 18.’”

How, then, can Banco Rojo and Puerta Roja manage to continue growing when other restaurants in the city are being strangled by soaring food and utility prices, and fewer people are choosing to eat out?

“It’s easy,” says Nacho, Mariano’s younger brother and purchasing manager of the bar. “There are people who believe that you open your business and you can sell at whatever price you want. They don’t think about the whole business.” Instead, Nacho insists that prices must be raised only when absolutely necessary.

Banco Rojo prefers to keep their customers coming, rather than to allow them to bear the costs of inflating food prices. Adrian Genta, manager of Banco Rojo, admits that “sometimes we prefer to absorb inflation rather than to raise prices.”

Paste_1Burger.jpg
Banco Rojo’s “La Borracha” burger with fries, for 95 pesos. Photo courtesy of Banco Rojo

When they do raise prices, though, it’s not always across the board. Nacho points out that they try to raise only those prices based on ingredients that have become more expensive, so that customers still have options. He pulls out a stack of old menus, reprinted every time menu items changed over the years.

The prices surely aren’t the only thing keeping customers around. Banco Rojo’s juicy burgers of the week are seductive and drool-inducing, like the recent “La Tropical:” Argentine beef, cheese, bacon, cilantro mayonnaise and mango sweet and spicy sauce with their crispy, spicy fries. The burger and homemade fries sell for 95 pesos (U$5.93), a bargain compared to many burger places in the city that offer far less interesting burgers for well over 100 pesos, fries not included.

So is absorbing costs and cutting profits the only way to thrive in this economy? If you walk down the cobblestone streets outside of Puerta Roja or Banco Rojo on a Friday night, the line of customers waiting for an inventive burger or a craft beer would suggest so.

But Daniele Pinna, chef and owner of high-end Italian restaurant La Locanda, has a different approach to keeping his restaurant prospering through the battering roller coaster of the Argentine economy.

When the elegant, cozy spot opened five years ago, “I remember that the lasagna started at 48 pesos, and now it’s 250 pesos,” says Pinna, originally from Alghero, Sardinia, Italy.

La Locanda has become known for its rich, complex chocolate mousse with olive oil, Himalayan sea salt and Jamaican pepper. It’s only been on the menu for little more than a year, but when I asked if the price had changed, Pinna replies that “Yes, everything’s changed. It always changes.”

Unlike Banco Rojo, La Locanda can’t rely on competitive prices to attract a steady clientele. With a significant amount of imported products, like olive oil, porcini mushrooms and truffles, costs are tied to the constantly changing dollar-peso exchange rate.

Their secret to success? “We are loved by our customers. We are not cheap, but nor are we dishonest. We sell what we say we are going to, and I think that has given us more success than reinventing dishes with cheaper ingredients.”

locanda mousse.JPG La Locanda’s famous chocolate mousse, as chef and owner Daniele Pinna mixes in the special ingredient: olive oil. Photo: Camille Ayral

La Locanda’s fame within the city of Buenos Aires might make it seem like they are resting comfortably on past successes, but Pinna insists that “maintaining where we are is hard. It’s not like we’re just coasting. But to have the continuity of customers that come to eat at least once a month, that’s an important achievement.”

Frustrated but not deterred by the unpredictable economic conditions, Pinna points out that “you get used to the place you live, and the truth is that Argentines are used to this lifestyle,” if inflation can be defined as a lifestyle. “I’m used to it,” he sighs.

“The day that people can’t afford that [mushroom risotto] anymore, I’ll sell pasta with broccoli. Or pasta with air.”

Managing a restaurant isn’t an easy undertaking in any part of the world. But with unpredictable inflation, Argentina makes a daily game of managing prices, retaining customers and producing delicious, creative dishes. I just hope we can still afford them in the years to come.

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