Bay Area restaurants are grappling with rising cooking oil prices

Earlier this week, two employees from Zareen’s, a Pakistani-Indian restaurant with three locations on the Peninsula, left for an important assignment. They were looking for cooking oil.

As the cost of cooking oil rose due to inflation, owner Zareen Khan began sending staff to restaurant stores several times a week to find the best possible prices and pick up orders to save on delivery fees. On Tuesday, the two employees drove to San Jose to fill a van with 20 cases of the now-coveted frying oils.

Cooking oil prices rose 25% in July compared to July 2020, according to the US Bureau of Labor Statistics. Restaurant owners across the Bay Area are scrambling to find ways to weather the latest wave of inflation, from rising menu prices to hoarding oils. They have also encountered a shortage of oil.

Restaurateurs are seeing inflation drive up the cost of almost everything now. But unlike an ingredient like beef that can be traded out if it becomes too expensive, there are few, if any, alternatives to something as essential as oil. As they reach the breaking point of increasing menu prices, some restaurants are also facing customer backlash.

“We’re really worried just because you can’t predict what’s going to happen,” said Rawan Harbali, co-owner of Middle Eastern restaurants Jood in San Carlos and Falafelle in Belmont.

Non-genetically modified organism (GMO) canola oil is an integral ingredient to the popular and crispy falafel at Falafelle. But in recent months, it became not only expensive, but so difficult to find that Harbali and her husband, Khaled, began driving all over the Bay Area to collect the necessary amount. Other owners are doing the same, weighing the added time and gas money against the fear of excessive prices or running out of gas.

Chefs fry chicken and fries at World Famous Hotboys in Oakland, which has struggled with the rising cost of frying oil.

Scott Strazzante/Chronicle

Harbalis’ newest Lebanese restaurant, Jood, relies on extra-virgin olive oil for almost everything — salad dressing, dips, hummus, baba ghanoush — yet has grown from about $86 per order to about $120, she said. They are reluctant to substitute a cheaper oil that would affect the taste of the dishes.

Now, whenever they find oils at a good price, they buy double what they need. They recently rented a storage unit to store oils and other products they worry might become prohibitively expensive or challenging to find.

Some owners have tried to save money by buying in bulk or negotiating better prices for large orders. Bay Area burger chain Super Duper Burgers has a new agreement with a supplier to pay $40 for a 35-pound case of non-GMO canola oil — compared to a rate of about $60 to $70, said vice president of operations Ed Oñas. Considering they buy about 120 cases each week for 14 locations, it’s been a game changer, he said.

Zareen employee Rigoberto Garcia loads a box van with cooking oil and other supplies at Restaurant Depot in San Jose.

Zareen employee Rigoberto Garcia loads a box van with cooking oil and other supplies at Restaurant Depot in San Jose.

Salgu Wissmath/Chronicle

“It’s still much higher than what we were paying before, but at least it keeps it from going up for a certain period of time,” Oñas said.

World-famous Hotboys owner Victor Abu-Ghaben has started buying peanut oil — essential to the flavor and freshness of the East Bay restaurant’s fried chicken sandwiches — in bulk to save money. What used to cost about $30 or $45 per 10 kilograms of oil has gone up to $70, but the bulk price is closer to $50. Other cost-saving measures, such as filtering frying oil twice a day to make it last longer and participating in an oil discount program, mean World Famous Hotboys has yet to raise prices.

Jose Feliz refills a fryer with peanut oil filtered from a cooking oil filter machine at Oakland's world-famous Hotboys.

Jose Feliz refills a fryer with peanut oil filtered from a cooking oil filter machine at Oakland’s world-famous Hotboys.

Scott Strazzante/Chronicle

But many owners have felt they have no choice but to charge customers more to cover their rising costs. When Falafelle started losing money, Harbalis raised prices by $1. (They didn’t come to Jood, worried about rocking the boat with customers at a still-new restaurant.) Khan also recently raised Zareen’s prices across the board by 50 cents to $1.

Complaints on Yelp about restaurant overpricing were swift.

“I feel like it’s not fair. Everyone can see the gas prices,” Khan said. “Why penalize your local mom-and-pop restaurants?”

As restaurant owners continue to spend time and money each week searching for the best oil prices, a bigger concern is emerging. Will customers begin to feel the pain of inflation at grocery stores, gas stations, and dining out less often?

“I think there’s just a lack of spendable money in our communities,” Abu-Ghaben said. “The situation is definitely not ideal for restaurant owners right now.”

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