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Traditional delis battle rising food costs

Pastrami sandwiches on a tray at Katz's Delicatessen on the Lower East Side of Manhattan, 28 June 2007, at in New York.

Jeremy Hobson: Foodies and deli owners will gather tomorrow in San Fransciso to discuss the future of the old-school Jewish-style deli. Rising food and labor costs are making it harder for traditional delis to stay afloat.

Deb Monroe reports now on how some are trying to adapt.


Deb Monroe: It's almost lunch time and Saul's Deli in Berkeley is getting ready to serve its main attraction: the traditional pastrami sandwich.

Peter Levitt: Pastrami that we serve comes from a naval brisket.

Saul's co-owner Peter Levitt says this cut comes from a special section of beef now in huge demand to make processed meats like hot dogs -- and that's doubled the price over the last 10 years. No surprise a 12-ounce pastrami sandwich now costs $20 -- a turn-off for many customers.

Levitt: There's no way to build a sandwich for $15 with eight, nine or ten ounces of meat in it and claim that you've used good meat.

Five years ago, Saul's Deli cut its standard pastrami sandwich to to six ounces for $11.75. Customers who want more pastrami now face a sliding scale. Saul's has gone the way of the airlines, charging extra for more.

Levitt: About 10 percent of our customers will add one, two, three, four ounces of meat to that.

But even with the smaller sandwich, Saul's is not recouping the cost of the meat.

Levitt: People come in for the pastrami but we absolutely need them to order a latke, a potato dish, we need them to have soup with a dumpling in it.

Levitt says it's all the other stuff on the menu that makes it possible to stay in business.

Levitt: Then they need to get a dessert, and they need to wash the whole thing down with a few beers. And then we're all happy.

While Saul's Deli has shrunk its sandwiches, across the Bay in San Francisco, Wise Sons Deli has shrunk its menu to about eight items. Co-owner Leo Beckerman says this keeps inventory costs down.

Leo Beckerman: We're trying to keep our menu small and very much built out of products that we make ourselves. So for example, we cure and smoke our own meats; we bake our own bread.

Wise Sons charges $12 for a pastrami with a side and pickles. Retiree Judith Franklin didn't bat an eye.

Judith Franklin: For a good deli fix, I'm willing to pay.

Some customers, at least, are willing to accept quality over quantity, proving there may be a future for a leaner, meaner pastrami.

In San Francisco, this is Deb Monroe for Marketplace.

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I'm also a little skeptical. Would have liked to see a somewhat neutral opinion on this; exclusively quoting deli owners seems like an unfair way to report this story.

Seriously?

OK - if I'm missing something obvious, I apologize. I'm not in the food service business and I'm not out to offend.

But it seems to me that most restaurants (this one included) make the majority of their profits from beverages - not food. As Levitt says, customers need to order other items - and I'm sure they do.

So why all the hand-wringing over a few menu items? Because they can't turn a hefty profit on them like they used to? And how is "good meat" defined?

I feel like some of these places have been gouging customers for years, and now they're complaining because they can't make the same money they did before. Like the one client said - they're willing to pay. So what's the problem?

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