Denny Tornatore realized fewer people were coming into his Italian restaurant in Orlando’s College Park neighborhood because they could no longer afford the meal out.

“I could see people struggling, and they weren’t coming out to eat as much,” Tornatore said.

So in August, Tornatore said he slashed prices across much of his menu. His lasagna went from $30 to $25. Garlic knots went from $12 to $10.

Tornatore’s Restaurant had raised prices “at least” four times since the onset of the pandemic, he said.

While his prices are not back to what they were before the food and labor cost increases that came with coronavirus, his decreases run contrary to a nationwide trend of rising costs to dine out.

Eating out cost 7.1% more in July than it did a year before, with full-service meals up 5.8%, while food at home only went up 3.6%, according to federal measures.

The number of customers coming through restaurant doors has been falling, with the National Restaurant Association’s June restaurant performance index showing 57% of operators reported a decline in traffic from the year before, the third straight month of decline.

“Consumers continue to be at stress,” said San Diego-based restaurant analyst John Gordon.

As prices rise, some restaurants see fewer customers

At Tornatore’s, labor costs remain higher than they’ve ever been, but food expenses getting a little better from their pandemic spikes helped enable Tornatore to lower his menu prices by about 10%, he said.

For example, his cost for sausage was recently $2.11 per pound after it got close to $4 during the pandemic.

In another instance, Tornatore said a 40-pound case of wings, once $50 before the pandemic, got so high he had to take wings off the menu. When he reintroduced them six months ago, he said a case was about $110 or $120 and that is now down to $70.

Ten wings on his menu are now $18, down from $23 when they rejoined the menu.

Tornatore says prices will never get back down to where they were before the pandemic when he said his lasagna was $20.

Tornatore is betting that his lower prices will drive more business to his restaurant, offsetting the smaller profit margins he will now have built into his menu. His restaurant announced the lower prices on Facebook on Aug. 17 and so far, so good, according to Tornatore.

“I’ll make a little less per item, but I’m selling more items. That makes my bottom line stay the same,” he said. “I’m counting on the volume to make it, and it’s working.”

Gordon pointed out that as a privately owned restaurant, Tornatore’s doesn’t have the pressure of reporting those profit margins to investors as publicly traded chains must do.

“You don’t take percentages to the bank, you take dollars to the bank,” Gordon said.

Price is also probably more important because of where Tornatore’s is located, away from Orlando’s main tourism and expense-account areas near places such as the convention center, Gordon said. The move will allow the restaurant to capture market share.

“He really has to survive on the folks in the neighborhood,” Gordon said.

But lowering prices isn’t risk-free.

Long term, if food costs go up again, Tornatore could find himself in a position where he has to raise menu prices all over again, Gordon said.

The playbook for chain restaurants in this position would be to instead have a limited-time offer, according to Gordon.

“Because he’s altered the face of the menu and his structural prices have come down, he’s in a semi-permanent position,” Gordon said. “Customers do not appreciate a yo-yo effect.”