Inflation Takes Bigger Bite Out of Restaurants' Narrow Profits

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Prices at the pump aren't the only thing going up. There's a good chance your next dinner on the town is likely to cost you more as well.

Instead of cleaning up, local restaurants like Chacho's in Morgan Hill are paying up. Inflation is suddenly taking an even bigger bite out of their already narrow profits.

"A case of limes, a month ago was $39 to $42, now they're $100, for limes,” said owner Jorge Sanchez. “More than double, just limes. Something that we really make no money on, it's just a garnish."

As costs go up, restaurants are passing the cost to customers. Which leads to a new problem for servers and bartenders like Anna Pelaiz. 

On social media, people are complaining that some local restaurants are now tacking on a surcharge of up to 20%, and not passing it on to servers, who are dependent on tips.

"So the surcharge is just that,” said Pelaiz. “There's no tip included in the bill when you drop it, and customers see that rise in the bill, thinking it's a tip, and not tipping at all. And being a server, 100% of your income is tips."

They want customers to know that yes, it’s more expensive to dine out. But don't forget the people who do the hard work.

"Nobody wants to work for free here,” said Pelaiz.

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