Chicago restaurants are being squeezed from all sides as surging fuel prices drive up the cost of food and supplies, while higher household costs are prompting consumers to eat out less.Several food suppliers have significantly raised their fuel surcharges, an added fee for clients to help cover fue l costs, as diesel prices climb amid the war in Iran. The average price of diesel in Chicago was $6.86 per gallon on Friday, up more than 68% from a year earlier, according to AAA. Diesel prices in the city reached its highest average price of $7.02 on Sept. 26.“Everything we do comes in on trucks, right? All our supplies come in on trucks,” said Kevin Vaughan, owner of Vaughan Hospitality Group, which owns six bars and restaurants across Chicago, including Chicago Brewhouse and Corcoran’s Grill Pub. “For example, food — beef, produce, etc. — there's a huge impact on those industries because diesel is up so high and transport is up so high. So we're starting to see that accelerate.”Vaughan's suppliers have said their freight charges are going up dramatically and will continue to be passed onto restaurants. One of his suppliers charges a $9 fuel surcharge when diesel costs $5 to $5.49 per gallon. Every time diesel increases by 50 cents, the supplier increases the surcharge by $1. Vaughan also believes consumer demand is falling as higher gas prices squeeze household budgets.“This is anecdotal, but I feel as if people are not necessarily going out as often … and [it's] all driven by fuel and other things like interest rates, the cost to rent, etc.,” Vaughan said. “The consumer is feeling big pressure on managing their budgets.”A KPMG survey from April found 67% of consumers are eating at home more often than dining out, with the majority citing budget concerns as the primary reason. When consumers do dine out, 25% said they're frequenting quick-service or fast-food restaurants, shifting away from casual and fine dining options.Mario Ponce, restaurant consultant with Chicago-based Partners in Hospitality, said he's seeing a similar shift among his clients, with consumers trading casual sit-down restaurants for cheaper options such as fast-food, pizza and sandwich shops.Ron Cain, owner of Kuma’s Corner, said sales at the burger restaurant are down 15% and 11% in the past four months, compared to the year before, for his Avondale and Schaumburg locations, respectively.“Our Schaumburg location has been consistent since we opened in 2015, and this is the first year we're really feeling an impact on the traffic,” Cain said.Although sales are down, Kuma’s Corner is absorbing their cost increases, rather than passing them down to customers. These include rising beef prices due to the national cattle herd shortage, as well as suppliers’ fuel surcharges, Cain said.But the trade-off is tricky. He said customer traffic is low, so raising prices might help, but it could reduce traffic further. Kuma’s Corner at 2900 W. Belmont Ave.Anthony Vazquez/Sun-Times “You can only charge so much for a burger,” Cain said. “So we have not passed down the cost of our margins.”Instead, the restaurant is focusing on appealing to customers by offering temporary special deals and discounts that encourage them to dine out.Some new offers include half-sized lunch burgers, mac and cheese and a beer for $12 on Mondays and a chicken sandwich with fries and a beer for $15 on Tuesdays. Kuma’s also launched a chicken caesar wrap on Sept. 1, which received 340 orders on DoorDash in the first month. Cain said they plan to sell the wrap with fries and a beer for $14.“We're doing that on a limited time basis, hoping that the economy's going to turn around at some point, you know, hoping this war is going to end and the fuel prices are going to come down,” Cain said.At Vaughan’s establishments, prices for beef menu items have increased while other costs are being absorbed by the company. Beef prices have squeezed his business the hardest, Vaughan said.Fuel is also impacting the cost of plastic products, such as cups, since those are petroleum-based products, Vaughan said, adding another strain to his restaurants’ costs.Sam Toia, president of the Illinois Restaurant Association, said small, independent and family-owned restaurants are particularly vulnerable because they have less buying power than larger restaurant chains and are seeing larger increases in fuel surcharges.“If they were open six days a week, maybe they're open five days a week,” Toia said. “If they're open lunch and dinner, maybe they're just open dinner … because the only two things you can control in the restaurant business is labor costs and food costs.”Despite such measures, Toia feels restaurant closures will be inevitable if fuel prices remain high and economic pressures persist. Cain is also worried.“I mean, that's my main concern — surviving all this nonsense,” Cain said. ...read more read less