A Greek-Italian restaurant can tell you a lot about real world inflation

By David Enna, Tipswatch.com

Editor’s note: This is an updated version of an article I first wrote in 2017 and revised in 2021.

There’s a restaurant in my hometown – Charlotte, N.C. – that has been in business continuously at the same location on West Morehead Street since 1952. The restaurant business draws a notoriously fickle clientele, so that’s pretty remarkable.

The Open Kitchen was founded by Steve Kokenes, who was Greek, not Italian. His menu of pizza, lasagna, spaghetti and other “international” cuisine was a rarity for Charlotte in those days. The city didn’t get an authentic Italian restaurant – meaning, run by actual Italians – until the late 1980s. But that didn’t matter; the Open Kitchen specialized in simple, tasty comfort food and it prospered.

The restaurant expanded in the 1960s and 1970s. An interesting side note is that its location — once a dreary area of warehouses and factories — is now a booming area of modern apartments, art galleries, trendy breweries and “artisan” restaurants, very close to Bank of America Stadium. It’s now a very valuable piece of property. But the Open Kitchen is still there, still consistently serving “comfort food” to a loyal clientele.

The restaurant is still run by members of the Kokenes family, who wait tables and run the cash register. And they have a remarkable collection of Charlotte memorabilia displayed all over the walls. But what really caught my attention on a past visit was a 1963 menu posted by the entrance to the dining room. It’s especially interesting since today’s menu contains many of the same items – with exactly the same names – 59 years later. Aha! This offers a unique look into inflation over the last 59 years, and … what could be in store for our future.

Full 2022 menu is here.

Where were you 59 years ago?

Back in 1963, $1 was worth … well, one dollar. And that is still true today. But adjusted for inflation (based on the Bureau of Labor Statistics’ Inflation Calculator) it takes $9.68 in today’s dollars (up from $8.89 last year, which is depressing) to equal the buying power of $1 in July 1963. That is an increase of 868%, and it is my baseline for comparisons of price changes from 1963 to today.

Anyone who drove a car before the 1973 gas crisis fondly remembers gasoline at 25 cents a gallon. That’s what it was selling for back in 1963. But in reality, gas prices until a couple years ago were as cheap (relatively speaking) as they were in 1963. However, even after dipping a bit this month, gas prices have almost doubled in the last five years and the cost of gasoline has now surged 1,584% since 1963, much higher than the rate of overall inflation.

And look at the median U.S. home sales price – $402,400 in 2022 – up 22% over the last year and 2,136% since 1963. Home prices have been running well above inflation. Same with the stock market, which has endured four bear markets in the last 22 years and yet is up 4,983% since 1963, nearly six times inflation.

At the same time, the U.S. minimum wage at $7.25 has lagged well behind inflation. At this point, I think, the minimum wage is an archaic idea that should be set to a realistic number ($15 an hour? $18?) and indexed to inflation, or simply abandoned.

The Open Kitchen: Then, and now

I included the Bureau of Labor Statistic’s Food Away From Home index in the chart, which should give you a realistic idea of restaurant price increases over the years. That index was up 7.7% in the last year and 1,105% over the last 59 years.

But the Open Kitchen is an interesting case study. When I did an update to this story last year, many of its prices were still very close to or the same as their 2017 levels. But in 2022, its typical prices have increased at a rate of 11% to 15%, more than the overall restaurant industry. That is realistic since it held prices close to stable from 2017 to 2021.

For example, Spaghetti with Meat Balls and Mushrooms (one of my favorite Open Kitchen offerings) costs $17.25 today versus $1.50 in 1963, a 1,050% increase that is very close to the overall Food At Home index increase of 1,105%. But the price popped up 30% in the last year, bringing it to a more realistic level, I assume.

There are a few bargains on the list: An extra meatball, for example, costs $2.25 today, same as last year, and 800% more than the 1963 cost of 25 cents. That 800% increase is lower than overall U.S. inflation and the Food at Home index. (Waiter: Extra meatball, please!)

Want the more exotic Ravioli Parmigiana? That will cost you 1,140% more than it did in 1963, and probably destroy any hope you had of maintaining your diet. Want half spaghetti, half ravioli? (Good choice.) That will cost you $11.25 and I’d say that’s a bargain, but the price is 1,025% higher than the 1963 cost. So, dang, not really a bargain.

One clear bargain is Spaghetti with Chicken Livers, which now goes for $14.75, versus a rather pricey $1.75 in 1963. That’s an increase of 743%, well below the rate of overall inflation. (This dish is now relegated to very fine print at the bottom of the current menu. Understandable.)

The Open Kitchen also offers a new dish, “Chicken Livers Greque,” with this awesome description:

Plump, juicy chicken livers sauteed in butter, delicately seasoned with oregano and lemon. Served with garden salad and French fries. ($15.50 … <up from $13.50 a year ago>)

I imagine that The Open Kitchen doesn’t sell a lot of Spaghetti with Chicken Livers or Chicken Livers Greque, but it’s a testament to their sense of tradition that they keep these on the menu.

A real world example, in our lifetimes

If you were alive in 1963 — I was 10 years old then — you and I have seen U.S. inflation rise 868% in the last 59 years. Gasoline costs are up more than 1,500%. A typical American home now goes for $402,000 versus $18,000 in 1963.

Inflation is an unrelenting force. I look at today’s Open Kitchen prices and my reaction is “perfectly reasonable.” But imagine if you saw these prices in 1968. You’d have been stunned. Now, imagine the prices you could be seeing in 20, 30, 40 years.

Inflation is dangerous. It’s a force that must be considered.

Another real world example

This week I received my natural gas bill for July. The cost was $91.97, which was 22.6% higher than the July 2021 bill. A year ago, in July 2021, we used more therms (49 vs. 46) and the bill was for more days (34 vs. 32), and even with that … the 2022 bill was 22.6% higher.

This is inflation. I can pay this bill. But a lot of people can’t handle a 22% increase in a basic cost of life.

Note: If you know young people who fail to understand and fear the force of inflation, please share this article with them. This all happened in our lifetimes. It will continue throughout their lifetimes.

* * *

Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear.

David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. The investments he discusses can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.

About Tipswatch

Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer's website.
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17 Responses to A Greek-Italian restaurant can tell you a lot about real world inflation

  1. Stuart says:

    I am wondering about TIPS purchases within a 401K or IRA versus outside of a standard retirement plan.

    If Individual TIPS are purchased within a retirement plan – does the retirement plan pay taxes on the earnings annually?

    I’m trying to see if there is an advantage to purchasing them in a retirement account versus straight through a treasury direct account.

    I appreciate all the information you proved regarding TIPS, Ibonds, Tbills, etc. it has been very informative and helpful.

    • Tipswatch says:

      If you buy a TIPS in a traditional retirement account (IRA), you won’t owe taxes at all and no taxes will be paid … until you withdraw the money from the IRA. Then the entire amount is taxable. A Roth IRA is totally free of taxes.

  2. Rob says:

    I finally got evidence that my paper 2021 tax return is being processed by the IRS. I received my refund I Bond. This year it was just a single $5,000 bond. In past years it was distributed between $1,000 $500 $200 and $50. The serial numbers reflect the denomination $50 L $500 D $1,000 M $5,000 V. The $200 uses E there being no single letter roman numeral for 200 20 or 2.

  3. Jimbo says:

    When I still lived in Chicago, my yardstick for inflation used to be a Vienna beef hot dog (with all of the fixings). Back in 1963 you could get one from a street vendor for two-bits. Now it’s $3.50. So, they’re an inflation adjusted bargain in Chicago! Now that I live in California, it’s actually hard to find an authentic Vienna beef hot dog. There’s one place close by that wants $7.00 for one. That’s not an inflation adjusted bargain (pretty much like everything else in California). But, you can’t beat the weather in SoCal.

    • Tipswatch says:

      I grew up in Rockford and my personal favorite Chicago food was Italian beef sandwiches. I lived right next door to a place in DeKalb. Seems like these are only made in Chicago. (There’s a great show on Hulu called “The Bear” about an Italian beef joint. In the first episode, someone yells … “We just got a big order from Rockford!”) I was hooked.

      • Jimbo says:

        Italian Beefs, like Vienna beef hot dogs, are another rarity in uber health conscious SoCal. There’s a local restaurant that’s owned by Italian-American Chicago transplants that have a pretty decent Italian beef. Unfortunately, now that I’m in my 70’s I can’t eat the food I grew-up on without risking a stroke! Good Chicago dogs, Polish and Italian sausage sandwiches, Italian beefs, pizza, corned beef and pastrami sandwiches are hard to come by out here. However, that’s probably a good thing for my blood pressure and chloesterol. As far as that Hulu show goes, I’d be a little apprehensive having an Italian beef at a joint where the owner has blue eyes!

  4. Pat says:

    David, what are your updated expectations on rates for the next 5 year TIPs and IBond? Thanks.

    • Tipswatch says:

      So hard to predict. I’d guess right now that the I Bond’s fixed rate will remain at 0.0% on November 1, but there is a possibility it could rise. I think the I Bond’s new annualized variable rate could be about 8%, but with gas prices falling, it could be lower. The next 5-year TIPS auction is in October, which seems like a lifetime away. No prediction on that.

      • Michael Wang says:

        Hello David,
        Hope all is well with you. A question for you. In my brokerage IRA account, it shows that adjusted cost basis of TIPs is always higher than my actual purchase costs (including paid accrued inflation and interest). Why is that? Should I care about “adjusted cost basis”?

        Thanks for your attention.

        • Tipswatch says:

          This could be because you will be paying taxes on the inflation accruals each year, so effectively they are being reinvested in the TIPS. If this is in a tax-deferred account, it’s irrelevant, but in a taxable account it would represent the actual cost basis, since you will be taxed on those inflation accruals this year.

  5. Mark in LA says:

    I remember reading and sharing this story last year, Dave. The increase from then until now is astounding!

  6. Joe says:

    Great article, as always! Excellent comparisons and perspectives. I might’ve said this in your 2021 edit, but figured it wouldn’t hurt to repeat. That point being price-per-unit. Some of it might have stayed in line with inflation and didn’t go off the charts with price increases. However, (for example) if you paid $0.85 for spaghetti with meat sauce in 1963 and now pay $9.25, are you getting the same product? Are you still getting a cup and a half (or whatever they served) or are they only giving you one cup now? Does the sauce still have the same amount of meat in it? The meatballs are another good example. Are they as big and meaty or have they shrank 20%?

    If they’re not providing the exact product (mostly quantity) then it’s not the same comparison. Companies raise prices AND lower both quantity and quality, but quantity is more scientific (quality is very subjective). A gallon is a gallon. A therm is a therm. There are several things I used to cook in the kitchen and I would ALWAYS have some left over. Now I have to buy an additional box and use 25% of it and have A LOT left over (75% vs 15%).

    • Tipswatch says:

      I’d bet the Open Kitchen’s servings have gotten larger since 1963, but possibly smaller since 2017. These are still generous servings. (Enough that we usually split a Greek salad and one pasta dish.)

  7. John Malcolm says:

    Nice essay!

  8. Max RN says:

    I’m always eager to read your insights on all things TIPS related. Keep up the good work!

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