The record-setting inflation and supply chain strains of recent months have forced restaurant operators to make some uncomfortable choices: raise menu prices (repeatedly, and with no end in sight), remove a menu item altogether if a suitable substitute is unavailable, or absorb some of the excess costs of increasingly expensive menu items. You’re likely making these choices on an all-too-frequent basis right now. If you’re assessing menu items and struggling to determine which bucket is the right place for a menu item, ask yourself if the experience you’re providing – to include the food and other less tangible qualities about dining in your restaurant – justifies the price you’re charging. How central is an item to your menu – or to the reasons guests are motivated to order from you? Where is the point at which the costs you’re charging exceed the quality of the experience? The tipping point is likely to fluctuate as consumers feel the pinch of inflation (or the pace of inflation continues to set records): According to a survey conducted for The International Council of Shopping Centers, 64 percent of respondents said they’re expecting to reduce their restaurant expenditures because of rising prices. The survey found that dining out, specifically, is one of the activities that will be most affected if inflation hits a tipping point. Restaurants that can find ways to support consumers’ efforts to cook more meals at home – with side dishes, meal kits and other value-added items – may be able to minimize some of those concerns. Justin Shoener, a financial operations leader for The Indigo Road Hospitality Group, recently told Nation’s Restaurant News that due to current economic pressures, he and his team are evaluating individual menu items constantly and rebalancing the mix on a weekly basis right now, with an eye toward preserving value: “We are constantly being very mindful of guest perception and value in our restaurants,” he said. “We want to make sure our guests feel an appetizer or entrée price is justified by the quality, portion, and price on each item. We look at our menu items individually to make sure it all makes sense.” Of course, your food costs are only one part of the equation – rent, labor, gasoline and other operating expenses are climbing too. If you’re needing to pass additional operating costs on to guests right now, be transparent about them. While consumers are seeing their own food prices climb at the grocery store and they generally understand the need for price hikes, they also need to understand what they’re paying for. If you’re adding a blanket charge to guest bills, mention this on your menu, or directly when guests are ordering, so you can avoid giving guests an unfortunate surprise (and a negative final impression) as they walk out the door.
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How food cost management can help The average price of food in the United States surged 9.4 percent in the 12 months ending in April. That’s the highest increase since April 1981, according to inflation data published in May by the U.S. Bureau of Labor Statistics. While the Consumer Price Index increased 8.3 percent for the year ending in April, a slight decrease from the previous month’s 40-year-high, restaurant menu prices have continued to climb. At a time when consumers are seeing significant increases in their grocery spending, restaurant operators face the challenge of making restaurant food feel like a worthwhile expense. While it’s a good time to scrutinize costs throughout your business to find ways to do things more efficiently, reviewing your food costs is an ideal place to start. There are a number of tactics you can use to keep food costs under control without compromising the experience of a dish. Consider how making these adjustments could impact your bottom line: Adjust portion sizes: Your menu should be assembled to maximize profits, so understand where expenses may be lurking. Your guests may not notice (or mind) a small reduction in the size of your ribeye steak as much as you think they will: One survey found that 86 percent of the chefs said diners would notice if they reduced portion sizes by 25 percent, while 60 percent of diners said they wouldn't. Elevate prices where you’re offering a better experience: You might take a lower-priced menu item and weave in a premium ingredient that makes the dish feel like it’s worth a few extra dollars. At the same time, make sure any premium ingredients are going into your main dishes, not in sides where they may be overlooked. Use better-value ingredients where guests are less likely to notice: While premium ingredients are best left to your entrées, your side dishes are optimal spots for your pantry workhorses. Are there other parts of your menu where lower-cost staples can be used to fill the backdrop of a plate while keeping your menu costs down? Could you easily swap in a pre-made dressing or sauce from a supplier that reduces your labor costs? Steer guests toward your highest-profit options: Consider how you can use server training, strategic menu-item placement or promotion of an item as a limited-time special to entice guests to try your premium offerings. Offer value: At a time when your more budget-conscious guests may be scaling back, provide them with some wallet-friendly options. Wendy’s, for one, has been focusing on highlighting its value offerings as inflation has affected spending. Limit the extras: In addition to finding more economical packaging options, ask guests to proactively opt into plastic cutlery, napkins, individually packaged sauces and other extras that your team might otherwise include in to-go orders automatically. If you normally bring bread or salad to the table at the start of a meal without question, first ask guests if they would like it – or perhaps upscale those items and offer them as starters priced à la carte. Your guests may see these changes as less of a sacrifice than a practical means of cutting back on waste and extra calories. |
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