In an inflationary economy, restaurants typically either raise prices, cut portion sizes, or worse- do BOTH.
No, I am not tricked by less food being put in a smaller bowl. There's a better way, folks ...
The top 5 things you can do in your restaurant business to hedge against inflation and increase revenue:
1. Commit the time for regular inventory. With product prices skyrocketing, operators have to manage inventory, or it will manage them. Do weekly inventory to get an accurate picture of the costs of goods sold (COGS).
2. Dynamically price to reflect the market and protect margins. Menu prices are basically a math equation that are dependent on COGS, which should include issues in commodity pricing and supply chain disruptions - but only if you have accurate COGS and regularly update pricing, sometimes even monthly.
3. Show some love to the Loyalty Program. Customer retention is the name of the game as operators continuously grow a loyalty program. People still eat out during recessions, but you are fighting for customers’ frequency.
4. Hire a great accountant. Every penny counts! Allocating money toward as killed accountant will pay dividends now, and well into the future. Reliabledata, including COGS, start with good data from accountants.
5. Bundle, don’t discount or coupon. Customers appreciate value, and when restaurants bundle complimentary items, they can make the ordinary extraordinary by creating appealing deals. The answer is not couponing or discounting products, but rather, creating perceived value with an offer that has a good blended profit margin.
This post was inspired by recent meals at TWO of my favorite chain restaurants. I'm not going to call them out by name, but there was a noticeably lesser amount of protein in both instances. For some reason, that just makes me madder than higher prices probably would.