This edition of MRM's "Ask the Expert” features advice from Buyers Edge Platform. Please send questions to Modern Restaurant Management (MRM) magazine Executive Editor Barbara Castiglia at firstname.lastname@example.org.
Restaurant menu prices continue upward as the U.S. Department of Labor reported an inflation rate of 7.5 percent on an annual basis. These rising inflation costs are impacting every industry, with restaurants being no different. Operators are being forced to make changes in an effort to navigate the price escalation.
Restaurant and foodservice operators are feeling the pressure as Technomic reports that food and beverage costs have skyrocketed 13 percent over the last two years, while paper and packaging are up 11 percent. Technomic also reported that 45 percent of consumers say they usually pick restaurants with lower prices. But with rising food and supply costs, how can operators keep menu prices low when they have to pay more for inventory?
Run LTO’s to Reduce Food Waste
Do you have fruit nearing its expiration date or meat about to go bad? Was your weekend a little slower leaving you with extra ingredients you didn’t plan on? Try creating a limited time offer (LTO) that uses up your soon to be tossed ingredients. There are multiple benefits of repurposing ingredients and it creates an opportunity for your chef to create something new and inspired. By prioritizing the reduction of food waste, your restaurant positions itself as an eco-friendly operation and you spend less money on replacing those expired and wasted products.
Utilize Value-Added Ingredients
According to Technomic, 24 percent of operators are increasing their use of value-added products. Switching to ingredients that can drive higher revenue and net profit is one way you can mitigate rising costs. Having the ability to bring in a sku that has multiple uses is a great way to maximize the use of that product and achieve greater success. Value-added products drive quality and consistency and can even help overcome labor challenges.
Focus on the Cost Side of the Profit Equation
The restaurant industry is rapidly charging into the technology age and more restaurants are taking advantage of enhanced restaurant metrics and reporting such as food cost management technology. Sometimes, savings aren’t that easy to find. With the naked eye, there’s no way to see full visibility into your purchasing. Using sophisticated data and technology tools can help you uncover the areas where you’re losing margin because of high costs.
Reducing your food costs without sacrificing the quality of your menu items is vital for survival in the foodservice industry. But customers can be sensitive to change, especially when it comes to the price of their favorite plates. It’s a tough time for operators right now and inflation doesn’t seem to be improving anytime soon. Even if you are forced to increase your menu prices, there are many ways you can navigate the increase and keep costs low. Whether you run LTO’s to use up left over ingredients, utilize more value-added products in your recipes, or take advantage of food cost management technology, you can navigate menu price inflation without changing the quality of your recipes.