Restaurateurs look at reducing rising overhead costs.
This article appears in its original context on the RESTAURANT.org website
If your customers ask why you’ve increased your prices, be upfront with them about it. If they understand you’re struggling to keep up with increased operating costs, they may be more accepting of it.
The country’s current two-step with inflation couldn’t have come at a worse time.
Supply chain issues have caused wholesale food prices to increase 16.3%, the war in Ukraine resulted in record gas prices, and an Avian flu outbreak reduced the number of poultry and eggs available for processing—and that’s just in the past year.
Add to that the record low unemployment that has exacerbated the industry’s labor shortage, pushing operators to raise wages to attract talent.
Operators don’t want to raise their menu prices, but they have few choices. The conundrum is how to deal with their higher operating costs and keep cash-strapped customers dining out with the same frequency.
Larry Reinstein, founder of LJR Hospitality Ventures, says consumers still want to dine away from home, but because they’re having to pay more for basics, they’re cutting back on how often they dine out—or even get coffee—during the week.
“When customers have less money to spend at restaurants, they’ll compensate by going out less or spending less when they do go out,” he says. “A bigger problem is a potential loss of traffic altogether. We’re in a tough situation. At some point, we’re going to have to ask ourselves how much further we could go on pricing without losing customers already challenged by what they’re paying.”
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