2 Steps to Navigating Inflation in Restaurants





Restaurants are seeing a financial pinch from two sides of their business. Costs of food are increasing and there is a shortage in labor in the restaurant indusrty resulting in competing wages to retain and attract employees. The US GDP was up 6.4% in April and restaurants are actually seeing around a 13% increase from revenues in 2019. New jobs created in April came in 73% lower than expectations which was a serious miss and shows that people are still not going back to work even though the economy has picked up speed. In early May Janet Yellen, Secretary of Treasury, acknowledged that the US Government is watching inflation closely. They do not believe the inflation we are seeing today is permanent, rather a temporary condition of inflation due to the re-openning of restaurants now that the COVID-19 vaccine is more widely available. That being said this leaves restaurants with a big challenge as prices may jump up significantly then all of the sudden drop back down to more normal levels. Let's take a look at the risk and how to navigate the risk.

bellcurve

Understand the Risk

How to price your food is not a new concept to restaurants. You can picture it like a bell curve (above) On one side if you price it too cheap you don't have the margins to retain your staff much less take a cut yourself. On the other extreme if your food is too expensive compared to your competition then you loose your customer base resulting again in too little margin to take home. The challenge in temporary inflation is that the middle of that bell curve can shift frequently leaving restaurants guessing as to why they lost their staff or their customers.There are two easy steps you can take to navigate this.



Track The Competition

One thing the Pandemic has brought to every restaurant is some sort of online ordering. This is a great way to see what other restaurants are doing and can help you make informed decisions. That being said if you don't write down what prices your competition are charging you are not likely to remember what they charged last month. Take 20 minutes every month to track 10 items with similar food costs as your restaurant for each restaurant in each market. We have created a free spreadsheet that you can access here. Watch the video above for a tutorial on how to use the spreadsheet.

bellcurve


Digital Menu

Having a digital menu can help you change prices more frequently to meet the cash pinch that comes from food costs or labor. QR codes have become a common way to display a menu at restaurants. That being said there is a right way and a wrong way to make a QR code menu. Do Not upload a PDF that was intended to be held as a physical menu. Each phone handles PDFs differently and just because it works on your phone doesn't mean it will work on other phones. PDF menus are also really hard to see properly without pinching in and out on the smartphone screen resulting in a poor guest experience. Instead look for a digital menu that is created with a mobile first web experience. You can find some simple ones that do not take a web developer to update. Taby has a smart menu that can be updated live from a google sheets spreadsheet. You control the menu items, descriptions and prices all on your own. If your restaurant also has the QR code pay at the table service you can use one QR code for both the menu and the pay at the table. You don't need to have multiple QR codes on your table.

If Taby can help you create a digital menu, provide a pay at the table solution, or an online ordering system with pricing that you can update all on your own contact info@tabyeats.com.


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