2014 Marks the Record for Highest Beef and Protein Prices. Ever.
Many restaurants, if they haven’t already, are having to seriously consider raising their menu items prices in order to cover expenses. Problem is,the majority of consumers are maintaining to carefully spend their discretionary income, even six years after the economic recession. Consumers are attentive to prices and will notice price changes not only in grocery stores, but in restaurants as well.
So, what exactly is a restaurant to do?
As a restaurant operator, you need to focus on the long-term. What type of growth are you expecting within the next few years? Do you have plans for expansion, or are you perfectly content with remaining the well-revered mom and pop cafe? Regardless of your company’s size, you should always have aspirations. Defining your goals puts into perspective exactly where your business is now and where you would like it to be. Besides, who doesn’t want to be better than they were last year?
What are your projected operating and overhead costs? If you have dreams of expansion, how many more employees must you acquire, and how much is it going to cost to employ them? What are the projected profits, and do they cover your expenses? Though the answers to these questions may be mere estimates, they are vital to your restaurant’s growth and prosperity. You wouldn’t purchase a new car without first quoting the payments, insurance cost, and maintenance fees, right? So, why would you treat your business any differently? It is important to know the direction your business is taking, and it is even more important to understand that the choices you make today will affect your restaurant’s sustenance in the future.
And probably the most pressing question, just how exactly are you supposed to maintain a reasonable food cost when the price of food continues to rise? The harsh reality to this question is that the price of food will likely continue to rise. However, with persistence and an openness to change, your business can overcome this obstacle. In order to do so, you must invest in your business. I don’t just mean be present within the restaurant everyday. I mean investing like you never have before. Know the ins and outs of your restaurant’s daily operations. Get to know your customer base, their average income level, how much they’re willing to spend in your restaurant, and which dishes they favor. [pullquote-right]Familiarize yourself with competitors, along with their pricing structures. [/pullquote-right]Based on your competitor analysis and your customers’ expenditures, do you have room to raise menu item prices? If so, raise them just enough to cover your heightened food cost. If raising your prices is out of the question, try revamping your menu with new pictures, highlighting those high-selling items that bring in the most profit. Investing in a food cost management software may also be an option. It will not only assist in identifying top menu items, but will also aid in inventory management and identifying trouble areas needing adjustments.
In addition to strategically controlling your food cost, effective employee scheduling can also benefit your restaurant in the long run. Scheduling your employees based on sales trends and labor goals can also aid in cutting unnecessary costs.
As they say, restaurants are no place for the weary kind. It takes work to own and operate a successful restaurant. Lots and lots of work. But remember, with any type of business, there will always be ups and downs.
Now, go out, tackle those high food costs. QSROnline is rooting for you!
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