5 Ways Restaurants Can Combat Inflation

With the right strategies, eateries can thrive even in economic downturns

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If it feels like everything’s gotten more expensive lately, you’re not alone. Inflation has skyrocketed in the aftermath of the COVID-19 pandemic, shooting from 1.5% in March 2020 to 7.7% in October 2022. While there’s no business in the world completely unaffected by inflation, restaurants tend to get hit especially hard, since the rising costs of ingredients can make your signature meals prohibitively expensive unless you pass that cost on to your customers.

Of course, you don’t want to give customers sticker shock or upset your most loyal patrons, so what are restaurant owners supposed to do during these periods of rising costs? We’ve rounded up some best practices, as well as information to help restaurant owners understand the effects of inflation on the food and beverage industry

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The impact of inflation

For restaurants, in addition to heightened utility and labor costs, inflation often means certain staples become more expensive, making menus pricier to maintain. According to Barbara Castiglia of Modern Restaurant Management, the most impacted ingredients are “meats, seafood, desserts, and alcohol,” which typically comprise a disproportionate percentage of a restaurant’s menu.

Unfortunately, there’s no easy solution. “Menu prices are not climbing at the same rate as inflation, while the food costs are pacing ahead of inflation,” Castiglia says. In other words, in order to completely offset the rising cost of ingredients, you’d have to raise your menu prices so high you’d likely scare off all but the most loyal of patrons. But all is not lost; there are steps you can take to improve your financial footing, even in a challenging economy.

Best practices for fighting inflation

When rising costs threaten the restaurant industry, it’s best to take a step back and look at the bigger picture before moving forward with any particular strategy. Here are the best ways restaurant owners and managers can navigate these rocky waters while continuing to meet customer expectations.

Keep your menu fresh

If your profit margins are feeling especially thin, it’s time to do a full audit of your menu. Tackle the low-hanging fruit first: Are there any dishes that aren’t performing well? Cut ‘em. Elsewhere, look for ways to replace expensive ingredients without compromising on quality, such as switching to seasonal fruits and veggies or locally sourced produce. Likewise, build specials around these economical ingredients and take advantage of limited-time reduced prices on certain items. Got a good deal on beef this week? Time to craft a meaty list of specials (literally).

Don’t change too much all at once, because that will be disorienting to your regulars. Think of the menu as a living document; nothing should be written in stone. You’ll want to reevaluate at regular intervals to make sure you’re continuing to balance high-quality food with affordable ingredients.

Reduce food waste

Trimming the fat from your menu can help reduce food waste, but you can take that even further. With food costs taking up 28% to 35% of an eatery’s budget, any unnecessary waste is an expense you can’t afford when inflation is high. Your next step should be to reinforce training with your waitstaff to ensure that food isn’t wasted due to wrong orders or customer allergies. No one’s perfect, and sometimes these issues are due to a customer issue rather than a staff issue, but when inflation is rising, every little bit helps.

The other step you’ll want to take to reduce food waste is to do a thorough inventory of everything you have. This should give you a better idea of whether you’re ordering enough to meet demand or more than you possibly use before it expires. Opinions vary on exactly how often to do an inventory, but experts generally recommend at least one a month, if not weekly.

Reconsider operating hours

Does your waitstaff spend the first hour after opening staring at their phones? Do customers clear out immediately after the dinner rush? If you’re keeping your doors open at times when there’s little traffic, you’re essentially paying your staff to wait around. When you’re tightening your belt, pay close attention to how your restaurant performs every hour that it’s open and take it from there. If weekend brunch is your bread and butter, but barely anyone is showing up before noon on a weekday, opening later during the work week can help you keep rising costs under control.

This also could mean shifting operating hours in order to capitalize on busier times. Going back to the brunch example, if your neighborhood is full of Zoomers who like to get together for bottomless mimosas and you’re not offering a weekend brunch special, you might be missing out on a lucrative opportunity to become the new hotspot.

Invest in technology

Spending money while costs are rising may feel counterintuitive, but the right technology suite will allow your staff to serve more customers, streamline processes, and ultimately save money. For example, a checkout solution like our own ExpressCheck app could save your waitstaff between five and 10 minutes per table while eliminating credit card fraud. Other technological advances for restaurants include handheld POS systems (another time-saver) and QR code menus — you’ll be glad you don’t have to reprint and distribute brand-new physical menus every time you do the first step on this list.

But it’s not just money that you should invest in technology; you should dedicate your time, too. Maintain an active online presence and engage with potential customers on social media and restaurant apps. A 2019 study found that nearly half of restaurant patrons have tried a new eatery because of its social media posts, and TikTok is particularly important if you’re courting the Millennial and Gen Z crowds.

Analyze the competition

Even if you’ve tried everything else, there may come a time when you have to adjust your pricing. Before marking up random items on the menu, however, you’ll want to take a look at what local restaurants are charging for similar items. You don’t want to be needlessly overpriced, as that will drive customers directly to your competitors. Additionally, this analysis will show you where you’ve got some breathing room to make some mark-ups — just don’t change too much at once.

Remember what we said about your menu being a living document? That goes for pricing, too. After your initial market analysis, continue to monitor the effects of any price increases and adjust as needed.

Let CityCheers help you fight inflation

The restaurant business is challenging, so let us make it easier! CityCheers is a powerful marketing and mobile payment platform specifically designed with restaurants and bars in mind. With free listings on the CityCheers app, creative ways to engage with customers, and an intuitive payment solution that integrates with most POS systems, CityCheers can help streamline your business operations while bringing in new customers (and turning them into regulars). Schedule a demo now to learn more!