Although the worst of the global pandemic is behind us, the owners of restaurants they continue to feel the pressure of staffing shortages, health-related challenges, and rising operating and supply costs.
According to the portal Trading Economics, In Mexico, the average food inflation remained around 5.95 percent from 2003 to 2022, but in August of this year, it reached 8.7%, the highest in 22 years. This is reflected in restaurant supplies, including tortillas, which according to recent reports are expected to reach up to 25 pesos per kilo in September, depending on the region of the country.
This represents a challenge for restaurant owners and managers because they must deal with inflation without driving customers away.
5 tips to manage inflation in your restaurant
Here I share some tips to help these leaders manage rising food costs while taking a more customer-centric approach.
1. Strategic price gouging
Adjust prices strategically by making decisions focused on the consumer. For example, I recommend considering the following:
- Raise prices over a long period of time to spread out their impact. According to industry norms, two to four rounds of price increases per year are acceptable, each with an increase of less than 2 percent.
- Consider small price increases on best-selling items, such as star dishes, which remain in high demand.
- Emphasize value and ingredients offered
- Monitor customer reaction after price adjustments and make corrections if they notice a drop in orders for repriced items or dishes.
Apply menu engineering. This means analyzing the offer based on data (including the cost of food) to ensure that each item on the menu is profitable and popular with customers. The technology allows restaurants to design a menu by making informed decisions about which dishes to highlight, which prices to increase and which items to remove from the menu. Additionally, supply optimization can help streamline kitchen operations.
Another integral part of menu engineering is menu design review. Even small changes can help entice customers to order specific dishes or convince them to select more profitable items like side dishes, drinks or appetizers.
3. Reduce food waste
Fighting food waste is a foolproof strategy to offset rising costs. To achieve this, you have to have better inventory control and make smart purchases. For example, avoid purchasing expensive raw materials that are only used in some dishes or as a garnish.
4. Invest in the relationship with suppliers
Although suppliers cannot control price fluctuations, they are aware of market trends and therefore can alert when their ingredient prices are about to rise. This is one of the reasons why businesses should always maintain a good line of communication with suppliers. Knowing in advance when certain ingredients are going to go up in price helps to search for alternative raw materials and adjust the menu as necessary. A reduced or modified menu is always better than disappointing customers when they order their favorite dish only to find it’s not available.
5. Increase takeout orders
Another way to avoid menu price inflation is to encourage customers to order takeout or delivery. Offering online ordering options provides an additional source of income. But more importantly, restaurants that have an efficient system for taking and delivering online orders often find that off-premises ordering is more profitable and effective. That’s because it’s possible to automate your order flow online, saving you labor, time, and money.
Menu engineering, preventing food waste, improving communication with suppliers, and boosting online ordering are all viable tactics to maintain a healthy balance between the food cost and value equation. The use of technology helps in many of these actions. Restaurant managers and owners must be open to adopting and investing in technologies that can, now and in the future, make it easier for them to manage price fluctuations in the market and optimize their operations.
Valentin Vermersch Valentín is an experienced executive and is currently General Manager for Deliverect in Mexico, with the aim of positioning the company in the country and turning it into the growth hub for the brand in Latin America.