If you own a restaurant, staffing issues, inflation, and other struggles may have led you to raise menu prices. You certainly aren’t alone. The restaurant industry as a whole is facing these issues, and increasing prices is a common response.
The good news is that customers are mostly understanding of such changes. They also see increasing food costs at the grocery store. Still, that doesn’t mean that raising menu prices isn’t problematic at all. Since so many people are struggling with the impacts of inflation, higher menu prices mean they may no longer be able to enjoy going out.
But what can you do instead? Look for alternative solutions. These will allow you to avoid increasing menu prices by lowering costs or increasing profit margins. Try a few of these strategies when you are tempted to raise menu prices to remain profitable.
Start with a Focus on the Menu
Even though you are trying to avoid raising menu prices, you will want to begin with the menu to make some important changes. By streamlining and perfecting your menu, you could end up with something that is more pleasing to your customers than ever.
Remember Your Core Identity
Restaurants can struggle with budgeting when they expand far beyond their areas of specialty and talent. Menus become large and cumbersome. Food prices are high simply because you are purchasing so many items to accommodate everything you are trying to do. Simplify and focus on your core dishes.
Additionally, by remembering your restaurant’s true branding identity, you will gain insight into which items should not be changed. These are the signature dishes that are why people visit your restaurant.
Ditch Your Poor Selling Items
Is it possible that there is some dead weight on your menu? If these poor sellers are causing you to waste money on ingredients, you might be tempted to raise menu prices to make up for that loss. Instead, it may be a good idea to get rid of these items entirely.
Lean into Your Creativity
Now is a great time to let your culinary team be a bit creative. So many classic dishes were created out of necessity. People had to stretch ingredients or create dishes out of inexpensive items. Try building dishes around less expensive ingredients or using up items that normally go to waste.
Swap Ingredients, Not Quality Standards
How do you move away from ingredients that are too expensive because of inflation or supply chain issues without raising menu prices or sacrificing quality?
It may not be a good idea to simply buy cheaper versions of different ingredients. This approach often means sourcing lower-quality items. Instead, you might look into swaps that allow you to maintain quality while also saving money.
For example, imagine you have a rustic beef dish on your menu. The price of beef has skyrocketed. Rather than buying cheaper, low-quality beef, consider a rustic chicken dish as a comfort food replacement. Another option is converting some recipes to vegetarian options.
This latter choice could allow you to market your restaurant to a wider audience. People are more interested in restaurants that offer plant-based alternatives than ever before.
Thinking Beyond the Menu
If you don’t see many opportunities to control costs within your menu, it’s time to look at other areas of your business. Consider the following options before you raise menu prices.
Use Rewards and Promotions to Boost Foot Traffic and Revenue
Saving money isn’t the only way to avoid increasing menu prices. You should also be aggressively pursuing both new and repeat business. If it aligns with your business model and target audience, you could introduce a rewards program or other promotional offer to earn more business.
Here are some popular options:
- Rewards cards and loyalty programs
- Discounts for specific customer groups (e.g., first responders, teachers)
- SMS campaigns
- Promotional partnerships with other local businesses
- Social media marketing
- Brand ambassador programs
These programs attract people because they offer savings, and — in some cases — free items. There’s also a level of gamification that includes earning points or meeting referral goals. This play-like experience can generate a significant amount of engagement in these promotional offers.
Cut Your Utility Costs
You already know that restaurants tend to spend much more on utilities than other businesses. Now you are paying even more because those costs are on the rise. Utility companies are even increasing delivery and service fees.
Some people have reported paying double or even triple the amounts they were paying last year. It may be worthwhile to go through your restaurant to find any issues you can fix to lower your bills. Check for leaking pipes, inefficient light bulbs, and appliances left plugged in.
Expand Your Business Model
Are there things you can do beyond your current business model to increase your food sales and boost your revenue? Some restaurants are exploring new ways to sell more food, expand their audiences, and make more money without having to raise menu prices.
See if any of the following options would work for your restaurant:
- Partner with area businesses to handle their dining services
- Sell food in local farm and community markets
- Create a line of prepackaged dishes to sell in grocery stores
- Open a food truck or cart
- Try event catering or banquets
- Bring in guests or celebrity chefs to try new menus
- Open a temporary pop-up location to attract customers in new areas
Don’t limit yourself to a single revenue stream when there are other ways to increase your profits.
You might also try increasing sales without significantly increasing your revenue. For example, if you are open for dinner only, try adding a lunch service.
However, instead of taking on the expense of paying a full front-of-house staff for that, make it delivery only. You could even partner with a few food delivery services to keep your payroll costs down.
Make Operational Improvements
Stay on top of every aspect of your restaurant operations. This oversight is imperative if you want to keep costs down and identify areas of waste.
First, be proactive, not reactive. Stay on top of things in the restaurant industry where you are. Read trade publications. Talk with area restaurant owners and managers. Speak to your vendors and suppliers as well.
Learn what other people in the industry are experiencing and what the experts say you should expect. Then, make the adjustments you need to in order to make the best of these challenges.
Track your budget even more than you already do. Look for opportunities to save and cut expenses. Look at payroll as well. However, you must be very careful.
Don’t let fear motivate your decisions, and don’t sacrifice long-term goals for short-term savings. Yes, you will save money by cutting your payroll. At the same time, you will also deal with staffing issues, lack of employee engagement, and degraded customer service if your payroll cuts are too extreme.
Finally, look at your contracts. Are your vendor relationships still serving you? Your suppliers are probably facing the same increased costs that you are. Still, the relationship should work for you. If it isn’t, it may be time to shop around.
Invest in Marketing
Yes — you want to eliminate waste and reduce costs. However, you should also consider increasing your spending in areas with a strong return on investment. Marketing is one of these areas.
If your strategy to avoid increasing menu costs includes boosting food sales and other revenue, then marketing is a key part of making that strategy work. You must be able to communicate with the target audience about new menu options, loyalty programs, or anything else you are promoting to increase your sales.
Make It Easy to Do Business with You
What is it like to interact with your restaurant from a customer’s perspective? Is it possible that you might be losing business because it’s simply difficult to do business with your restaurant? How easy is it for customers to do the following:
- Place an order online for carryout or delivery
- Make or change a reservation
- Find your operating hours
- Look at your menu online
- Call and speak to a manager
- View your website on mobile
- Contact someone through Facebook
If your website or other technology platforms are slow, outdated, or frustrating they are going to cause you to lose customers. It may be time to update your technology to remove any barriers to doing business with your restaurant.
Communicate with Your Customers
These days, it’s more important than ever to be engaged with your customers. Communication is what keeps those connections strong. It’s something that will help to maintain customer loyalty, whether you have to increase menu prices, make changes to the food you serve, or adjust your business model.
Now is an excellent time to introduce or give new focus to two of the most effective communication channels there are. Email and SMS marketing are low-barrier methods of reaching out to your audience with excellent return on investment.
Contact Consumers can help you with both. Contact us to get help with establishing an email and SMS outreach strategy.