How to Deal with Rising Food Costs
It continues to be an incredibly challenging environment for restaurant and food service operators. On top of rising labor costs and the impact of the pandemic on demand and operations, wholesale food costs still see volatility and increases driven by inflation and supply chain issues.
This makes it harder for you to run a profitable business.
Most forecasts have increases and volatility in food costs continuing for the foreseeable future, so what can you do about it? How can you provide the dining experience your customers expect, and you want, while still making sure your business is viable in the long run?
Here are three options to look at to help deal with rising food costs. How good of an option one may be depends on your customers, your menu, and your business. We guarantee that at least going through the thought process will uncover something that will help you.
1. Optimize your purchasing across your vendors
Prices change constantly with distributors and each week one may be more or less expensive than other options. It may be worth your time to compare your order guide against your top couple of regular vendors to determine where the best price is that week. Of course, you can make that easy to do by using the FoodMaven Smart Shopping Assistant.
Make sure you understand your order minimums and potential additional fees like shipping, so you don’t end up paying more in total. If you see that one vendor is consistently trending lower on certain products, can you negotiate on minimums or additional fees to make buying from them a viable option?
2. Look for more cost-effective substitutes
Do you have the flexibility to make some slight changes to recipes? You might be able to find more cost-effective substitute products if your regular option is seeing a significant price increase or availability shortage. A recent example of this is Wingstop promoting their chicken thighs with their Thighstop brand. They were able to reduce lost sales and margin caused by chicken wing price increases and shortages by offering an equivalent thigh product that a number of customers were happy to order. Maybe you have a dish where the preparation allows you to use a different cut of meat or substitute frozen for fresh without negatively impacting the dining experience.
3. Modify your menu for better margin items
Some operators have LOTS of flexibility with their menu. If that’s you, what changes can you make to improve your margin by reducing costs or increasing the price? Can you add more vegetarian options and avoid spiking protein costs? Are there options to lean more towards lower cost per lb proteins like chicken and pork? Or can you keep your high-cost menu items and increase the price because you know your customers will happily pay it. Just make sure that if you have the flexibility, that you are looking at what options allow you to reduce the impact of higher costs to your bottom line.
The cost of food has always been one of the biggest drivers in the financial performance of restaurants and food service. That’s only become more important in our current world of inflation and supply chain challenges. It does take additional effort to reduce the impact of spiking costs, but you can’t afford to ignore it. The good news is that there are tools that can make it easier for you, so you can focus on providing the same great experience you always do.
If you want to easily compare prices on similar products as you shop, try our free Smart Shopping Assistant browser extension.