Six Steps to Navigate Inflation for Restaurant Owners

By Dirk Ahlbeck, CPA Principal, National Restaurant Practice Lead: Apple Growth Partners

Consumers aren’t the only ones feeling the pain points of inflation; restaurants are increasing menu prices to help offset costs. Raising prices may seem like a solid action plan to maintain the restaurant’s bottom line; however, these six additional strategies can help offset the industry’s thin margins, especially during inflation.

1. Offer more discounts and promotions. Who doesn’t love a sale? What better way to lure diners, especially those who have adjusted their budgets, than a two-for-one meal deal. Or perhaps a free appetizer with the purchase of an entree. Buyers love the feeling of a good deal, and it may be just the motivation they need to get out of the house for a night out.

2. Reduce operating hours. Consider trimming available hours either first or end of the day to condense traffic flow to your most popular hours.

3. Reduce staff.

Consider evaluating poor performers and determining whether the risk of reducing their hours entirely or temporarily benefits the overall financial health of the restaurant, including associated risks with staff morale.

4. Remove lower-margin menu items. Now’s the time to pause or stop altogether lowmargin menu items, which will save on production and supply costs – owners should be routinely analyzing sales according to the menu to classify which plates can be easily cut. This category is historically known as “dogs” – low profit, low popularity – dishes that aren’t ordered often and cost a lot of money to prepare.

5. Simplify the menu.

Slimming down a menu has several benefits, including catering to the average customer’s attention span of only 109 seconds studying a menu.

6. Create loyalty programs

The psychological benefits of sales and promotions can also carry over into a customer loyalty program, where frequent diners are rewarded for going out to eat. An actual win-win scenario –customers receive an incentive (for example a free appetizer, drink, or discount) to leave the house and go out to eat. Customers can be rewarded for frequent visits, special events, or birthdays and holidays, creating a sense of excitement, exclusivity, and inclusion throughout the dining experience.

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