Tips on How to Combat Rising Inflation for Restaurant Owners

The hospitality industry has never been for the faint-hearted. It takes determination and grit to make it in such a competitive industry, but even with that the profit margins are getting smaller with ongoing rises in inflation.

A recent report combines data from the Restaurant and Catering Association, Mastercard, and Uber Eats to reveal the longtail economic impacts of covid on hospitality. Largely credited to slowing consumer spending, 44 per cent of restaurant owners reported feeling as though they’re in a more difficult financial position than at this time last year.

“The longtail impact of the coronavirus continues to ripple through the economy. Deferred impact has appeared in the form of higher rental costs, growing insurance premiums, increasing utility and wage bills, and more expensive raw ingredients,” says Uber Eats ANZ General Manager Ed Kitchen.

While each state and territory expressed unique pain points, recurring issues nation-wide included utility bills, rent increases, supply chain disruptions, and labour shortages.

Here we explore some ways to combat the impact of rising inflation on your hospitality business.

Optimise Menu Pricing and Offerings

Optimising your menu seems an obvious choice, but it can be a challenge for some longer standing restaurants who have become known for their signature dishes. For venues with more flex, consider reducing or removing menu items that are too expensive to source or prepare. Focus on items with better margins and that use more affordable, locally sourced ingredients.

Experiment with more flexible pricing strategies. For example, offer daily specials or limited-time menus that allow you to adjust prices based on ingredient costs. Ensure you communicate any price increases clearly to customers. Tighten portion sizes slightly to reduce waste and keep costs in check, without significantly affecting customer satisfaction.

Negotiate with Suppliers

If possible, lock in prices with suppliers for a longer term to reduce exposure to price fluctuations. Some suppliers may be willing to offer price stability in exchange for a longer commitment.

Build relationships with multiple suppliers to compare prices and ensure you’re getting the best deals. Also, consider sourcing from local farms or producers to cut down on transportation costs, which can fluctuate with fuel prices.

While buying in bulk can be a challenge for smaller venues, this can be a substantial cost-saving to offset the impact of rising prices. Just be mindful of product shelf life to avoid waste.

Front of House (FOH) Tech

When was the last time you took a good look at your FOH tech? This encompases a huge range of technology used in the customer-facing areas of a restaurant, and can have a huge impact on the customer experience, streamlining operations, overall efficiencies and support staff.

Getting your FOH operations sorted can be a complete game-changer, and make life so much easier for you, your staff, and ultimately your customers. The right point of sale system, payments provider and integrations are key to any successful restaurant.

The best outcome is to look for an integrated point of sale (POS) and payments provider to save on monthly support and software fees. The right choice here can literally save your restaurant thousands of dollars annually.

Reduce Waste and Improve Efficiency

This one seems like an obvious choice, but again this takes time to research the best inventory management tools to track waste and identify areas where you’re over-ordering or over-preparing food.

Invest in energy-efficient appliances and practices to lower utility bills. Short term pain here results in long term gain. Simple steps like ensuring your kitchen equipment is properly maintained, turning off unused appliances, and switching to LED lighting can all make a difference.

Ensure you have the right venue management integrations in place. Use scheduling software to optimise staffing levels based on demand. Cross-train staff to take on multiple roles, so you can adjust quickly without needing to hire extra workers. Be cautious of overstaffing during slower periods.

Increase Revenue Streams

Ensure you have your Order Ahead integrations in place and research the best option for your restaurant, whether it’s order at table or order online. Expanding into delivery and takeaway can provide an additional revenue stream, especially in an inflationary environment where dine-in business might slow down.

Offer loyalty programs or subscriptions to encourage repeat business. A steady customer base can help smooth over fluctuations in demand.

Control Labor Costs and Retain Staff

In times of labor shortages, retaining your current staff is key. Offer incentives like flexible work schedules, opportunities for advancement, or non-monetary rewards to keep your team happy and reduce turnover.

Additionally, consider using online booking systems to streamline reservations and minimise no-shows, which can lead to wasted food and staff time.

Invest in Marketing

Marketing on top of all else can seem overwhelming to the novice, but it is so important to have an online presence. A venue’s Instagram account is often the first point of reference for customers considering to visit your restaurant to get a feel for the food and ambience. Investing in a professional food photographer to showcase the menu, or enlist the help of one of your staff with the necessary skills and passion to manage this for you.

The other crucial platform that has become a quick check for potential customers are your online reviews. It is important to monitor these as well as your overall rating. Follow up with happy customers and encourage a positive review on the spot by offering a free coffee to finish their meal.

Explore Government Assistance or Grants

Finally, make sure you stay informed about hospitality support grants. Research available programs that may help mitigate the impact of rising costs.

By combining these strategies, Australian restaurant owners can manage inflationary pressures while maintaining customer satisfaction and profitability. Staying proactive and adaptable is key to keeping your restaurant thriving.