Adjusting for Inflation

According to a Consumer Index Report summary from August 2022, inflation across all items has risen to 8.5% over the last 12 months, which is the largest increase since 2008. As food prices surge in the U.S, food manufacturers and restaurants are increasing prices, trimming their costs and using various other tactics to offset heightened expenses. Restaurant owners are weary of increasing prices for fear of turning customers away. While increasing menu prices is one way to adjust during the inflation period, there are several other tactics that can be considered as well.

Review and Analyze your Menu
Before you start to make changes to your menu, be sure to conduct an audit. Take notes on important factors such as sales, costs, resources allocated to each individual dish, customer sentiment about each dish and evaluate this against profit margins. From here you can make adjustments accordingly.

Think over how you prepare each menu item.
What are the resources and how much time does it require for your dishes to be made? Ideally dishes should use different spaces in the kitchen to make workflow efficient. Do you have sufficient equipment?

Sort your menu items –
Order or list your items out based on popularity or by how much was sold in the past year. Ideally, the more popular items should give you your highest profits. Look at online reviews for feedback. Here you can gain some insights on what customers prefer or what works well for your core customer base.

Make adjustments –
Remove dishes that aren’t very popular as well as give you low-profit margins. Use marketing tactics to push the less popular, high-profit items. Where are these located on your menu? Do you see a correlation? How can you better promote these items if you truly believe in their value? Encourage your staff to recommend the high profit items that haven’t been selling.

Consider using Alternative Items or Tweak your Current Dishes
There has been a large rise in the price of chicken this past year, especially chicken wings. Instead of wings some food service operators served tenders instead. Slightly tweak other menu items that have gotten too costly. To prevent problems in the future, replace inflation susceptible food items with more steady and secure ones. For example frozen seafood and produce are less prone to inflation because they are not tied to a contract.

Use Value-Added Products to Reduce Time in the Kitchen
Consider purchasing foods that only require heating because they are already completed with the necessary prep work. This also helps keep your product consistent. For example, purchase chicken fillets that are already cut as you like, and seasoned and breaded. There are many options to choose from that cut down on resources such as produce that is pre-cut and pre-washed to save prep time. Ask your sales representative on your options for value-added foods.

Control your Portion Sizes
Look back at your menu review. First, which items get wasted? Cut back on portions on these dishes. A key component to portion control is training your cooks to weigh or measure the food that is put on the plates. Make sure portions are consistent each time. Food presentation makes a difference in perceived value. Garnish the dish in a way that fills the plate without adding extra food. For example, add several celery sticks to the wing platter to fill the empty space. Lastly, find small ways to cut back on the amount of food in a way that is not very noticeable. For example, slice your tomatoes or sausage thinner in the dish.
Other Areas for Improvement

Online Presence
Use a solid online presence to drive traffic. Make it easy to find information about your business such as address, phone number and menu. If you have an online ordering button on your site, place it front and center on your site’s page. Having a strong online ordering system will reduce the amount of profit given to third parties. Optimize your digital footprint by being on all platforms and posting accurate, quality information about your restaurant.

Control Labor Costs
You can control some costs by using software to monitor shifts and preventing inaccuracy when it comes to paying wages based on time worked during shifts. An organized scheduling system can also reduce errors in overstaffing on a certain shift. To cut back on cooks needed, make prep work as efficient as possible. Do you have sufficient equipment to maximize efficiency? As mentioned earlier, the use of value-added or ready-to-cook products allows for faster prep times as well.

Minimize Food Costs
A profitable restaurant usually produces a 28%-35% food cost.³ Keep a solid and consistent inventory tracking system. Track your costs on a weekly basis at the least. Order from your vendor as accurately as you can. Try hard not to overorder food that goes to waste easily.

What Food Cost is Right for You?
List all the food products that were delivered. Add together the prices of each of the items. Track your food product orders
Take inventory again at the start of next week. Add together total food sales per day. Calculate actual food cost for the week (using the equation below)

How to Calculate your Food Cost Percentage
Food Cost Percentage = (Beginning Inventory + Purchases – Ending Inventory) ÷ Food Sales

Find the balance between serving your customers high-quality food while keeping costs down. If your restaurant is known for amazing pizza sauce, do not switch up your ingredients used because customers will notice.