Details In Business Blog

By Keith Schofield
Restaurant Consultant for Details In Retail

The climb in oil prices has been placing enormous upward pressure on commodities across the board. Higher transportation and fertilizer costs translate to unprecedented pricing levels for rice, flour, oil, produce and every other item in a restaurants cooler and storeroom. Profit margins and the necessity of meeting targeted food costs in order to maintain them are becoming seriously distressed. How does an operation flourish amidst these uncontrollable factors?

The obvious answer is one that most restaurateurs are loathe to accept: raise menu prices. Economic reality has severely impacted discretionary spending. The concern that price increases will negatively impact cover counts is all too real in this climate. What is an owner/operator to do?

The bottom line is that rising cost of sales will eventually overwhelm the already tight profit margins in this industry, which creates an untenable situation. Short of cutting quality by utilizing cheaper ingredients, price hikes are essential for survival. The keys to successfully navigating this slippery terrain, is to ensure that the price structure is judicious and to communicate with your guests. Working the floor and listening to your clientele’s needs and concerns is always the best way to inform your decisions and allay any discomfort your guests might experience.

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