Economists predict that as the inflation rate rises, consumers tend to spend less of their fixed income, thanks to the currency’s volatility. This means that restaurant owners face tough times. They have to compete against other businesses that offer similar services at lower prices.
As prices of products rise, restaurant owners notice tangible effects of the rising inflation on their profits. As a result, they may find increasing their prices inevitable, albeit short-term. Yet, this might push away clients.
Restaurant owners need to keep adjusting their prices to keep up with inflation and maintain profit margins that match the restaurant’s costs. The impact of high inflation on your business can erode your profits and inhibit your ability to recruit and remunerate skilled workers.
Restaurant owners with diversified portfolios like mutual funds, shares in the stock market, real estate, different asset classes, cryptocurrency, real estate investment trusts (REITs), etc., can set a fixed rate or interest rate allocation to inject into their restaurant as an inflation hedge.
To be on the safe side business-wise, here are some ways to help your business thrive even during inflation.
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Focus on Customer Service
Your customers are valuable and deserve to be treated with utmost respect and professionalism. Improving your customer service may have you receive repeat customers and new customers through word-of-mouth referrals during higher inflation.
84% of companies that improve their customer experience report an increase in their revenue. It’s important to train your team regularly to be of value to your customers. This would mean helping them with their luggage or children, offering special furniture for clients with disabilities, timely service, etc. Once you make your customers feel they are king, they will always look forward to visiting your restaurant to experience excellent customer service.
Focus on Quality Food
Food costs are about 35% of total costs, and higher food prices are among the greatest challenges restaurants face. If your best-selling dish requires a pricey ingredient, it may be time to find a substitute to help you cut costs.
However, you need to be creative as you use the substitute to maintain the overall quality of your food. This way, you may not need to increase your prices but would still offer your clients excellent value while spending less. This allows you to make profits.
In case of price hikes, ensure to improve the quality of your food so that your customers get value for their money. Also, conduct a menu audit to identify the dishes to retain and which ones to stop preparing. Ideally, find a way to maximize the high popularity and high profitability dishes and cut down on the low profitability dishes.
You should also check your food portioning to minimize wastage. If your guests are not finishing their food, it could be time to reduce the portions.
Adapt to Changing Consumer Tastes and Preferences
Restaurant owners should take note of the current trends and try as much as possible to keep up with them. These trends include the growing popularity of fast food, delivery apps, and mobile ordering.
The pandemic saw online ordering grow in popularity last year. To date, you can greatly benefit from these orders from customers who do not want to go out. Notably, online orders increase your client base with low investment. You only need a point-of-sale system to process orders and payments and a fully equipped kitchen to take up the orders quickly and accurately.
After the pandemic, businesses have had to rethink their entire marketing strategies in the past year. Restaurant owners can take advantage of this digital shift to create engaging content. The best way to do this is to use digital signage.
You can use signage to display your menu. Place the screens strategically so that they draw in customers. The ideal place to position them would be at the entrance of your restaurant. Another content idea for your digital signage is images of your best-selling dish. This will push new and old customers to desire that dish.
Strive to Contain Costs
With inflation comes to labor and supply chain shortages. Restaurant owners should prioritize active recruitment for open positions, employee retention, and advancing their technologies to keep up with the ever-changing digital trends.
They should always seek technologies to help them effectively manage cash flow and reduce costs. For instance, they can opt for food delivery services to diversify their client base and use QR codes to speed up orders and reduce menu costs.
Also, consider using social media and other low-cost digital marketing avenues to cut advertising and marketing costs.
These simple tips are effective and efficient ways to thrive during inflation and maintain your restaurant’s profit margins.
The bottom line is that you should strive to remain relevant in the food service industry by constantly evaluating your marketing strategy. A great dining experience that puts your customers first is a surefire way of turning them into loyal customers.