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Food Inflation, Restaurant Profits & a Stainless Steel Patio Heater
In the face of inflation and the rising costs of food, how is a restaurant owner supposed to maintain profit margins and continue to build a steady customer base at the same time? According to CNBC, a report released by Bank of America Merrill Lynch global research showed that the cost of heating at home was increasing at a faster rate than the cost of restaurant meals. For the first time ever, it might be more frugal to eat out, than make that trip to the supermarket and stock up on weekly groceries.
According to Dan Rowe, founder and CEO of Fransmart, grocers and restaurants have been hit by rising commodity prices; however, grocers tend to pass the costs directly to the consumer while restaurants can be more flexible and adapt to food inflation. So how do you drive profitability in the face of food inflation? Below are a few tips to help you out.
1. Focus on Value
As Rowe says, "value is in the plate not the price." To customers, value is seen in the quality of the food and not the price alone. Restaurants creating value menus are getting hit the hardest during this economic slump. These kinds of customers are searching for a lower price not a better experience.
If someone is going to spend time in your restaurant they want it to be worth it. Premium positioned restaurants are the fastest growing most profitable segment of the restaurant industry. So never mind the value menu but instead provide a reasonable and satisfying dining experience with great tasting food.
2. Upgrade Your Menu
Now is the time to expand your menu and include new cost effective items. Soups are a low cost way to change up the menu. Most ingredients are inexpensive. Add custom creations to your menu, too. Design a selection of dishes that only your restaurant offers. It's a distinguishing quality that makes your restaurant special.
It's always a good idea to maintain a balance between high cost foods and low cost foods. Pasta and potatoes with prime cut meats and seafood are great way to balance your offerings and maintain a profit margin. Also, maintain consistent portion control. Streamlining portion sizes will help ensure a healthy profit margin.
3. Quality Customer Service, Management and CrossSelling
Talk to your staff and set the ground rules. They are to provide the best possible customer service, exuding hospitality and friendliness at all times. Be sure you have a good management system in place, too. There should be a front of the house manager to handle the wait staff and ensure customers are receiving the best possible service. Use a back of the house manger to handle the kitchen and taste the food that goes out. This prevents complaints and ensures the meal is as great as advertised. You pay your staff and in return you want them to provide the best quality work.
Train your staff on cross selling. Suggestive selling or soft selling is the best way to drive up profits. Offering a glass or bottle of wine with a specific dish, maybe a custom salad to complement a meal are good ways to increase the sales ticket. Always suggest appetizers, sides, desserts, and any other specific extra you can offer. Because it's considered soft selling, it doesn't come off as pushy and feels as if you're providing them with "better" service instead.
4. Atmosphere Means Everything
The concept, menu and decor all work together to create the best possible dining experience. The atmosphere should be one that your customers can enjoy. Whether it's contemporary, classic, retro, or rustic doesn't matter as long as your customers feel appreciated and welcome.
Continually update decor to keep it looking clean and fresh at all times, and if you offer outdoor dining use stainless steel patio heaters to maintain a warm and inviting place to dine.
5. Utilize Online Networks
A great way to increase profits today is through online social media. Here, you can stay connected to customers, offer them special deals, and create a social environment in which to partake in. Facebook, Twitter, and other media outlets are a great way to build customer connections.
6. Drive Down Purchase Costs
One of the most beneficial ways to maintain a healthy profit margin is to drive down purchase costs as much as possible. This might be difficult in the face of inflation; however, talking to suppliers and negotiating prices is always a benefit. Try new suppliers, to stay flexible. By doing this you cannot only offer better menu pricing to customers but you can stay consistent even in the face of food inflation.
7. Online Service
Offer a takeout menu and allow for online ordering. This is a convenient service most of your customers will appreciate. Also, it's a great idea to manage reservations online and allow customers to make arrangements without stopping to make a call. Communicating via email with your customer baseis convenient and easy. You can confirm reservations via email and send them special invites at the same time.