How should a restaurant operator deal with a cash strapped consumer? Treat them better than your competitors. Deliver on the value you provide. When you work hard on what you are really good at you will succeed. You win by taking care of the 20-30 per cent of your customers who are the 40-60 per cent of your business. 

Food and labour cost shocks

When major costs go up, restaurant operators are tempted to raise prices. Unfortunately, when you raise prices you often lose guests. Restaurants have had significant shocks to the system recently:

• The industry has had sustained increases in minimum wages in most markets
• A food cost spike in 2008 has been followed by another in 2011
• Gas price increases have taken money out of consumer wallets

Remember that what goes up must come down; but be careful about increasing prices. Not all food commodities are going up. Gear your core menu to what adds value for the consumer. You can also get creative when costs get out-of-line by using menu innovation to take costs out while maintaining value to the consumer.

The best way to make money in the restaurant business is to get more guests in seats. When you think of your guest first and what matters to them, you will be able to circumvent the long range trends threatening the full-service establishment.

See more related content:

• Foodservice sales moderate in the first quarter of 2011
• Food prices continue to creep higher
• Ten tips to better pricing
• Food prices continue to creep higher

About the author:



Hugh Johnston, CA, CMC is a strategy consultant working with chain restaurant and foodservice leaders to unlock greater value in their business. For more information contact Hugh at 416-662-5670 or visit hughjohnston.com