Throughout the pandemic, the hospitality industry had to first handle an unprecedented shutdown, and then quickly learn how to operate in a remote world where social distancing, anathema to restaurant life, reigned supreme. Now, surging inflation with the rising cost of food is proving to be yet another hurdle for restaurants to contend with. These rising costs are heavily impacting restaurants, necessitating the need for increased food waste reduction, tighter menu management, and other creative measures to ensure customers have the best possible experience so they keep coming back.
But what’s a restaurant decision maker to do?
As restaurant brands continue to be challenged by rising food and labor costs, they need to explore different ways to optimize their operations. It’s important to keep in mind, though, that short-term profitability fixes are not always feasible for the long term. If restaurants focus their efforts on one pricing strategy, such as cost-cutting, they may not see long-term success. To guarantee continuous revenue, they need to focus on technology integration within back-of-house operations to streamline and increase workflow efficiencies. Here are three things restaurant operators can consider to help them navigate this period of inflation.
Be mindful of your menu
Menu optimization will make it easier to sync all menus—whether they be on an app or a website—whenever there is a change to implement. Should an item become unavailable due to prohibitive costs or lack of supplies, hitting the “snooze button” keeps customers from being disappointed when they find the item they’ve got their heart – or better yet, their stomach – set on isn’t currently available.
Updating the menu in real time, both its content and price, will enable customers to make educated decisions about where and, more importantly, what they want to order online.
Focus on sustainability
Keeping an eye on which dishes are most and least popular and modifying the menu accordingly is another way restaurants can optimize their selection for customers and help curb food waste. The U.S. discards more food than any other country in the world – nearly 40 million tons every year, roughly 30 to 40 percent of the entire U.S. food supply. When restaurants waste food, it’s lost revenue and therefore it’s essential to find efficiencies via technology in order to avoid it. Two out of three (66%) consumers surveyed feel it’s important that restaurants are open about their practices to limit food waste. Analyzing data on which dishes are less popular on the menu and phasing them out can ultimately save restaurants both time and money.
Don’t discount promotions
A recent Deliverect global survey of 7,000 consumers shows that 42% people in the US get up to three food deliveries a week today despite the recent rise in inflation. That’s a 2% increase in consumer habits than pre-inflation and restaurants are at an advantage to engage customers and keep them coming back for more. The survey also revealed that 30% of respondents are most likely to be driven to choose one restaurant over another by special offers/promotions. Offering limited time deals or specials can entice consumers to order more or more frequently.
Work around the labor shortage
With the rise in inflation has come a higher cost of living and demand for higher wages. At the same time, the food service industry continues to suffer from a labor shortage with unemployment hovering around 6%, and restaurant owners are feeling the strain. Incorporating an integrated point-of-sale system to streamline operational flow from the front of house to the kitchen and out the door will lead to less manual tasks for floor staff, and greater efficiency at scale. Essentially serving as another pair of hands, kitchen staff can receive online orders sooner rather than later, and in a standardized ticket format, enabling them to improve prep time and ensure more accurate orders.
Inflation has infiltrated every aspect of the restaurant industry from the cost of food to labor, ultimately impacting restaurants’ bottom line and the customer experience. For restaurants to succeed during this challenging time, they will need to balance price increases strategically while ensuring that customers get the experience and service they are seeking. The integration of technology within back-of-house operations is key to offsetting the impact of price inflation on restaurant businesses as much as possible.
About the Author
Zhong Xu is the CEO and co-founder of Deliverect, a SaaS that offers quality integrations across a wide range of online ordering systems and POS platforms.