Running a restaurant business in 2024 seems to get tougher with the rising inflation costs. In the aftermath of the COVID-19 pandemic, restaurant inflation has ballooned, with the supply costs affecting menu prices. This has increased production costs for the restaurateurs, making it impossible for them to retain old prices. Now, many small to medium-sized restaurants struggle to decide how to price their food to customers. Many restaurants have already increased their prices to meet the cost. According to an article from Forbes, menu prices at quick-service restaurants are up about 8% over 2020, while full-service restaurants have increased nearly 6% more. For restaurateurs, increasing prices seems to be the only way to fight labor, supply chain, and inflation pressures. The most obvious way to deal with rising inflation costs indeed is to raise menu prices – which consumers have noticed. However, as a restaurant owner, a rise in menu prices can positively impact your bottom line. To combat the rising cost, increasing menu prices is often inevitable, but without the right strategy, you might lose your loyal customers. Therefore, this blog has rounded up the best practices to help you deal with rising inflation costs. The Impact of Inflation on Restaurants Whether you’re a startup or an established restaurant owner, you must be feeling the heat of the rising cost, and the supply chain becoming more expensive. While there is no business in the world completely unaffected by inflation, the restaurant industry, which is already on a thin profit, tends to get hit harder. According to Statista, the food inflation rate in the United States was at about 5.8% in 2023, and with a slight decrease of 1.3% predicted in 2024, the price for many food items will continue to rise. This also impacts consumer behavior. As of November 2023, more than 43% of consumers feel worried about paying for food. This means that passing the rising ingredient cost on to your customers won’t be easy for restaurants. The restaurant owners are now in a tight spot, trying to figure out how to maintain the quality of food while making a profit. Meanwhile, the labor cost becomes the elephant in the room, making it harder for the restaurant chains to maintain their profits. More than 30 states have made the minimum wage higher. This will continue to rise, affecting restaurants of almost all types. In such a situation, restaurant owners need to revise their strategy to deal with rising inflation costs. How To Deal with Rising Inflation Costs Americans have long been known to enjoy eating out. Even now, in spite of economic challenges, there are predictions that the restaurant and food service industry will continue to thrive in 2024. Eating out is still in demand and restaurants do have the chance to grow and thrive even in difficult economic times. You need to adapt innovative ways to deal with rising inflation costs. Here are the top ways that can help you to deal with rising inflation costs. 1. Trim the fat Before you start raising your prices to protect your profit margin, start by trimming the fat. Identify the items in your menu that are not selling and immediately remove them. Optimizing your menu items will help you to cut the cost. Now, identify your high-cost ingredients and remove them with an affordable option. If you source imported ingredients that are more expensive than local ones, consider sourcing local ingredients, which are often the same or even better quality because they don’t have to go through rigorous travel and logistics to be delivered. Look across all your vendors and see if any offer a discount on bulk orders, especially when you have multiple restaurants. You may have to cough up more money when you purchase, but it can make a huge difference in reducing your costs in the future. Trimming the fat enables you to minimize the impact of inflation on your menu prices. 2. Avoid Food Waste At the time of economic crises, avoiding food waste can be of significant help. Since food costs take up a huge margin of your budget, any unnecessary waste is an expense that no restaurateur wants to bear. Therefore, your second step should be to reinforce training with your employees and make sure that food isn’t wasted due to wrong orders, customer allergies, or carelessness. Once you and your staff are on one page, the next step is to do a thorough inventory check of everything. This helps you to know whether you’re ordering enough to meet demand or more than you possibly use. You can use POS system inventory reports to know the exact inventory figures. 3. Practice Menu Engineering Menu engineering is one of the most effective ways to sell high-cost food. You can integrate a POS system and inventory management software to gain valuable insights into the cost of dishes and the profit margin of each dish. By managing your menu, you can improve the performance of your menu items, ultimately making more profits. You can check out our blog, Menu Engineering: What it is & How it Can Increase Your Restaurant Profit, to learn how menu engineering can help you boost sales and increase profit. 4. Reduce Labor Cost As the minimum wage rises across the country, it becomes crucial for you to track your labor costs and take steps to reduce extra expenses. Once you get insights on the total labor cost you carry every month, it will become easy for you to optimize. Common steps you can take to reduce labor costs are: Use Technology: Technology is the key to reducing labor costs and streamlining your restaurant operations. Start by adding a reliable all-purpose restaurant POS that helps you to track employee performance, provides detailed insights, and lets you automate numerous tasks. Optimize Schedule: No need to pay for extra hours when you expect fewer customers during that part of the day. Optimizing employee schedules can help you prevent overstaffing, ultimately saving you more on

Running a restaurant isn’t all about focusing on your operations and the quality of dishes. Of course, it matters, but without focusing on the small details, you can’t expect your sales to grow. When a customer enters your restaurant, they are likely greeted with a smile and a menu. The menu of your restaurant is the first impression that can help you build a positive brand image. It’s not only a way to communicate with your audience but can also influence what your customers will order and how much they will spend in your restaurant. Therefore, the design of your restaurant menu is an important factor in boosting your sales. Restaurant menu engineering can be the best way to transform your menu into a money-maker. Why Do You Need to Focus on Your Menu? On average, restaurant guests spend around 100-109 seconds (about 2 minutes) studying the menu. This means that you only get a few seconds to make an impression and let your customers select the most profitable dish.  You need to focus on your restaurant menu to stand out from the competition. Menu engineering can help you make a profitable menu by keeping it concise, well-organized, and perfectly laid out. This is a smart move for restaurateurs searching for ways to make more profits. But what is it? Menu Engineering Basics: Rules Restaurateurs Need to Know Menu engineering, often called menu psychology, is the popular practice of making a restaurant menu more appealing to guests. It is used to categorize the menu by using sales data and food costs. Restaurant menu engineering requires you to have exact menu item prices, food costs per serving, and contribution margin to fully optimize your menu. This helps you to maximize your profits by encouraging your guests to select only the most profitable items. By implementing menu engineering, you can raise profits by up to 15%. However, it’s important to know the following key basic concepts to make an effective physical menu design. Pay Attention to Colors Colors can influence your guest’s feelings and behavior. Restaurateurs that use color psychology can influence purchasing habits and brand loyalty while boosting revenue. You should use your restaurant’s branding or decor colors in your menu; however, you can slightly add bright colors like red, orange, or yellow that trigger appetite. This small change can encourage hungry guests to order their favorite meal quickly. Align Your Menu Items with Guest’s Eyes Engineering your menu according to eye movements can help you maximize your sales of highly profitable dishes. Most humans tend to move their eyes in certain patterns, and knowing these patterns can help you put your high-margin dishes in the desirable placement areas of your menu. Optimize Your Menu Descriptions Do you know that the descriptions of menu items can have a direct impact on your sales? According to a study by the National Library of Medicine, the design and description of your menu influence the customer’s mind. When writing a menu for a restaurant, you need to keep a balance between the number of words you use to convince customers and keeping their attention. A description like “Cheese Sandwich” won’t be an effective way to write a menu item. However, replacing it with a “Classic Cheese Sandwich” could be a better option.  But the best way to write down the menu item would be                     “Fresh savory, buttery, toasted bread with melted cheese fillings.”  Pictures Are Forbidden… Sometimes When designing a menu, there is always an internal urge to place pictures of your dish. While you may think that it’s a good move, as the picture says a thousand words, however, it doesn’t apply to high-end restaurants. If your target audience is luxury clients for fine dining, it’s always good to avoid placing pictures. In contrast, if you run a fast casual or fast-food business, then adding images could help customers quickly see your most popular items. You should only use high-quality images of your best meals to showcase. Low-resolution or blurry images take away from the overall design of your menu and weaken your credibility. Menu Pricing Everyone knows that setting a profitable price is crucial. Of course, you won’t charge $3 for a chicken sandwich which costs you more than $5. But how to make it sellable? That’s the real question! Most of the expensive items listed on your menu won’t make it to the guest’s table unless you have the right pricing. Here, the key is not to lower the prices but to apply psychological tricks. Remove The $ Sign: The dollar sign on your menu not only attracts guests but also makes the dish look more expensive. Use digits such as 15 instead of $15 to let customers spend more. Use Decimal: Use of decimal instead of putting a straight amount can make your dish look more affordable. A dish with a price of 10 will look more expensive compared to a dish that is priced at 9.99 cents. Right Arrangement: Wanna sell more of your mid-priced food? Consider setting one high-priced item at the top of the list that makes the rest of the dishes look like a more affordable option. Boost Your Restaurant Profit by Using Menu Engineering Menu engineering offers significant benefits that go beyond designing an attractive menu. You can influence customer choices, improve sales, and enhance your brand image. Here are the key steps to boost your restaurant’s profit by using restaurant menu engineering. Step 1: Calculate Your Food Cost Calculating your food cost allows you to know your expenses to prepare one dish. You need to know the exact cost needed to produce one portion of every dish on your menu. The food cost information is often available in your restaurant POS system; however, if it is not, you can use the manual method. Let’s say you serve chicken tenders for $9. A single serving takes up to 4 ounces of chicken, 1 tablespoon