Restaurants Get Creative With Selling Strategies as Food Costs Escalate

A mixed age range group of friends having a meal together at a restaurant.
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The restaurant industry is a notoriously difficult one in which to thrive due to competition and trends. In a recent update on its Food Price Outlook for 2022, the U.S. Department of Agriculture claimed that food commodity costs are expected to continue, making a significant price impact on nearly everything we consume.

What does all this mean for restaurants that are still finding their legs after being pushed to the brink of survival by the pandemic? It means they must now find creative ways to attract customers to not necessarily thrive, but simply survive.

Two years on from the beginning of the pandemic, restaurants have yet to return to normal. Customer demand hasn’t risen to pre-pandemic levels and the continuing impacts of lower customer traffic and accumulated debt have placed restaurant owners in an uncomfortable situation.

We are amid a historic period of food cost inflation and the future food price outlook is grim. In general, food prices have increased 7.9% over the last year. For this year, the USDA expects menu prices for food away from home (restaurants, foodservices companies) to rise 5.5-6.5%, which would be a higher hike than in 2020 and 2021, and historically higher than average. Food-at-home prices (groceries) are expected to rise 3-4%.

Suddenly spiking menu prices would be a punishment to customers just coming back from the pandemic, but soaring food costs are forcing everyone to consider skimping on portion size, looking for cheaper vendors or raising menu prices. Many are trying to avoid these measures with strategic menu marketing to lure cagey customers.

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Without having to resort to market price menus, restaurants are putting in the research and planning needed to find cost cuts by streamlining their menus, highlighting dishes that turn a profit and dealing effectively with labor costs and a shortage of workers.

For example, Darden Restaurants (owners of Olive Garden and others) have trimmed menu items, choosing to have fewer high-quality choices rather than a superfluous cost-hurting variety. Others, like Chipotle Mexican Grill, are thinking outside the box by toying with the idea of limited time offers, to direct customers to offers more in line with the bottom line.

As for the physical menus themselves, advertising more eye-appealing items with a redesigned look or using creative graphics can lead to more price margin-friendly sales. QR codes have seen more use during the pandemic and this wave of inflationary pricing will see them used even more to save the time and expense of reprinting menus for fluctuating dishes and prices. They also pair nicely with social media to update customers about things like loyalty programs or daily specials.

Food prices will continue to be a major variable in the restaurant business and this year will be no exception. However, through creative menu engineering and strategic price planning, it is hoped that restaurants can turn their food cost challenges back into growing revenue centers.

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