How to Beat Inflation in the Restaurant Industry

Owners of eating and drinking places have been compelled to increase menu prices as a survival strategy. Full-service menu prices jumped 8.8 percent and limited-service menu prices rose 7.1 percent in September year-over-year. However, continuing to raise prices to try to beat inflation could sound the death knell for restaurants at a time when they should be reveling in tune with the Christmas bells.

While battling inflation may not be easy, it is not impossible either. What is needed is a clear strategy that tackles the core concerns of rising costs and diminishing profits. The ‘Trim and Grow’ model addresses both these directly. The premise is very simple: trim expenses and grow revenue. In other words, beating inflation in the restaurant industry takes three steps: trimming food expenses, trimming labor costs and growing revenue.

Step 1: Trimming Food Expenses Since food costs generally account for about 35 percent of a restaurant’s total costs, this would be the best…