Restaurant Owners – You Have a Food Cost Problem!
Did you just increase prices? Revise your menu? When did you start the process? How long did it take you? A week, a month or longer? You have a food cost problem!
2008 is like a shadow. You can’t separate from your shadow and this year, you can’t move away from universal price increases.
Here is a checklist to help with menu price changes:
- Every distributor is notified by food brokers and processors in advance of pending increases. Demand that you get the same notifications for planning purposes.
- Almost every delivery you get will have a fuel surcharge on it. If you get a $500 dollar delivery and there is a $5 fuel charge, that is a 1% increase to food costs. Find your average and factor it in your menu.
- Revise your menu to items that are relatively stable. Believe it or not, beef and seafood may fall into this category.
- Menu more high margin entrees that can absorb small increases such as pasta, grains and baked goods. All of these have increased, but still offer exceptional margins.
- Look at your produce. Costs are skyrocketing. Are there frozen or canned items that can substitute for fresh?
- Eggs have doubled in cost. Now might be the time to look at liquid eggs. The increases in liquid eggs has been small compared to fresh eggs. If you factor in labor cost reduction and the six week shelf life of liquid eggs, it may be the time to switch.
- Watch your splits. Most wholesalers charge more for broken case quantities than full cases. If you have the storage, case quantities make sense for more expensive items.
- Finally, your other operating costs are going up. Everything from utilities to cleaning supplies will increase this year. Factor in those increased costs into menu items.
If it’s been more than 30 days since you reviewed your menu pricing, I can assure you your best guess at the time is wrong unless you had all the factors above projected. In my operations food costs alone have increased 10% over 2007 and more are coming.
Your customers are in tune with price increases. They have seen it at the grocery store, the gas pump and other restaurants. It is easier to implement increases while the subject is nationally publicized. Raising menu price points is always risky, but in this economic situation, it has become necessary to survive the next few months.
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