How does inflation affect restaurants?

After what seems like an eternity, people are now getting out there and back in the restaurants they know and love. And restaurant owners are more than happy to see that huge jump in footfall through their doors after the last 2 years. As a busy restaurant owner, you could get lost in the moment, and just be happy with the fact that money is coming in again. But it’s not so simple; life never is. And, in this case it’s the problem of rising inflation that is affecting everything and everyone.

The doom and gloom news stories of rising inflation are offloaded onto us by the media it seems every day. For restaurant owners it poses significant problems especially, as it appears to be hitting them from all sides. The costs of many food items and ingredients in Canada seem to be going up every week. As is the cost of restaurant equipment and materials. Don’t forget the rising costs of employing staff either.

On top of the problems of rising costs, there are ongoing supply chain issues affecting restaurants and all other sectors of industry. Don’t forget that post-Covid, there’s also been a real shortage of labour and problems recruiting staff in the hospitality industry. Also, the finances of many restaurant businesses are still reeling and wobbling from having 24 months of mediocre or non-existent sales.

Those in the restaurant business cannot afford to stand still; they’ve got to adapt and change with the times. When costs are not shifting in your favour, you’ve got to be mindful of how those costs impact on your profit. In the short term, it can be easy to overlook the effect of rising costs on profit, but over time it will become glaringly obvious. The best practice is to be aware of price changes affecting you, and match those costs through increasing your prices.

It’s a fine line of course trying to maintain your customer base while at the same time introducing price increases, but, remember everyone in the industry is on the same boat. An interesting study undertaken by Yelp found that people are proactively searching for higher-price restaurants, which is great news for price conscious restaurant owners. No doubt this trend is a biproduct of the pandemic where people now want to enjoy themselves big time, whatever the cost.

There are many ways that restaurants can change their business practices to adapt to rising inflation. Embracing technology, for example, which cuts down running costs, such as continuing to use QR codes instead of printed menus. Changing the menus, you offer to accommodate seasonal foods that are more in supply and less costly. Offering a food delivery service to customers that runs in parallel with your in-house operations and which helps boost sales. All of these examples can help in absorbing the negative impact of rising costs.

Many restaurant owners now also realize how important social media channels are in promoting their businesses. Establishing social media business profiles will help build and maintain a loyal customer base, and more importantly increase sales. With some effort, businesses can make a real success of this at little or no cost. There are also paid marketing methods available that can boost your online presence and take it to the next level.

CHI is dedicated to keeping up with local and national trends in the Restaurant Industry to help serve our customers better and keep them one step ahead. If you are interested in opening, purchasing, or selling a restaurant CHI Real Estate can help. Get in touch with our team today.