A recent survey of middle-income households shows 57% anticipate buying fewer takeout and dine-in meals, reported Restaurant Business (April 20). At the same time, restaurants are struggling to keep prices in check. With these factors in mind, how can restaurants retain and provide value for price-conscious consumers?
The Food Institute spoke to Dan Rowe, CEO of Fransmart, about what restaurants can do.
“After just getting a footing after the COVID crisis, restaurants are now grappling with inflation and customers having less discretionary income for eating out,” said Rowe. “Successful restauranteurs will need to adjust in a way that allows them to operate at a profit, but without negatively impacting the customer experience.”
One of the first places Rowe recommends starting is making a menu that makes sense to consumers. “If an item is hard to get or expensive, add new items that are easier to get and more profitable,” he said. “Engineer the menu to sell more items that are higher margin and require less labor to produce.”
Additionally, he recommends looking beyond food and labor costs to see where operations can be optimized without impacting customer experience. For example, is there a lower cost credit card processing service or cheaper delivery option that can be used?
“This is also a time to drive new, incremental sales over your existing expense structure to create more free cash,” said Rowe. “You already have a certain labor, rent costs, utilities, etc., if you double sales over an existing cost structure, it generates more profit to help offset the inflation impact.”
Rising ingredient prices have also forced fast-food chains to reconsider their deals.
For example, Wendy’s has downgraded one of its most popular deals, reported The Charlotte Observer (April 23).
The fast-food chain limited its 4 for $4 meal item to only a Jr. Cheeseburger, when previously customers could swap that out for a double burger, or a chicken sandwich. The 4 for $4 remains on the menu, but Wendy’s has pushed sandwich choice into its $5 Biggie Bag.
Meanwhile, Taco Bell has been testing a $10 “Cravings Meal,” which includes two Chalupas, two Beefy 5-Layer Burritos, two Chips & Cheese, and two large fountain drinks. The deal is essentially a doubled-up version of what you’d typically get in one of their $5 My Cravings Box, encouraging consumers to buy more food.