How to Manage Labor and Food Costs While Growing Your Franchise
It’s no secret that food prices have been rising significantly. There are several major factors fueling inflation and the sharp increase in food prices, including the pandemic, supply chain disruptions, and increased fertilizer and fuel costs. The Russian invasion of Ukraine has jeopardized the global supply of grain, sunflower oil, and other core commodities. All of this means that restaurant owners must cope with pricier inventory. On top of that, labor costs are also rising, thanks to the elevation in the cost of living.
Here’s a look at how you can continue to grow your restaurant franchise while keeping food and labor costs manageable.
Capitalize on the desire for quality
Surprisingly, the cost of eating at home has been soaring faster than the cost of dining out. You can take advantage of this and entice more people to eat out at your restaurants by helping them to justify the decision to dine out. One effective way to accomplish this is to sub in higher quality ingredients—and then advertise the adjustment. For example, if you sell burgers, offer a brioche bun instead of the usual white roll.
Launch new promotions
During times of high inflation, savvy consumers are always on the lookout for a great deal. Use the opportunity to craft new promotions in order to fill more seats. For instance, consider offering early bird specials to extend the peak dining hours.
Reduce portion size
Restaurants customarily provide diners with large, heaping plates of food, quite a bit of which ends up wasted. Consider reducing portion sizes slightly. If you’re concerned that your diners might be upset about the change, it may be helpful to purchase new, smaller plates and bowls that have a similar appearance as the old ones.
Substitute ingredients
Another option is to swap out certain, pricey ingredients for less expensive ones. Try to do so in a way that doesn’t draw attention. Alternatively, you may want to increase the portion of certain meal components that are less expensive (e.g., breadsticks) while decreasing the portion of the more expensive components (e.g., meats).
Raise prices, carefully
If your profit margins are still less than desirable, you may need to consider raising prices. Price changes are what consumers will notice most, so do so carefully. It may not be wise to raise prices on all menu items. Instead, consider testing an increase on a couple of the most popular items. If diners are already in love with those particular meals, they may be willing to continue ordering them despite the increase.
Manage labor costs with caution
By and large, restaurant employees are some of the hardest workers in our economy. They’re on their feet all day doing a demanding job and dealing with customers who may not always remember to use their manners. It’s crucial to pay restaurant employees well to help them cope with rising inflation. It’s not generally recommended to cut employee wages, as staff turnover can cost a restaurant franchise more money. Instead, consider the following:
- Use POS technology to increase efficiency.
- Crunch the numbers to decide if hiring delivery drivers is really worth the revenue that delivery orders bring.
- Track peak service times for each day of the week to better inform your staff schedule, and make staffing adjustments as needed.
Would outsourcing franchising tasks alleviate your burden?
Pinnacle Franchise Development is comprised of a team with over 40 years of combined experience in the franchise industry. We provide outsourced franchising services to all types of businesses, including companies that are just beginning to explore the franchising process and those that have been established for many years. From franchise lead generation to sales development to marketing, our talented team will elevate your brand and drive you toward greater success. Contact Pinnacle Franchise Development today to request a consultation.
