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In the bar, restaurant, and hospitality industry, the flow of food on the food supply chain is integral to business success. Because of the vital nature of food in the industry, the term food inflation carries some nerve-tingling weight.
Food inflation–meaning rising costs and scarcity of food items–can have a direct impact on the profitability of these industries and individual businesses. Within these businesses, from the bar owner to the inventory program manager, having a working knowledge of food inflation and how to combat it is crucial.
In this blog post, we’ll be walking through tips and tricks to combat food inflation and related concerns. You can’t avoid food inflation, and on a singular business level there’s not much that can be done to reverse inflation, but there are steps you can take to work with it.
Even in times of high inflation, these 10 tips can help you stay afloat and even get ahead. When it comes to how to deal with inflation in a business, these 10 tips are the place to start.
10. Offer Limited Menus
Limited menus can mean anything from seasonal menu items, to weekly specials, to unique happy hour deals. Offering limited menus helps you combat food inflation by giving you control over what you include in your promotions down to the last detail. You can plan your menus around what is available, and make unique tweaks as needed.
9. Find Alternatives
Finding alternatives for your food options can apply to limited menu items as well as everything you serve. It can also apply to liquor and other beverage options. You’ll get used to the 86 meaning rather quickly. You'll also be able to work with food inflation issues if you always have a few alternatives in mind.
8. Reduce Food Waste
Reducing food waste starts in the kitchen, and extends all the way to your budget and potential food inflation problems. If you can find ways to waste fewer cuts of steak, or keep complimentary bread sealed, you can hold onto fresh food longer. That way, you'll have it on hand when you need it.
"Key Takeaway: Having a working knowledge of food inflation and how to combat it is crucial."
7. Rely on Restaurant Equipment
Relying on the best restaurant equipment, from deli slicers to storage containers, will help you reduce food waste. It will also give you a better idea of what you have on hand. Overall, using the right restaurant equipment helps you in several other areas of combatting food inflation.
6. Cut Non-Food Costs
Cutting costs is always tricky, no matter what area of the business you are reducing. When it comes to dealing with food inflation - the higher prices of the available food - however, it’s worth looking for other areas to cut from. This could be printing single use menu options on cheaper paper, or buying more supplies in bulk when you can.
5. Examine Your Supply Chain
While the term supply chain is often used as a blanket definition of one type of chain, there are a few options out there. In some cases, you'll be dealing with ongoing food inflation issues due to simple food supply chain issues. When that is the case, it might be time to look into other options for vendors and shipping choices–maybe even bulk shipping.
4. Raise Costs with Care
Raising costs is something that should be done with great care and consideration. By choosing the right items and not raising costs by an extreme amount, it can be an effective way to balance with food inflation. The ideal profit margin is 70%-with 70% of the cost of an item being pure profit. For the most part, you can lower this to 60% and still make a healthy profit.
3. Optimize Menu Items
Optimizing your menu items is all about planning your menu around the ingredients and standardized recipe options you can expect to have on a regular basis. This strategy is the close cousin of making limited menu options. However, instead of using limited ingredients, optimizing your standard menu means you’re able to mix up delicious dishes with reliable ingredients, and pair them with well drink options.
2. Adjust Operational Efficiency
The operational efficiency of your business can have a direct effect on your menu options, your budget, and your ability to handle food inflation. From implementing order management software to using an inventory management system, boosting your operational efficiency is a must.
1. Improve Inventory Practices
Food inflation issues are as close as can be to inventory practices and potential issues. If you’re running into food inflation problems, or you see them coming up, evaluate your inventory process, and see where you can improve. Even with something as easy as new inventory management software, any improvement will help.
Frequently Asked Questions About Food Inflation
Food inflation is quite the inflated term when it comes to the weight it throws around with food service and hospitality businesses. Of course, it’s not something any business owner or manager wants to deal with.
The fact of the matter is, though, that it will come up, and it’s better to be prepared for it. Our answers to these frequently asked questions will shed some light on the subject, and give you food for thought.
What Causes Food Inflation?
Food inflation is most often caused by supply shortages. The demand for food doesn’t change dramatically apart from seasonality in business for menu items. When inflation occurs, it’s because the supply of a certain food is low, with the demand remaining the same. There’s no way to increase the supply right away, but it can be planned for with alternative menu options.
Will Food Prices Go Down In 2023?
According to the USDA consumer index report, while inflation for 2023 is expected to be lower than in 2022, inflation is still predicted. To be precise, between June and July of 2022 food prices increased by 10.9% over that same period the previous year.
In 2023, that number is expected to be around 6.5 to 7.5%. While this is unfortunate, it’s important to know, so you can plan to work hard against inflation in 2023.
How Does Inflation Affect Restaurants?
Inflation affects restaurants by raising the cost it takes to maintain types of menu items. Due to food inflation, restaurants end up having to find solutions like the 10 tips in this blog post. From strategically raising prices to finding cheaper alternatives, inflation puts extra work on the restaurant management team.
Does Inflation Affect Fast Food Restaurants?
Yes, inflation absolutely affects fast food restaurants. Fast food restaurants are often grouped separately from fine dining establishments or even quick service restaurants. That said, they rely on the same food and agricultural supply chain management to stay in business. Food inflation hits fast food restaurants just as hard as any other restaurant.
Food Inflation: Like a Bad Soufflé
There’s no doubt about it, food inflation is something you have to keep a close eye on in the hospitality and food service industries. With these 10 tips and operational efficiencies, however, there’s no reason why food inflation needs to rule your business. Plan for it, work with it, and know that it’ll come and go while you work to make your business last.
Come back to the BinWise blog for more solutions for food inflation concerns. You'll also find beverage inventory software management coverage and basic bar inventory information. Or, visit our sister site, the BlueCart blog, for eCommerce business solutions and order management advice.