Taylor Wells Advisory Firm - Make Your Pricing World Class’ Post

Inflation may be easing, but restaurant owners are still grappling with high prices. Despite the decline in inflation rates, local venues are charging more. For example, a simple cup of coffee now costs $6.50 in the CBD, up from $4 recently. Local venue owners express frustration over the ongoing need to keep prices high. Rising leasing costs, coupled with interest rate hikes, have squeezed already narrow profit margins. Despite efforts to absorb these increases, businesses find themselves gradually passing on expenses to customers. The impact of rising raw material costs is also significant. Beer kegs have surged from $300 to $400, and essentials like fruits, vegetables, and meat have seen substantial price hikes. These mounting expenses compel businesses to carefully adjust their pricing strategies to remain viable. The challenge is balancing affordability for customers while ensuring business sustainability. Regular price adjustments are crucial for covering operational costs and maintaining quality. However, merely passing these costs onto consumers risks alienating price-sensitive patrons and potentially decreasing foot traffic and revenue. Ultimately, this situation highlights the complexities businesses face in setting menu prices. Value-based pricing can help address these complexities. 

The Daily Mail published an article on menu price inflation 📈 over the weekend, showing a 30% increase on many highstreet brands. And as not many restaurants 🍽️ are posting record profits , what has been going on? 🤷♂️ CPI inflation for the period in question is up around 20%, but that is not a true representation of costs for a hospitality business. Energy is obviously a big impact, with many businesses seeing energy costs more than double (and lots still stuck in high energy contracts for many more months). Wage inflation has also been huge - the National living wage has moved from £8.21 in 2020 to £11.44 come April (39% increase). And food costs 🍔 are up 25% - 35%. So it's no wonder the menu prices have moved as well. But you can't get away from the fact that going out feels more expensive now than it did a year or two ago 💸. And that will impact consumer behaviour. We will see menu price increases slow in 2024 and potentially reverse in the casual dining sector where customer attraction / retention is going to be challenging. https://lnkd.in/eiGerEbZ

🔺 Inflation is Straining Restaurant Operations 🔺 The sharp rise in food and labor costs is dramatically impacting restaurant profitability. Wholesale food prices have soared by 13.2%, and labor costs have risen by 15.1% from December 2020 to December 2021. With restaurants operating on tight pre-tax margins of just 3-5%, these increases are unsustainable. 💼 Key Challenges: • Food and labor costs each take up around 33% of every dollar in sales. • Rent, utilities, and other operating expenses account for 29% of sales. • 88% of operators report higher food costs as a percentage of sales compared to 2019. At MTIPLY, we understand these challenges. Our solutions help restaurants maximize their wholesale food ingredients and improve sales by adding virtual restaurants. By leveraging our innovative strategies, you can navigate these tough times and boost your bottom line. 📈 Interested in learning how MTIPLY can help your restaurant thrive? Let’s connect and discuss how we can support your success. https://lnkd.in/gZVVvNjB #RestaurantIndustry #FoodService #VirtualRestaurant #Inflation #MTIPLY See Article Below👇 https://lnkd.in/gTjmXt3g

https://ow.ly/mqlA50RfGYS Consumers are not happy about the surging prices in #FastFood #restaurants? If #labor cost is an issue, will it be cheaper to eat at a robotic #restaurant? #HR #HRM #Economy #Inflation #Market #FoodBiz #Retail

💰Menu prices have risen faster than inflation and now consumers are feeling the financial pinch.. Our latest reports reveal how both American and Canadian diners are increasingly sensitive to menu price hikes (and just how high they’re willing to go). Learn more about today’s cost-conscious consumers and the implications for the restaurant industry 📈🍽️ Download our Canadian 🇨🇦 report: https://bit.ly/3PRPryC Download our American 🇺🇸 report: https://bit.ly/4cP2cUP

The rate of inflation slowed to an annual rate of 3.4% in February, reflecting a downward effect from restaurants and cafes, where prices rose by 0.7%, compared to 2.1% in January https://lnkd.in/e5pZMvse

To my U.S. restaurant friends: the CPI numbers were released this morning, and they look good. Inflation is moderating, and this might directly affect your linen rental bills. Many linen rental companies use the CPI to determine your price increase. A lower CPI number means less of a price increase. So many restaurant managers I speak to don't know the terms of their linen rental contracts, or worse, don't realize they have a contract at all. Most do! And knowing the terms can be the difference between throwing money away, and bolstering the bottom line. #restaurants #restaurant #restaurantmanagement #restaurantmanager #operations #money #bottomline #hospitality #hospitalityindustry

Sales of food services and drinking places amounted to $93.9 billion in April 2024, up 5.5 percent from the same month a year ago. While some of that increase can certainly be attributed to higher prices on the menu, the Bureau of Labor Statistics reported that the Consumer Price Index for Food Away From Home increased 4.1 percent year-over-year in April, indicating that the increase in sales can only party be attributed to higher prices.

**Americans Didn't Let Inflation Spoil Their Appetite** Despite inflation, Americans continue to dine out. The restaurant industry is expected to hit $1.1 trillion in sales this year, employing over 15 million people. Data shows a 5.5% increase in sales for April 2024 compared to last year, with growth outpacing menu price hikes. The industry has bounced back impressively from Covid, with sales returning to pre-pandemic growth. 📊 This chart shows the resilient growth of food services and drinking places in the U.S. #FoodAndHospitality #Inflation #DiningOut #RestaurantIndustry #EconomicRecovery

Eating and drinking places registered total sales of $94.8 billion on a seasonally adjusted basis in June. That was up 0.3% from May and represented the third consecutive monthly sales gain, after May’s preliminary reading was revised significantly higher. While the trendline during the first half of 2024 was only modestly positive, the revised data paint a much more positive picture than was originally reported last month. Coupled with the continued resiliency of the labor market, this makes it likely that consumers will bend but not break during the second half of the year. The recent uptick in restaurant sales was primarily driven by rising menu prices. As a result, real eating and drinking place sales were essentially flat during the first half of 2024, after adjusting for menu price inflation. Overall, June’s sales volume of $94.8 billion was a full $2 billion below the November 2023 peak, in inflation-adjusted terms. For the original National Restaurant Association post from my colleague Bruce Grindy, see https://lnkd.in/eRY6u3N6. #retail #consumer #retaurants #spending #sales #economy