Attention Restaurant Owners – Inflation Warning

ST LOUIS, MO (StLouisRestaurantReview) Restaurant owners have voiced concerns over the increase in food cost.  Watch the news.  For months the media and politicians have warned about fears of inflation caused by the influx of federal funds into our economic system.  It was wonderful that consumers supported the federal government, but the support has exceeded the limited necessary to survive.  The excess funds are creating inflation.

The inflationary period will likely be here for several months, maybe a few years, as asset prices will be readjusted.  Wages will increase.  That is great, but rising wages cause greater demand for products and services, resulting in inflation.  Food costs are escalating at rapid rates.

Restaurants have been challenged over this past year by a lack of sales.  Now, the sales are returning, but inflation will break as many restaurant owners as the lockdown. So restaurant owners need to know their numbers.

Our advice is:

1. If you don’t have an accounting process and procedures in place, get them fast to know your numbers.
2. If you do have accounting procedures in place; study those numbers
3. If your accounting is lagging in days or weeks before you get your numbers, revise the process to have up-to-date financial results
4. Adjust your menu prices frequently or adjust your portions
5. Do not include free items with meals, like salads – everything needs to be priced to track numbers accurately
6. We highly recommend the QuickBooks Cloud version to integrate with your bank account for real-time updates
7. If you don’t have staff to manage your accounting, get an independent person to help that uses QuickBooks
8. Don’t be afraid to adjust your prices – focus  on quality cuisines, service, marketing on online-sales

Consumers are used to increasing prices.  If they are not, they will soon adjust.  Yes, you might lose a few customers, but you can’t afford to lose your establishment in fear of not pleasing one person. Instead, expand your marketing to attract a new type of customer base.  Online sales are a great tool that is solely responsible for many establishments surviving the pandemic.  Digital marketing is the best value to the expense.

Over 90,000 restaurants have permanently closed.  That number will increase.  Inflationary times on the back of multi-month lockdown have created the largest challenge to the restaurant industry in history.  Prepare for battle.  Be prepared—no room for errors at this point.  If you have survived this long, you are doing something correctly.  However, many restaurants would have already closed had they not had access to the PPP funds.  Changes are that those opportunities will not be available.  You can’t expect those funds to save your business this time.

Now, it is down to business.  You have to do business correct this time, or you will soon be added to the 90,000+ restaurants that have closed permanently.

If you have questions, please email Marty@STLMedia.Agency.