As a restaurant or café owner, managing rising menu costs can be a challenging and ongoing process. 2023 has posed many challenges with rising labor costs, food and logistic costs, as well as the pending inflation in North America. However, there are various creative ways you can mitigate the impact of increasing food costs on your bottom line. We work with hospitality businesses to put in a year-long strategy to optimize their menus and features, as well ensure continued profitability.

In this article, we will explore strategies you can implement to manage rising menu costs, including raising menu prices, shrinking your menu, emphasizing add-ons, reducing portion sizes, leveraging menu engineering, analyzing sales data and food costs, re-evaluating your inventory needs, and negotiating with suppliers.

1. Raise Menu Prices

The most obvious solution to manage rising menu costs is to increase menu prices across the board. However, as a savvy restaurateur, you know that some guests may not react well to seeing higher prices on your menu. You’ll need to get creative to increase your restaurant menu pricing without giving your guests sticker shock.

A smart way to do this is by offering highly seasonal items, like seafood, at market price instead of a set price. Using a market price can help you mitigate food costs if the price you pay for a certain item fluctuates wildly from one week to the next. Guests generally already expect to pay a premium for items like fresh lobster or a specific cuts of beef.

2. Shrink Your Menu

If you don’t want to raise prices on your menu, another way to keep food costs down is to operate with a small menu. Shrinking your menu can help you lower costs by reducing food waste from unpopular menu items and enabling you to place more bulk orders, which can come with major savings.

In 2021, Forbes reported findings from a study by food industry research firm Datassential that showed 60% of restaurants surveyed had slimmed down their menus that year. 

Trimming your menu items helps you do more than just mitigate increasing food costs. It can also streamlines your back-of-house operations, which is especially useful if your kitchen is running with fewer cooks due to higher labor costs or a staff shortage.

3. Emphasize Add-Ons

Encouraging guests to order more items to raise your restaurant’s average transaction size can also help offset higher ingredient costs. For instance, if you have steak on your menu, you could keep the cost of the main dish itself the same, while rounding out your menu with extra side dish options. Offering a shrimp skewer or baked potato is an excellent way to tempt customers to add to their meal.

Or, try giving guests more ways to customize their salad or bowl, like adding a grilled chicken breast or smoked salmon for an additional cost. That’s exactly what Earls and Cactus club offer – Delicious Options!  By offering add-ons, restaurants can increase their revenue per guest and offset the impact of rising food costs.

4. Reduce Portion Sizes

Unless you operate a fine dining venue, restaurant portion sizes are notoriously large, especially in the Canada and the United States. So, if possible, it’s a wise move to see if you can make any of your own portion sizes smaller without compromising the guest experience.

Reducing portion sizes is known as “shrinkflation” and is happening more and more in the industry.

Overall, Restaurants and Cafes need to take action now to minimize the impact of rising costs.  When was the last time you calculated your food and beverage costs?  Do you know EXACTLY where your business is currently operating?  If not, the time is now!  Set a goal and ensure ALL menu items are providing the profit you want and need to run a successful business.  

Pinnacle Consulting works with hospitality businesses to increase profitability and optimize their menus for long-term growth.  We help create innovative seasonal offerings that maximize profit and keep your customers coming back again and again!  Message today for a free consultation to learn more about our services and how we can help make 2023 the most profitable year yet, for your business!  Contact us today! – Pinnacle Hospitality Consulting