Juliet Chung’s WSJ article illustrates how the run up in the cost of goods is compelling restaurateur’s to adjust their menu offerings.
High oil prices and a world-wide thirst for ethanol have triggered a run-up in corn, feed and transportation costs that is driving up food prices. Restaurant owners last year saw wholesale price increases of 7.4%, the biggest jump in nearly three decades, according to estimates by the National Restaurant Association. Consumer food prices went up 4% in 2007, according to the federal government.
The weak dollar is hammering restaurants that buy such imports as French cheese, Italian olive oil and European wines. Add to that, belt-tightening by customers caught in the slowing economy.
Value = Price + Quality + Quantity + Service, is the value formula. Creative menu ideas are one of the solutions. Smaller portion availability is another way to maintain the current menu without changing the essence of the experience. No one ever found their way to greatness by slashing costs. There is a great deal of pressure from CFO’s telling you to find ways to make up your lost margin caused by the higher cost of goods. As true as that is, the one over riding imperative has to be to enhance the customer experience. When the customer experience falters no amount of cost cutting will avail you.
