6 Ways Restaurants Can Stay Competitive Without Sacrificing Quality or Raising Menu Prices

How to Protect Restaurant Sales While Food Costs Rise & Labor Shortages Continue

Rising food costs and the labor shortage challenge restaurants’ ability to stay profitable. While restaurant prices are increasing faster than they have in decades, owners, operators, and management are taking a hard look at their businesses and developing strategies that can help offset those costs without sacrificing quality.

Why are dining prices rising?

Heard of “Meatflation?” Forbes has reported that the consumer cost of meat is skyrocketing -- meat, poultry, fish, and egg prices are up 11.9%, beef is up 20.1%, and pork is up 14.1%.

Business Insider said it best: "Labor costs are partially the cause of these rising prices. A truck-driver shortage is making transportation more expensive, while restaurants, grocery stores, and factories are struggling to stay fully staffed. Processing plants and farms are facing the same problems. For example, chicken farms don't have enough employees, so they're struggling to process birds quickly."

In this economic climate, fast food chains may opt to keep the price of a sandwich down so their restaurant stays competitive, but that often happens at the expense of clean bathrooms. That's a band-aid reaction, not a well-reasoned tradeoff. This perfect storm of rising ingredient costs and labor shortages forces restaurants to quickly pivot to meet customer demands and stay competitive. They need to find ways to maintain food, service, and physical space quality without first jumping to raise menu prices.

Most businesses, including restaurants, struggle to create opportunities to review what's working and what's not. But market speedbumps force restaurants to get more efficient in every aspect of their business. It may seem like a tall hill to climb, but moments like these help restaurants lay an operational foundation that can better weather changes in the economy and customer behaviors.

Don't think about short-term fixes. Think about reassessing where your investments are going and how a long-term vision can yield positive results in your restaurant beyond just this quarter. Find ways to create new margins without shifting costs to customers.

How to Keep Restaurant Profits Up

Restaurant owners know how to be creative in developing menus and marketing to the public. But having a new set of ideas that can inform a clear plan of action can help owners reach goals faster. So, what are some ways to market a restaurant? Here are six ways restaurants can attract more customers and generate more revenue to offset costs associated with rising food prices and labor shortages.

1. Menu Engineering

Design your menu to highlight profitable items and make them your best sellers. Simplified menus can lower overhead and keep consumer prices in check. Leaner menus help kitchens run more efficiently, shorten employee training, and reduce waste. Menu engineering also involves developing attractive menu items for maximum success and tracking menu items for popularity and profitability over time. In short, menu engineering takes out the guesswork of what items are making money for your restaurant.

2. Improve Operations

Paying more attention to how your restaurant operates may seem a bit obvious. But tracking expenses is even more critical when food and labor markets are rapidly changing.

  • Stay on top of food budgets, waste, salaries, and costs. Make logical adjustments when needed, but be guided by long-term success, not panic.
  • Keep informed of changes and trends in the industry by following trade publications and websites that offer valuable insights that can save you money.
  • Review vendor contracts and make sure they're still working for the business. Sometimes strong relationships can help with agreement and price negotiations. Vendors want to keep your business.

3. Invest in personalized promotions and rewards

Customers love personalized attention. And customized promotions and rewards can help bring more people to your restaurant and keep it profitable. Personalized promotions reach your target customers with the right incentives when they want them most. Upside is a cashback option designed to influence individual customers' purchasing habits and funnel the desire to dine out specifically to your restaurant. It cuts through competitive obstacles and shortens the decision-making process. That's a win for the customer and you.

4. Make ordering and picking up easy

The way customers have dined out during this time has drastically changed. While some pre-pandemic behaviors are returning, the expectations in getting restaurant meals have evolved. It's always a good idea to periodically evaluate your ordering and delivery platforms and methods, including:

  • Online ordering. Make sure your system is user-friendly and getting good traction.
  • Phone ordering. Don't stop taking orders over the phone. Make it easy.
  • Pick-up and delivery. Create a station in the restaurant that separates online orders, phone orders, or third-party delivery pick-ups. Quick fixes like this can help manage meal delivery, save time, and improve customer service.
  • Go where the customers already are. With platforms like Upside, guests can quickly choose your restaurant for their dine-in or takeout experience. The customer will appreciate the cashback option, and you get guaranteed profit—every time.

5. Partner with grocers or corporate events companies

While the goal is to bring more people into your restaurant, sometimes it's a good idea to go offsite. Think about partnering with a local grocery store to provide prepared meals as featured items. Offer to conduct cooking demonstrations to promote the meals. Or work with local companies (organizations with 150+ onsite employees) to go onsite once every week, biweekly, or monthly to set up a pop-up catering table. Employees will remember their delicious lunch and think about your restaurant for the next happy hour, birthday dinner, or group lunch.

6. Raise awareness about your restaurant

Customers have a lot of choices, so it's vital to find new ways to let customers know you're open for business. Plus, the COVID-19 pandemic has changed the way consumers find the products, services, and experiences they want. Many customers now rely on mobile apps to find recommendations and make buying decisions. Apps like Upside are right in customers' pockets, make it easy to reach them, influence their behavior, and incentivize them to choose your restaurant.  

And if you want to reach even more potential guests, take time to review and revamp your social media presence. Are you consistently posting enticing images, promotions, specials, events, and more? Finally, think about creating a targeted public relations effort. Local morning shows are always looking for great content. Consider pitching them a cooking segment with one of your chefs or highlighting a community service project you've undertaken. 

Restaurants have multiple options to attract new customers and earn the loyalty of their regulars. During times of significant change, restaurants can lean into the uncertainty and make positive changes that last. Dust off some old strategies, try completely new ones and work on tactics that can guarantee profits now and for years to come.

Learn more about how to stay competitive without raising menu prices.