Restaurant Menus Shrinking and Costs Rising

The global food and beverage industry has been one of the hardest hit due to government restrictions to help stop the spread of COVID-19. F&B sales have reached unprecedentedly low levels over the last few months. With ongoing social distancing measures and general apprehension amongst the public, the reopening restaurants will also be a difficult task.

Over the last few months, many restaurants have scaled back their menus – and those changes may be here to stay.

The Issue with Rising Prices

Restaurant costs are increasing for various reasons, from an increase in costs for ingredients, the need to purchase PPE equipment, extra cleaning costs, delivery costs, lower occupancy, card payment, and more staff absences.

Many restaurants operate on very thin margins, which makes it difficult for them to absorb these extra costs.

In an ideal situation, restaurants would like to be able to pass these costs on to their customers through higher prices or a temporary surcharge whilst we’re having to operate during this tough time.

However, depending on your existing price position, if prices go up, customers may turn to competitors. It’s a very risky strategy and it is likely your customers will not take well to it.

In the United States, for example, while some restaurants have been adding a COVID-19 surcharge, out-of-home food costs only rose by 0.4% according to the Bureau of Labor Statistics.

Why Trim the Menu?

Reducing the menu allows you to order in bulk, achieve economies of scale, less wastage, more efficiency, faster service, and overall increase customer satisfaction.

The items being removed from the menu will be the less popular or more expensive items, and those that affect the least number of customers.

Having an extensive menu with staff shortages can stretch your service levels.

Scaling back menus will take some pressure off restaurants so they can adapt to new social distancing guidelines. It allows restaurants time to reopen with less pressure.

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