*For Restaurants, Higher Prices and Thinning Margins
Restaurant menu price inflation hit a 39-year high in November. No operator was surprised by this. “I’m surprised it’s that low,” one said.
Despite this, restaurants are watching their margins thin, meaning operators feel themselves unable to raise prices enough to maintain their prior profitability.
That suggests to us operators are being more mindful of their charges than it seems. They’re raising their charges by quite a bit—fast-food prices, in particular are up almost 8% year-over-year. That an industry cannot recapture lost margins when raising prices almost double digits is unusual, to say the least, and speaks to the level of inflation there is in the system.
Labor costs have taken off. Wage rates are up 14% over the past year, almost three times that of other industries. Wholesale food prices are also up in the double digits.
That means operators’ two biggest costs are up well into the double digits, meaning the 8% price increases at fast-food restaurants need to be almost 50% higher for them to recapture lost margins.
An additional 4% price increase on its own would represent higher-than-average menu price inflation and otherwise might spark concern of business lost to grocers. In this case, it’s probably the amount needed for operators to maintain margins.
There have been plenty of recriminations on the inflationary movement in restaurants. But consumers have more money to spend, particularly among younger and lower-wage workers who spend more of it on restaurants. And, as we said, the industry is treading more carefully on these price increases than it seems.
The biggest concern by far for operators, in other words, is simply having enough workers to staff their restaurants. For now, people are simply paying the higher prices.
SOURCE: Restaurant Business
* How Has the Pandemic Flavored Food Trends?
Not surprisingly, the pandemic has been a top driver of many food trends over the past 18 months, said Denise Purcell, the Specialty Food Association’s vice president of content and education, during a session on trends that kicked off the show on Monday. Purcell presented trend forecasts from the association’s Trendspotter Panel, which includes a roster of representatives from a variety of different areas of the food world.
Cooking and eating at home became the norm after March 2020 and consumers have developed new cooking skills and preferences they’re expected to carry into the future even as they once again opt for restaurant meals more often.
“Consumers are eager to get back out there, but we aren’t expecting that they’re necessarily going to abandon even some of the skills that they’ve picked up over the past year and a half, we’re expecting to see a mix of cooking and dining out,” Purcell said.
Not every food trend has to do with the pandemic.
Nineteen percent of consumers surveyed said they enjoy shopping at stores that stock products from diverse companies including brands owned and operated by women, people of color and LGBTQ people, and the percentage rises among specialty food fans and Gen-Z.
“In addition to helping support these diverse companies, carrying these products can be a gateway to attract these young consumers,” Purcell said.
Retailers can get an additional boost among younger shoppers with brands that extend their focus on social issues and demonstrate commitments to sustainability, the environment and giving back to the communities that support them.
* Restaurant Recruiting Checklist: You May KNOW This, but Are You DOING It?
We know there are no silver bullet solutions to the current labor crisis. However, there are many restaurants that have developed new recruiting strategies that are attracting more applicants and resulting in more new hires.
Here’s a list of recruiting activities to consider. Some may be new, others you may have used in the past. In either case, maybe it’s time to widen your recruiting net to come into contact with more potential candidates.
Never take any hiring decision lightly. Who you hire today determines what your company will be like tomorrow. – Mel Kleiman, Humetrics
Be creative, try something new and you may be surprised at what could bring in some new applicants and promising new team members.