How to Fight Inflation at Your Restaurant
by Seated Team July 29, 2022
Another Challenge for Operators…
Inflation is on every restaurant operator’s mind in 2022.
Between higher costs, slimmer profit margins, and budget-conscious consumers, it’s easy to wonder: how are other restaurants dealing with it all?
So we found out.
We surveyed restaurant operators across NYC, Dallas, Atlanta, and Boston to get the inside scoop on inflation’s impact—and what they’ve done to fight back.
While three out of four operators report raising their menu prices in response to inflation, that’s not the only strategy that can help you maintain—or improve—your profit margins.
Here’s what our survey respondents had to say!
1. Focus on low-cost marketing
DIY marketing solutions can offer a powerful lift for a small time investment—especially as people search for new restaurants not just on Google, but on social media.
Curious diners use networks like Instagram and TikTok to get a sense of not just a restaurant’s cuisine, but its aesthetic and mood. Restaurants that report success with social media, like NYC’s Merakia and Villanelle, use it for highlighting quality photos and videos of their dining rooms as well as their menu items.
(Want more visibility on social? Working with a local influencer, like a food blogger, can give you a boost.)
Don’t underestimate the potential of a tried-and-true tactic like email marketing, either — marketing blasts to existing customers were named by the restaurants we surveyed as one of their most effective marketing channels.
QR code menus and POS platforms like Toast provide valuable opportunities to capture emails from your guests, opening the door for ongoing marketing that keeps them coming back—especially when you offer loyalty perks for return visits.
2. Embrace incentives and special offers
While increasing menu prices is a useful tactic for fighting inflation, doing the opposite can be just as impactful.
With restaurant-goers feeling the pinch of inflation, specials like happy hours and other incentives are more valuable than ever for bringing guests in the door and turning them into loyal, returning customers (leveraging a modern loyalty program is one of the most popular strategies for successful operators, and is a great way to keep people coming back).
NYC’s Osteria Morini offers a special “Summer Fridays” happy hour that starts at 2pm, targeting professionals who take Friday afternoons off in the summer months. Meanwhile, NYC’s Festivál offers weekend discounts on espresso martinis, capitalizing on the iconic cocktail’s recent surge in popularity.
Targeted specials like these are opportunities not only to encourage ordering more while prices are lower, but to leave a strong impression and bring those guests back when menu items are at full price.
Other operators report specifically discounting high-margin menu items like pricey wines that have dipped in popularity as guests look for opportunities to save.
Ultimately, strategically decreasing some of your prices is a valuable complement to increasing others—and one with the potential to pay off exponentially.
3. Introduce new revenue streams
The COVID-19 pandemic forced many restaurants into a crash course in offering takeout, but as consumers increasingly return to in-person dining, pickup and delivery shouldn’t fall by the wayside as an unnecessary—or unprofitable—revenue stream.
Direct online ordering continues to surge in popularity as a lower-cost alternative to solely relying on expensive 3rd party marketplaces (not to mention that direct ordering platforms give you a valuable opportunity to collect customer email addresses for ongoing marketing).
Meanwhile, other platforms can help fill the empty tables in your restaurant and increase your overall occupancy—even during times that are typically slower.
An occupancy management tool like Seated offers guests incentives to dine when you have the most empty tables, allowing you to target specific days and shifts when you want to increase your dining room’s occupancy. Those incentives can also apply to takeout orders placed via direct online ordering, which has proven useful for restaurants like Takumen in NYC.
“I’m feeling confident that we can ride the wave [of inflation],” says Takumen General Manager Henry Aberle. “Part of the solution will be creating new sources of revenue, which is why we’ve partnered with Seated.”
Minimizing downtime and slow shifts by increasing your guest volume for both dine in and takeout is a huge opportunity for fighting back against profit losses—and as 65% of operators report a decrease in sales and bookings because of inflation, it’s one that’s becoming more vital for every restaurant.
4. Adjust Your Menu
While many restaurants continue to use the cost-effective QR menus they adopted during the height of the pandemic, the contents of those menus increasingly show inflation’s influence.
70% of operators report that their meat costs have been impacted the most by inflation, and many of them have responded by trimming meat from their menus.
NYC’s Rabbit House Omakase & Japanese Bar reports that seafood has been their most-impacted food cost, and has responded by shortening its menu.
“We’ve upgraded our menu,” says Rabbit House owner Yoshiko Sakuma, “and a lot of people have loved it so far!”
Another NYC spot, Two Hands Nolita, reports a similar experience with introducing more veggie-forward menu options, particularly as updating the menu with new items creates an opportunity to factor inflation into pricing from the get-go.
“Response to our new menu items has been good,” says Two Hands Operations Manager Lucy Thom. “And prices are new for these items, so there hasn’t been a real response [related to cost increases].”
The high costs of inflation—particularly as they impact meat products—is creating a golden opportunity to refresh your menu instead of just increasing its prices.
5. Trust Your Customers and Be Honest
If there’s solace to be found in economic inflation, it’s that no one is exempt from its impact.
76% of restaurant operators report that they’ve increased their menu prices in response to recent inflation—and consumers generally react sympathetically to the changes.
“We adjusted our prices up, and customers haven’t commented or noticed the increase,” says Brandon Baessler, General Manager of Atlanta’s Burnt Hickory Brewery.
Channing Johnson, Marketing Manager of NYC’s Maya, reports a similar lack of response. “We continue to adjust our menu prices quarterly,” says Johnson. “It seems to be the norm, so no one has been too upset.”
Other operators agree: consumers understand that inflation impacts everyone.
- “Any mention of inflation, and people are understanding.” — Henry Aberle, GM at Takumen, NYC
- “Some of our prices went up 100-200 percent. Nobody was shocked.” — Kevin Takarada, Owner at MakiMaki Sushi, NYC
- “We only increased prices twice during the pandemic. People understand, and it’s expected with inflation.” — Eric Lee, Owner at Dim Sum Go Go, NYC
While some operators acknowledge and proactively communicate inflation-driven menu changes to their guests—usually in the menu, on social media, or via email—others simply let their prices speak for themselves. Either way, guest response suggests that consumers respect the need to change prices and adjust menu items.
Make A Plan and Be Intentional
At the end of the day, every operator needs to think about which of these strategies that make the most sense for their business.
While no two approaches will be quite the same, being intentional with your strategy and thinking through how each decision, from increasing prices to shortening menus, will impact your customers is key to avoid negative effects down the road.
If you want support to ensure you continue to bring new people into your restaurant even as demand decreases, reach out to the team at Seated for a full consultation and customized approach for your business.
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