Mark Kuperman, chief operating officer of Revenue Management Solutions (RMS), provides 10 top tips to surviving the rise in food prices in the bar and pub sector.
According to the latest index from the Office for National Statistics, food inflation in the UK hit its highest rate in three years in June. Food and non-alcoholic beverage prices were 2.3% higher than a year earlier, up from a rate of 2.1% in May. Therefore, pub and bar operators need to get wise to this major and growing expense without causing harm to their business.
Here are 10 top tips for pub and bar operators looking to reduce costs without impacting their bottom line:
1. Rethink the menu
It may sound like an obvious first step, because it is something pub and bar operators do every day, but executive chefs need to be taking a hard look at re-engineering their menus. This isn’t about saying goodbye to quality produce, it is all about using fewer ingredients more creatively and indeed wisely. This will present operators with ways to cut costs in a way that will be invisible to customers.
2. Don’t try to be everything to everyone
Streamlining the number of dishes on offer to customers will help operators reduce food costs while also improving execution.
3. Do the maths on operational efficiency
Chefs should look at the operational impact of specific menu items, to see if the way certain dishes are prepared impacts on profitability or throughput. There are menu items that are very profitable, but actually slow down service. It’s about understanding operationally where those bottlenecks occur.
4. Understand price barriers and which ones your customers are reluctant to cross
For both independent and multi-site pub and bar operators, there are certain price barriers consumers are reluctant to cross. Chefs would be better off re-engineering portion sizes or the ingredients served with a dish, than crossing barriers that may be prohibitive to customers. Multi-site operators should firstly explore crossing barriers with their least sensitive dishes, in their least sensitive locations.
5. Be unique
If a pub or bar operator offers burgers or a pasta dish served with chicken in a cream sauce, customers are going to have an idea in their minds about what that should cost. However, if operators get creative with menu items, using lesser-known ingredients, customers are less likely to have a frame of reference for price, which in turn means they will be less likely to balk at any price increases.
6. Leverage loyal customers
Unlike chains, independent pub and bar operators have a lot to learn about who their customers actually are. Savvy operators need to be reaching out to their customers through social media or point-of-sale data to provide incentives for repeat visits.
7. Combat rising costs with greater efficiency
Operators should be turning to technology, not only to deliver on that all-important customer experience, but also to get ahead of the competition in terms of increased efficiencies. The beauty of technology for pub and bar operators is that it seamlessly steps in as a silent partner to take care of all aspects of the customer journey, leaving staff to deliver on the experience.
8. Keep price changes small and more frequent
For many operators, price increases are inevitable. However, in an environment of increasing costs, this is much easier for customers to swallow if done in small increments over time.
9. Change your hours of operation
A pub or bar operator open for breakfast, lunch and dinner may not need to be open between 3pm and 5pm. Therefore, there is room for operators to better align their opening hours and in turn, staffing requirements. This is where independent operators reap the benefits of flexibility.
10. Don’t cut staff
Cutting staff impacts the overall pub or bar experience. There’s the saying, ‘food brings them in and service drives them out’ – it’s important for operators to remember that cutting back on service is not the answer.
Article originally published on August 3, 2017 by Bar Magazine