Restaurants are getting creative with menus to counter soaring food costs
Long Beach Fish Grill’s Menu Board
Source: Jessica Dinglasan
Jessica Dinglasan is the owner of Long Beach Fish Grill, Long Beach, California. She never wrote “market price”, on her menu.
Now, the halibut she purchases costs over $30 per pound. It is also nearly twice as expensive than a year ago. In addition, her 13-gallon canola oil container she buys to make French fries or crispy fish has increased from $19 up to $42.
She stated, “I need to determine market prices.”
Restaurants are making changes to their menus in order to reduce the need to reprint every week as food and labor prices rise. However, price increases are only so effective. With weekly fluctuations in the cost ingredients, frequent reprinting would be necessary. This is where menu engineering steps in.
Receiptionists can analyze sales data to decide what menu items they should emphasize and how much to price them. Smart menu designs can help keep customers returning or aid in kitchen operation.
Quickly, a larger font or a more eye-catching box can translate to dollars.
Michele Benesch of Menu Men, President of Menu Engineering, stated that “Menu engineering” is how a restaurant’s order process can be made most profitably.
Sean Willard, who is a Menu Engineers specialist in menu engineering, says that most diners take less than 90 seconds to browse the menu. Restaurants are under pressure to provide customers with fast and easy menus so they can order the food that is most appealing.
For months the restaurant sector has had to deal with increased commodity costs as more people are eating out and their supply chains are slowing. Russia’s aggression against Ukraine has worsened this problem, driving up gas prices and creating a global shortage of soybeans, wheat and corn.
“Inflation isn’t going down. Dinglasan said that while I believed it would, there was now a war.
The Bureau of Labor Statistics’ Consumer Price Index shows that food prices increased 7.9% last year. Not all menu items feel the inflationary impact to the extent that they do.
Benesch stated that chicken has increased, but not in the same way as beef or fish.
This puts steakhouses and seafood restaurants in an awkward position. Ruth’s Hospitality GroupFor example, the company is estimating that its food prices, which exclude beef, will increase 16% in its first fiscal quarter. If you add beef prices to the equation, the Ruth’s Chris proprietor expects the price of its ingredients will rise 24% over the previous year.
In steakhouses that have higher prices, diners who are budget-conscious may choose to eat a smaller filet mignon. Benesch assists these restaurants in enhancing their menus to encourage customers to try more side dishes or appetizers.
“Maybe featuring the wedge or a Caesar salad or the potatoes au gratin … Padding that bottom line does make up the difference,” she said.
Matt Piccinin was co-founder of Shuckin’Shack Oyster Bar with 16 locations, including restaurants on the East Coast. According to him, he has now listed all his seafood items as market prices. This is similar to Long Beach Fish Grill. The chain offers about half its menu as seafood.
Piccinin says that some of Shuckin’ Shacks menu items, such as its crab balls are loss-leaders. Piccinin says that the price of crab has skyrocketed and that the chain won’t pass on the extra cost to its customers. It hopes that the customers who enjoyed this popular appetizer will return to purchase other more lucrative menu items.
Willard stated that almost all his clients have reduced their menus over the past few months in order to improve inventory control.
High prices don’t mean that you should buy expensive ingredients for just one recipe or decoration. Willard stated that one customer stopped using pickles for garnish because the prices rose.
In the kitchen, a slimmer menu can also help. This may happen because of higher labor costs and fewer workers.
Olive Garden’s parent company Darden RestaurantsThis restaurant was one of the first to cut pandemic-related dishes and has remained true to its strategy.
In late March, Darden CEO Rick Cardenas and the incoming CEO said that the menu reduction was a good thing. And we keep improving. We take off another item if we add items.”
Inflation can be managed better by the largest restaurant chains using strategic price rises and future contracts to hedge against it. Future contracts allow them to purchase their ingredients up until a year ahead of time.
Sara Senatore, a Bank of America Securities Analyst wrote last week in a note that food inflation was the most closely linked to growth in industry sales.
Senatore stated that food prices rise immediately in supermarkets, while smaller increases in restaurant prices are slower and less costly. We believe companies who price at inflation should have the ability to absorb cost increases efficiently, while businesses that are lower can increase traffic.
Publicly traded restaurants chains don’t care about the menu. Chipotle Mexican GrillScott Boatwright was the Chief Restaurant Officer at The Chain. He stated that the company is trying to strategize about limited-time menu options.
Boatwright explained that “we are looking at future limited-time offerings and margin impact with an eye to supply chain, specifically to products which will see significant inflation” and moved LTOs to move those LTOs to be either on balance with margin or margin accretive.
As menus change constantly, pandemic changes in consumer behavior offer restaurants more flexibility and cushion for their bottom line.
Many eateries switched from physical menus to digital QR codes that direct diners to online versions — no need to wipe down or throw out physical menus each time after use. Benesch explained that traditional printed menus are being reintroduced by many businesses and encourages clients to retain the QR codes as they can be used to create loyalty programs or daily specials.
QR codes will be around for a long time. Benesch noted that QR codes can be used as marketing tools. They are also great for highlighting specific menu items.
Benesch stated that she encourages restaurants not to use the menu to lure customers. For example, pushing a dessert cart around the restaurant so everyone can see their treats.