How pubs can survive rising food prices

By Nikkie Sutton

- Last updated on GMT

Rising costs: foodservice inflation hit its highest rate in three years in June 2017
Rising costs: foodservice inflation hit its highest rate in three years in June 2017

Related tags Bar Public house Price

Reducing the number of dishes on the menu, tapping into technology and keeping staff at the forefront of the business are some of the ways operators can combat rising food prices, according to data experts.

Revenue Management Solutions (RMS) chief operating officer Mark Kuperman urged operators to "get wise" to price rises without impacting their business.

He said: “According to the latest index from the Office of 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.”

The first tip RMS gave was to rethink the menu and to use fewer ingredients more creatively and wisely as a way for operators to cut costs that is not noticeable by customers.

This goes hand in hand with advice around streamlining the number of dishes on the menu, helping to reduce food costs while improving execution.

Profitability impact

Chefs should also look at the operational impact of specific menu items to see if the way particular dishes are prepared impacts on profitability or throughput.

Some menu items are very profitable but actually slow down service, and RMS explained it was important to understand operationally where those bottlenecks occur.

Understanding price barriers and which ones customers are reluctant to cross is a further way in which operators can reduce costs.

Chefs could re-engineer portion sizes or the ingredients served with a dish, rather than crossing barriers that may be prohibitive to customers.

While important for single-site licensees, multi-site operators should firstly explore crossing barriers with their least sensitive dishes, in their least sensitive locations.

By getting creative with menu items and 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 baulk at price rises.

RMS also advised that, unlike chains, independent pub and bar operators have more to learn about who their customers actually are.

Technology benefits

It urged licensees to reach out to their customers through social media or point-of-sale data to provide incentives for repeat visits.

Keeping along the technology line, operators should use it to get ahead of the competition in terms of increased efficiencies.

The beauty of this for operators, said RMS, 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.

For many operators, price rises are inevitable but in an environment of increasing costs are likely to be easier for customers to swallow if carried out in small increments over time.

Changing the pub’s hours of operations can also benefit operators as it aligns staffing requirements and can reduce costs.

Lastly, RMS called on licensees not to cut staff as it impacts the overall pub or bar experience for customers and said it was important for operators to remember that cutting back on service is not the answer.

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