When you’re celebrating big occasions, you may feel the need to order BIG. Entrees, appetizers, drinks, and dessert — why not? While out with friends, you may not raise an eyebrow if a receipt is slightly higher than you anticipate. But when you go out that next week and get a hefty bill, you may be curious. Your eyes aren’t deceiving you: Prices have risen, making the cost of going out to eat more expensive.
So, what’s the deal?
It’s not necessarily that restaurants are getting greedy, or that food has gotten more expensive. According to USA Today, restaurants that employ a waitstaff (and not a fast food venue like McDonald’s or Burger King) have prices that have risen 2.7 percent on average. An increase in food prices can be expected at times, but this is more brutal of an increase than most expected. Inflation is usually around 1.6 percent.
The culprit is due to rising rents, insurance fees, and the constant cost of labor.
Since restaurants make money based on the food they sell, raising the cost is one of the few ways they can stay profitable when other fees spring up.
So, does this mean that dining in is on the way out?
Not necessarily. (Because let’s face it — McDonald’s isn’t the best place for adults to celebrate big achievements.)
Only I would want to eat at a restaurant that costs $380 a person 😒
— Ja’don⚡️ (@enerjaee) February 22, 2019
In order to hire great staff members, restaurant owners will need to pay up.
Without good employees, managing your business will get a lot harder — so it’s essential to keep up with labor costs.
Restaurant companies are struggling to manage rising #labor costs, while #recruiting and retaining strong talent.
— RSM US LLP (@RSMUSLLP) February 21, 2019
Learn how restaurant operators are responding and what's working: https://t.co/U7nHd9DqbG pic.twitter.com/nzjHbrjDxL
Maybe this is a good thing — it’s all about perspective.
But if anything, these higher prices may give some initiative for those who frequently go to restaurants or order takeout to really pay attention to what they’re spending. For people who eat at restaurants regularly, sometimes it’s easy to lose track of how much things actually cost, especially when you factor in the tip.
For those who own a restaurant and fear they’ll lose clientele, there are always other ways to try and cut down labor costs.
Restaurant owners will also have to pay closer attention to who they hire. The more turnaround, the more money wasted.
What causes labor costs to increase at your restaurant? The three biggest factors we've found are:
— Crunchtime (@GetCrunchtime) February 24, 2019
- High turnover
- Low efficiency
- Incorrect staffing
What's the best way to manage these three areas? Learn more: https://t.co/DLVLcc2V5f pic.twitter.com/XgxMZEJAtY
David Henkes, senior principal for Technomic, told USA Today that it’s going to be tough if restaurant owners keep depending on customers when prices go up.
“It’s a catch-22,” he said. “Restaurant operators need to cover costs, but consumers can’t always cover those costs.”
ShopKeep reports that the average amount it takes to open a new restaurant is $250,000.
The first year is often hard to recoup that money, especially if it’s your first business.
That’s one of the reasons why keeping costs in check is so crucial.
You don’t want to rip off a customer by overpricing your menu items, but you also don’t want to keep losing money — especially month after month.
Trust me. Customers know when they’re getting ripped off.
Oatmeal must be one of the most marked up restaurant menu items. It costs pennies to make at home, but can be like $11 at some breakfast spots.
— Tony Macaroni (@AnthonyMaul) February 25, 2019
WebstaurantStore reports that the first thing owners need to do is carefully graph their funds.
You’d assume that most restaurants already do this, but shows like Bar Rescue prove that a lot of people go into the service industry because it’s fun, not necessarily knowing the math behind it.
You also need to map out employee happiness, which often comes with the amount they’re paid.
“To get a better picture of how efficient your employees are, you need to take into account your turnover rate, your staff’s effectiveness, and technology use in your establishment,” they write.
It’s also worth making sure your employees are properly trained.
Continuous training helps. Putting time and money into workers will make them feel more appreciated and less likely to leave.
Does that mean that a grumpy waiter or waitress might indicate a price hike on the menu?
It’s possible. Again, it makes sense for food costs to go up sometimes, but in a situation like this when food isn’t the issue, it shows the owner may not know the importance of managing labor costs, as well.
A manager who owns a restaurant with a high turnover rate should probably think about their employee program.
Do they offer up benefits? Initiatives? Anything that’ll make employees want to stay and not just work at the restaurant across the street?
Here’s why that’s incredibly important.
If the only increase is in food prices, eventually customers will find cheaper places to eat. When it comes to customer satisfaction, the cost is a big part of it.
It’s one of the many reasons why fast food thrives — because chains offer delicious food that often appears on a dollar menu.
And as the name states, it doesn’t require a lot of sitting around.
Here’s the good news…
It’s likely that restaurants aren’t going anywhere. When one restaurant closes, another one eventually opens in its place. But, the number of times people go to a fancier place per year may decrease.
A customer may be able to afford their anniversary dinner, but not an anniversary dinner and two birthday dinners per year.
Because if your food is good, people will want to celebrate with you.
If you’re a customer, it’s just good to be aware that prices are likely a little higher in most places.
It’s not just you, even though you may feel personally slighted. Luckily, you can always check and see if your favorite place has a menu online to check out before realizing you can only afford a side salad and a cup of soup.
