Increased Menu Prices - Is it the Wisest Decision?

Today, as we Restaurant Owners struggle to keep our business afloat, we consider changes that must be made and how they will affect our customers, our staff, and our net income. Many of us believe the uncommon inflationary issues facing us today to be temporary, in fact impermanence is almost certain although no one can predict where prices will land when these unfortunate increases settle down. Consider the unsettling facts.

Last month US inflation rose an astonishing 5.6%, this is the first time it's risen that fast in 17 years. Along with a huge increase in inflation, came a 0.8% rise in the Consumer Price Index (CPI). The CPI is the measurement used to indicate the rise in level consumers feel the effects of increased cost for food, energy, clothing, and other consumer goods and services.

Though imports have become cheaper, the economy still shows weakness that continues to lead to inflation, possibly due to high commodity prices and trouble with the U.S. dollar on the international scene.

Although average weekly wages for workers fell by 0.8%, that's hardly enough to off-set the increased costs of owning and operating a successful restaurant (remember that 5.6% inflationary increase last month). And decreasing our employee's wages is not how we want to stabilize our bottom line.

As Franchise Restaurant Owners, this steep inflationary period brings us face-to-face with many issues that affect our bottom line. Some of these include:

* Consumers are tightening their belts, which means they aren't going out to eat as often as they did in more lucrative times.
* Consumers are looking for consistent, or reduced, prices when they do make purchases (or dine out).
* Energy costs are steeply rising.
* Commodities prices have risen due to increased fuel prices.
* Development costs for new restaurants have increased significantly due to literally everything in that process being affected by high fuel costs.
* Immigration is tightening at U.S. borders which may be affecting labor costs in the restaurant industry as well as labor availability.

One way we may off-set some of our rising costs is to support locally grown and produced food resources. It just may be time to go local! Almost every community has Farmers Markets and Food Co-ops. Some Restaurant Owners have formed Food Co-ops with other Owners in their area! Though this doesn't remedy all the problems we face, it certainly may be the first in a list of possible solutions that will help us avoid large increases in our menu prices, as the shorter the distance our food travels, the lower its cost to us.

Are Restaurant Owners facing the old adage "Desperate Times Call For Desperate Measures", or do we simply increase our prices while our costs are high, and bring them back down in less lean times?

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Increased Menu Prices - Is it the Wisest Decision?