food and beverage underground

Tough Times Make Restaurant Survival Mode Plans a Must

Are you in restaurant survival mode? Do you have a plan to keep your restaurant going in bad times? September 11th changed the world for everyone and it is still hurting businesses today whether you realize it or not. One of the biggest impacts on restaurants has been the dramatic increase in fuel costs.
Gas prices shot up almost immediately. It only took a month or so when the first invoices from major restaurant suppliers came in to restaurants with a gas surcharge added to the bottom of their invoices. The sustained high fuel costs then started trickling into the actual product costs. To top off the increased costs of goods sold there was the squeeze on the customers who were shelling out more bucks to keep their family functioning, so they had to cut back to, on what? Why entertainment of course. This left many restaurants fearful of passing their additional costs to the customers, so they ate it.

Sure gas prices leveled off, then retreated some for a while, but nowhere did you find the reduction on product cost coming back your way on the invoices. Prices are pretty elastic when they are going up, but certainly don’t stretch much on the down side. So now with another round of rising fuel prices what is a restaurant to do? You already have the price points that work for you covered. Will your customers stay with you as you have to raise those price points or will they find other places that are more in line with their threshold?

Good restaurateurs are prepared for restaurant survival and you should to. In this environment a restaurant has to be prepared to act, and have a solid plan. Will another 9-11 happen? God, I pray not, but there sure is a possibility. Will another hurricane interrupt oil refineries in the Gulf States? Yes, at some point. Will a drought or wild fires destroy crops? Another yes. Will these things effect the pricing you are getting on products you have coming in your door today? With out a doubt!

For your restaurant survival you need to start taking a good a hard look at you pricing structure now and create a plan for the inevitable if your operation is going to survive the next round. If you believe your price points are reaching their ceiling then you will have to look at a plan that will adjust portion size, or start looking for product substitution possibilities.

Talk to you suppliers, I’m sure you are not the first that has approached them of late with interest in finding substitutes for high priced products. You may even have to look at taking high cost items off the menu and replacing them with items that are comparable and still hit the price points that you have established. Remember, your competitors may not be reacting in a proactive way and may simply respond by raising their prices. This very likely will backfire pushing their price points above their customers comfort level causing them to look for alternatives; YOU!

Now, more than ever, the Chef and the suppliers of your establishment need to work to find a structure that will get you through tough times. At the very least, have a plan!

Restaurant survival depends on small margins, so anything that cuts into these margins could potentially destroy the very business you have put everything into. You can't wait to react in this environment so start planning your restaurant survival today.

Go from Restaurant Survival to Reducing Food Cost

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