Two-thirds of restaurants raise menu prices to offset other costs

07 July, 2016 by

Oracle Hospitality has announced the results of its new study, Cost Control in Food & Beverage, which surveyed senior managers from more than 200 independent food and beverage operators and chains in Australia, the US and UK to find out how they manage labour, inventory and loss prevention.

Two-thirds of restaurant operators said they have to increase menu prices to offset rising staff and inventory costs, according to the study. Thirty-eight percent said they will be raising prices in the next six months.

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Labour and inventory are the two biggest costs on nearly every food and beverage operator’s budget. Restaurant operators reported they spend more than 50 percent of their revenues in these two areas.

While respondents ranked recruitment, training and retention as top priorities when it comes to staff, 63 percent of managers change worker schedules prior to posting them and 49 percent do so after posting. Forty-four percent of respondents reported that understaffing is an issue for their business.

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Similarly, 32 percent of restaurant operators spend three hours or more managing stock each week even though their top priorities for inventory lie in meal quality and kitchen staff empowerment. Sixty-eight percent of respondents reported food consistency and quality is their top inventory concern.

Christopher Adams, vice president, Food & Beverage APAC, Oracle Hospitality said, “Raising prices to offset costs impacts the guest experience. Customers may look elsewhere if they feel a food and beverage provider is not delivering on quality at the right price. Gaining cost and time efficiencies in labour and inventory management is crucial to a sustainable future for food and beverage operators, and new cloud-based platforms that automate many of these processes are making this possible.”

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Some restaurant operators are addressing their labour management issues by allowing staff to manage their own schedules using their personal mobile devices. Half of the respondents plan to pursue this strategy, and among those, 51 percent plan to do so in the next six months. 

Over-portioning and food waste are also major contributors to cost inefficiencies, standing out as the two biggest factors for product loss among the businesses surveyed. Thirty-two percent of restaurant operators cited over-portioning as the biggest culprit and 30 percent cited waste.

Despite these concerns, 50 percent of respondents admitted they do not track prepared waste. Fewer than half use modern forecasting systems designed to deliver more accurate ordering and reduced waste, in addition to automated stock management.

“It’s a surprise that restaurants of all types are not doing more to track prepared waste. Encouragingly, the majority of those who do track waste have a system in place that is integrated with their point of sale. This is the easiest way to monitor money being lost so the problem can be addressed more proactively – this also helps to hold everyone accountable,” said Adams.