Long Beach Fish Grill menu
Source: Jessica Dinglasan
Jessica Dinglasan, owner of Long Beach Fish Grill in Long Beach, California She never used to write “market price” on her menu.
But now the halibut fish she sources costs more than $30 a pound, nearly double what it was a year ago, and the 13-gallon container of canola oil she buys for french fries and crispy fish is up from $19 $42 up.
“I have to do the market price,” she said.
As food and labor costs rise, restaurants are making strategic changes to menus to avoid reprinting new ones every week. But price increases can only help to a limited extent, especially since weekly changes in ingredient prices would mean frequent reprinting. This is where menu technology comes into play.
Analyzing sales data and food cost can help restaurateurs decide which menu items to emphasize, which prices to increase, and which offerings to scrap to optimize their bottom line. Smart menu design can highlight the food or drink that will keep customers coming back or help with kitchen operations.
A slightly larger font or a prominent box, sketch or photo can quickly turn into dollars.
“For me, menu engineering is the layout of the menu that makes the ordering process most profitable for the restaurant,” said Michele Benesch, president of menu design firm Menu Men.
price pressure
Sean Willard, a menu engineering specialist at Menu Engineers, estimates that diners spend less than 90 seconds after sitting down to browse the menu. This puts pressure on restaurants to present menus to customers that help them quickly order the food they like best.
The restaurant industry has been grappling with higher raw material costs for months as demand for restaurant dishes falls but their supply chains lag behind. Russia’s war with Ukraine has exacerbated the problem, driving up gas prices and spurring global shortages of wheat, corn and soybeans.
“Inflation is not going down. I thought so, but now there’s this war,” Dinglasan told CNBC.
According to the Bureau of Labor Statistics consumer price index, food prices have increased by 7.9% over the past year. But not all menu items have felt the inflationary impact to the same extent.
“Chicken has gone up, but not as much as fish or beef,” Benesch said.
Inflation is not going down. I thought it would, but now there’s this war.”
Jessica Dinglasan
Owner of Long Beach Fish Grill
This puts seafood restaurants and steakhouses in distress. Ruth’s Hospitality Group, for example, is forecasting that its non-beef grocery costs will rise 16% in the fiscal first quarter. Add the cost of beef into that equation, and the owner of Ruth’s Chris expects the price of his ingredients to increase 24% compared to the same period last year.
At steakhouses that face higher prices, cost-conscious diners may opt for a smaller cut of filet mignon. So Benesch helps these restaurants round out their menus so customers are tempted to order more side dishes or appetizers.
“Maybe with the wedge or a Caesar salad or the potato au gratin… Filling up that bottom line makes all the difference,” she said.
Matt Piccinin, co-founder of the Shuckin’ Shack Oyster Bar chain with 16 locations and restaurants along the east coast from Maryland to Florida, said he now lists all of his seafood offerings as market price, just like Long Beach Fish Grill. Seafood makes up about half of the chain’s menu.
Some of Shuckin’ Shacks’ menu items are loss leaders, like the crab balls, according to Piccinin. The price of crab has skyrocketed and the chain doesn’t want to pass all the costs on to customers. Instead, it’s hoped the popular appetizer will entice customers to come back and buy other menu items that are more profitable.
Constantly evolving
Willard said almost all of his customers have streamlined their menus in recent months to practice better inventory control.
When prices are high, there is little point in buying an expensive ingredient that will only be used in a dish or as a decoration. Willard said one customer stopped buying pickles as a side dish as prices went higher.
A leaner menu also helps in the kitchen, which may have fewer cooks due to higher labor costs or labor shortages.
Olive Garden’s parent company, Darden Restaurants, is a restaurant business that reduced dishes early in the pandemic and is sticking with the strategy.
“In terms of the menu, we made it clear that we really like the menu reduction and what it has done to give our guests the quality dishes they want and make it easier for our teams to prepare them,” said Darden COO and new CEO Rick Cardenas told analysts in late March. “And we keep getting better. As we add new items, we take away another item.”
The largest restaurant chains can better manage inflation with strategic price increases and hedging through futures contracts that allow them to buy their ingredients up to a year in advance.
Bank of America Securities analyst Sara Senatore wrote in a note to clients last week that grocery inflation is the macroeconomic factor most closely linked to the industry’s same-store sales growth.
“Grocery prices rise instantaneously in grocery stores and hesitantly, smaller price increases in restaurants are less onerous by comparison,” Senators said. “As a result, we believe companies that are priced for inflation should be able to weather cost increases effectively, while those that are priced lower are able to gain traffic share.”
That doesn’t mean, however, that publicly traded restaurant chains aren’t also thinking about what’s on their menus. Chipotle Mexican Grill Chief Restaurant Officer Scott Boatwright said in a February interview that the chain is trying to think strategically about time-limited menu items.
“We are considering future limited-time offers and the impact on margin, looking at the supply chain, specifically for products that we know will experience significant inflation, and moving these LTOs to at least match are in balance with the margin or are even margin-enhancing,” said Bootsbauer.
And as menus continue to evolve, some pandemic-driven changes in consumer behavior are giving restaurants more flexibility and a cushion on their bottom line.
Many restaurants have switched from physical menus to digital QR codes directing diners to online versions – the physical menu doesn’t need to be wiped down or thrown away every time after use. As many establishments return to traditional printed menus, Benesch said she encourages customers to keep the QR codes for daily specials or a loyalty program.
“I think QR codes are here to stay. They’re great marketing tools, and they’re great for highlighting a small segment of someone’s menu,” said Benesch.
Benesch said she also encourages restaurants to think of off-menu avenues to attract customers, such as B. Pushing a dessert cart through the dining room so that every customer can see their sweet treats.