Food is stored at one of the largest cold storage facilities in the U.S., NewCold. The Idaho facility is one of 3 in the United States. (Photo: NewCold)
Just when you think the bad news is over, here comes more: In the past year, corn prices have doubled. Think about that for a second. Take all the time you need. Corn prices also affect other commodities… like oranges and coffee. Add to that, a shortage of truck drivers, and as things re-open, a spike in overall demand. The result is a brewing storm that could deliver a knockout punch to establishments that barely survived the pandemic.
After the Great Recession, high corn prices caused beef and other protein costs to peak. The forecast isn’t much better now: Higher commodity prices combined with labor shortages are sure to put a squeeze on local operators – who are already playing catch up with their lenders and landlords.
Lumber costs too have hit all time highs too, as new home building during the pandemic continues to astound the market. There are many factors coming to a head, to stay ahead of inflation we’ve put together a few tips to help you optimize your operations:
Pivot to a Pop Up
Is there a demand for your product but you can’t afford the overhead of a new location or have time to build it out? Pivot to a Pop Up. What is a Pop Up Shop? Pop Ups are a great way to extend your brand (and create a new revenue stream) without over-extending your resources.
Constantly Re-Negotiate Rates and Fees
Talk to your service providers about your rates and fees. Are there any discounts available? Talk to your colleagues and fellow operators – find out how they negotiated their delivery rate, is it better than yours? If you’re in a tight financial situation, don’t wait to talk to creditors or lenders, be proactive. Could a service provider comp’ing a month of service help you out? Ask them, the worst they can say is “no.”
Spend on Labor, Invest in Talent
You made the investment in the property, the equipment and the brand. But you don’t approach your staffing with the same commitment? Are you the same guy that thinks you can stop time by stopping the hands of the clock? What planet are you on?
Get real with yourself. When you invest in talent and show a commitment to them, they’ll commit to you. Give them that hiring bonus. Properly train and onboard new servers, staff and other hires with the same attitude you would onboard a new executive chef. Create a task management system that helps guide employees toward success. Go after and work to keep good talent – in the long run, the right people running your operation can save you a lot of money.
Focus on Operations
What’s working. What’s not? Hiring a Mystery Shopping company can help you find gaps in your steps of service – and improve restaurant operations with actionable feedback you and your staff will benefit from – which helps reduce costs.
Restaurant and hospitality operators will be working even harder in the months ahead to get their businesses back on track. Keeping an eye on inflation and fighting it head on will keep those same operators even busier.