Entrepreneurs and business owners have experienced shortages in supplies and labor since the start of the COVID-19 pandemic. The restaurant industry was hit extremely hard, and continues to struggle with rising costs.

According to Robb Report magazine, the price of fryer oil had more than doubled since 2020, the cost of takeout boxes had increased by nearly four times and a case of chicken wings had spiked 388 percent.* This proves that  prices are skyrocketing and restaurants are being forced to pay these inflated rates to keep their businesses open and increase what they charge their customers. This is causing an uproar in the economy; consumers do not want to go out to eat and pay $40 for a basket of chicken wings.

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So, what is causing these inflated costs? Supply chain issues are thought to be the main culprit. Shipping and delivering food has slowed due to the pandemic and just like every other business, shipping and supply companies for food have experienced shortages in labor. It is hard to find people to work because of the pandemic.

How can restaurants avoid these extreme costs and delayed supply times?

There are lots of ways that restaurant owners can avoid these inflated prices and thrive during the pandemic. Restaurants have one main cost, food. They must purchase food for their business to function and keep customers coming in the door. One way of circumnavigating the rise in prices is by tapping into your local network of peers and asking other restaurant owners what suppliers they use to get supplies, which may help you find quicker and cheaper options for getting food in the kitchen. Going to local farmers markets or joining Facebook groups with other restaurant owners or farmers/suppliers can help connect to people who can help find suppliers that are right for you.

There are also people who are great to have in your corner when owning a business. One example is having a financial advisor who can help develop a strategy to eliminate costs in certain areas of the business in order to allow for these increased prices. Financial advisors are critical to keeping the restaurant on track and profiting. It would also be extremely beneficial to reevaluate costs and figure out what types of price increases need to follow. Taking the time to dive deep into the costs may save money and keep more customers coming in the door because prices are lower than competitors.

Finally, reevaluate the menu. See what items are costing the most and substitute them with other things that will not hurt your profits as much. There are a ton of substitutes for a variety of different types of foods these days and most of the time, it will not change your customers’ minds about your establishment. However, listening to customer feedback while making these changes is critical. Changing the menu is a big deal and losing customers because of it may not always be worth it. Keeping an open mind and listening will be a great asset when going through that process.

There are issues with the supply chain and food shortages/prices now, however, these issues will come and go and restaurant owners need to persevere to keep their business open and thriving!

 

Wayne Goshkarian is the Director of Communications for Scottsdale-based Association for Entrepreneurship USA, where he assists entrepreneurs nationwide with creating, establishing and expanding their businesses.