The smart way to increase costs on a menu
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| Tanya Spence |
To ensure ongoing profitability for franchisees so that their business can grow, it is important to not only monitor progress, but also to do forecasts of the things that could impact on it. We know that supplier costs and other expenses such as fuel and electricity increases occur at least once a year, and if the impact of these increases are not accounted for and covered, the company will essentially be paying for the customer to buy their products.
A menu update is usually imminent because profit performance and pending increases have made it essential. The question remains: can the company simply adjust as they deem fit?
Not in the least.
There are two important things to consider before adjusting:
It starts with the customer. The customer is the one who will be impacted most by any increases on a menu or catalogue. Consumers are the ones who have to deal with these increases and this will determine whether sales will increase or decrease. While a significant increase could ensure that you cover all your costs with ease, it can impact on whether your customer will continue being loyal to you or not. Customer feedback received throughout the year should be taken into account and it is important to study trends that indicate “best sellers”, as this will predict future demand and will give an indication of how willing customers will be to accept price changes.
It is important to consider the rest of your team. Increases will also impact others in the company, and it is important for everyone to be informed and involved (where needed). Usually it is the staff members who deal more directly with customers than the management team. They are the ones who more easily pick up where changes are needed and how these impact customers once they are made. In franchising especially, the franchisees are involved in the process as much as possible, as even slight changes will impact on their own businesses. Franchisees need to give feedback throughout the year on various elements of the business, and also need to actively take part in discussions on menu changes, sampling new products and discussing profit margins.
Once the decision has been taken that a menu update is viable, remember that in order for it to be a smart change, you need to invest a great deal of time in developing and finalising it. Time is needed to ensure profit margins and costings are correct, and that the correct processes are being followed. This includes sampling, designing the actual menu and proof reading it – repeatedly. Once this has been done, the menu can then go to the printer, where after it is proof read again and only then distributed to stores for the update to take effect. If done right, it could be a lengthy process, one that the Sandwich Baron team completed in six months.
At the end of the day, while everyone knows and understands that adjustments are needed, it is important to go about the process in a smart way. Remaining profitable is important, but not at the expense of your customers and other team members. Complete the needed research, follow the right processes and roll out the updates correctly, and your business will progress in a sustainable manner.
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