Inflation in foodservice prices will be a major challenge to eating and drinking out businesses in 2018—but smart brands can soften the impact on their customers.
That was the message from CGA commercial director Graeme Loudon in a session at the 2018 Casual Dining show in London.
The CGA Prestige Foodservice Price Index revealed high single-digit inflation in wholesale prices throughout much of 2017—well ahead of CPI inflation. And while some pressures have eased, the Index suggests that inflation will continue to cause headaches in 2018, adding to other challenges like rising property and labour costs, sluggish like for like sales growth, Brexit and the risk of market saturation.
Inflation is running particularly high in fish, where prices have risen 9.1% over the last year and are forecast to increase another 4.5% this year. The Foodservice Price Index also projects further inflation of 6.0% in hot beverages and 5.0% in soft drinks, mineral waters and juices.
CGA’s Confidence Survey showed that seven in ten business leaders increased their menu prices in the last quarter of 2017, with the average cost of a main meal up by 27 pence. But as Loudon pointed out: “Putting up your prices is one thing, but getting your customers to pay them is a whole different challenge.” Here are five things that CGA research suggests operators can do to protect sales from inflationary pressures.
1. Don’t compromise
CGA’s data consistently proves the close link between perceptions of food quality and customer satisfaction. While it’s tempting to cut corners on ingredients amid such high inflation, Loudon suggested that it is a risky strategy. “High food quality, on a consistent basis, is key. Don’t be tempted to trade down the quality of your ingredients—that’s your USP.”
2. Provide top service
Great customer service is another important driver of satisfaction and can help to compensate for price rises. “Yes, it’s a basic—but it’s so important to get it right,” said Loudon.
3. Get the drinks right
With so much competition in casual dining, a well thought out and distinctive selection of drinks can make all the difference, Loudon told Casual Dining. “Your drinks range can really differentiate your venue from the one next door.”
4. Think about value for experience as well as money
Even if prices rise, consumers can still feel they are getting good value for their spend—but only if the experience is right. “It’s about shifting the dial from value for money to value for experience… in a flat market, offering value for experience is key to driving loyalty,” Loudon said.
5. Engage staff
Frontline bar and restaurant staff can deliver great customer experience and trade up sales—but only if they are properly motivated. “It’s all well and good training them, but if they’re not engaged they’re not going to execute,” Loudon said. “We need to do all we can to keep them and improve them.”
For more about the CGA Prestige Foodservice Price Index and how it can help businesses, contact graeme.loudon@cga.co.uk.
