Taking Out Bands of Inefficiency

What can operators do to avoid raising prices too aggressively? Or should they?

This week’s episode of the Restaurant Business podcast A Deeper Dive features John Gordon, a restaurant consultant out of San Diego, to talk about the industry’s historic level of menu price inflation and whether consumers will ultimately respond.

Restaurants are raising prices at historically high rates, including 6.9% year over year in March, continuing a high run of price inflation. Restaurants are doing this because their own costs are soaring. Consumers at least thus far have yet to reject these higher prices.

Gordon discusses why consumers haven’t yet rejected higher prices. He also discusses how long this will last. There are growing fears that consumers will shift their spending habits in response to inflation.

Yet operators’ own prices continue to increase. Gordon discusses what they can do to avoid further price increases, and a potential consumer blowback, without having their margins hurt even more.