Hospitality vs. Inflation: 7 Tips To Help You Navigate Through This Uncertainty
Inflation refers to the decrease of purchasing power of money within an economy. Hospitality venues are particularly vulnerable to being impacted by inflation due to its compounding effect on their business. Food prices increase, which drive up the overhead costs of the business, while customers begin to spend less due to the reduction of their purchasing power.
It can seem like a vicious cycle, and can wreak havoc in small-to-medium businesses. In saying that, there are many ways that venues and hospitality businesses can navigate inflation. We’ve compiled our top tips below:
1. You need a budget
Routinely tracking your costs and keeping on top of your monthly expenses will help you to know how to adapt to this ever-changing economic climate. Being aware of the inward and outward flow of money within your business is critical in bringing light and clarity to what can be an otherwise discouraging situation.
2. Evaluate labour costs
Work to prioritise staff retention and reduce the inefficiencies of staff turnover by establishing good working relationships and a strong team morale.
3. Take on new debt sparingly
Practice caution and careful discernment when considering taking on further debt. Avoid variable interest rates and be strategic when shopping the market to find the most competitive offer.
4. Optimise your traffic
Review your busiest time periods and the days of the week, and adjust your opening hours and labour scheduling to maximise your business’ efficiency during these times. Moving your resources from your quiet times to your busy times will ensure a high quality of service is delivered when it’s crunch time!
5. Review prices
It may be necessary to raise the prices of your products in order to ensure that costs remain covered. Maximise your profit margins by competitively matching your price to the market value and increase the value supplied to the customer through optimising customer service and community engagement.
6. Be honest
Be open and transparent with your customer base, with social media posts highlighting reasons behind increased prices. Thank your customers for their understanding and their continued support. Positive relationships with loyal customers are absolutely critical and will make a significant difference in the way your company emerges from this challenge.
7. Innovate new solutions
Increase your profits with the cost-effective online ordering platform MyTab to reduce the costs of paper menus and buzzers, and the labour costs of staff taking orders. With remote ordering available up to 15kms away from your business, giving your customers accessibility to you has never been easier. MyTab is free to use with no commission fees, no lock in contracts and zero risk.