The Unexpected Way Restaurants Are Dealing With Inflation
If you've been paying any attention to the news (or your bank account), you likely already know that inflation is at a record high. But you don't really need to monitor the Consumer Price Index to know about rising costs. Anyone who has purchased gas, gone grocery shopping, or gone out to eat in recent months has probably already felt the pain of rising inflation for themselves. As a result, many consumers are changing their spending habits, tightening their purse strings and being extra careful with their budgets. For many, this means forgoing luxuries and cutting down on nonessential expenses. Often, one of the first things to go is eating out, which is bad news for the restaurant industry.
According to Revenue Management Solutions, quick service restaurant traffic dropped by 9.4% in April of 2022 compared to the same time last year, and restaurant owners are starting to feel the pinch. Boston-based pizzeria owner Joseph Charles told NPR that because of inflation, "it's harder to do business than it was in the pandemic." Pressured by rising costs, many restaurants have been forced to raise their menu prices to stay afloat. However, some eateries have recently decided to take a decidedly different approach.
Some restaurants are lowering their prices
In response to rising inflation, some businesses have decided to lower their menu prices. Nashville-based casual dining chain O'Charley's recently launched an "Economic Stimulus Package" that offers its customers discounts in relation to the Consumer Price Index, Restaurant Business reports. Meanwhile, the Northeastern U.S. Italian chain Bertucci's has announced it will be offering an "inflation relief" menu, listing items that cost up to 75% less than normal. Robert Earl, owner of Bertucci's, said his staff wanted "to offer a bit of relief" to customers during these "challenging times."
However, there is one catch: These reduced prices are often only available for a limited time. The tactic is designed to entice money-strapped customers to come through the door, rather than eat at home and avoid restaurants entirely.
While businesses are trying to offset their own rising costs, there is a limit to how much they can increase prices before customers simply stop coming, according to Forbes. Therefore, lowering prices on select items or launching short-lived promotions just might encourage consumers to spend their discretionary income at restaurants. Sit-down eateries, in particular, are competing against cheap deals offered by fast food chains by offering price incentives. While it remains to be seen if these tactics will be successful for businesses in the long run, customers are sure to appreciate a little extra savings on their bills these days.