How Smart Menu Design Can Help Restaurants Counter Inflation

Restaurants in America have had it tough in recent years, from COVID-related lockdowns to staffing shortages and now inflation. Although inflation impacts just about every industry, it has hit the food service sector particularly hard. In fact, according to Restaurant Business, restaurant menu price inflation is at its highest point in roughly 40 years.

While inflation and rising food prices can cause problems for business owners, there are several ways that businesses can counter the issue, continue to attract customers and earn revenue through smart menu design.

A Well-Engineered Menu

For starters, having a well-engineered menu that maximizes your overall profitability is crucial in your journey to offset inflation. As Popmenu notes, a well-engineered menu can drive as much as 10% to 15% or more revenue to a restaurant’s bottom line. To create such a menu, restaurant operators need to assess how well their current menu items are actually selling and how much potential profit each item has. After doing this, they can determine which menu items can be kept, which items and prices should be modified, and which items need to be eliminated altogether.

Additionally, when designing your menu, it should be easy to read and crafted with simplicity in mind. For example, QSR Magazine suggests that utilizing a slightly larger font, employing attention-grabbing colors or boxes, or highlighting signature food or drinks, can result in increased revenue.

“A menu that clearly and compellingly explains value will help attract consumer interest in and attention to the quality of your menu items, and away from ordering by price,” wrote Tom Cook, a principal of King-Casey, a restaurant and food service business improvement firm.

Smaller Portion Sizes

But it’s not just about the aesthetic of your menu that matters. When it comes to designing a menu to combat inflation, another strategic approach involves reducing the menu or offering smaller portion sizes. Take another close look at your menu and see which items you may be able to scale back on. If an ingredient or food item is costing you more but isn’t turning a profit, consider removing it. However, if that item is a favorite among consumers and your menu can’t live without it, try reducing the portion size. For example, a steakhouse owner could offer smaller cuts of steak for cost-sensitive diners. This will allow you to adapt to the economic shift while maintaining the quality and appeal of your offerings.

Limited Time Offers (LTO)

Another tactic to counter inflation is by offering strategic limited-time menu items. These limited-time food items can create a sense of urgency among customers, generate buzz and excitement, and ultimately, allow you to have price flexibility. By introducing exclusive items with limited availability, you can set a higher price point, which in turn can allow you to maintain your margins without alienating your customer base. In an interview with CNBC, Chipotle Mexican Grill’s chief operating officer Scott Boatwright revealed the chain frequently considers offering limited-time menu items as a way to adapt to rising food costs.

“We are thinking about future limited-time offers and about margin impact, with an eye toward supply chain, specific to products that we know will see significant inflation and moving those LTOs to at least be on balance with margin or even margin accretive,” Boatwright said.  

Raise Prices

One of the most common and immediate responses to offset inflation is to raise prices. Although there are other solutions, if you choose to raise prices, it’s recommended that you do it little by little. Josh Sharkey, the founder and CEO of recipe software company Meez, told Back of House that by poorly executing a menu price increase, business owners could confuse or deter guests from returning.  

“You can’t just blindly raise prices,” said Sharkey. “If you don’t do it the right way, you’re not only going to impact your customers, but you could negatively affect your business. You have to look at the velocity of sales of different items, which ones have the best economics for you internally and see where the wiggle room is.”

If you decide to take this approach, monitor the reaction from your customers. Most importantly, be up-front about it. Maintaining transparency is crucial to prevent customers from being surprised when they receive their checks.

Weather the Inflation Storm

As economic uncertainty continues to loom, there’s never been a better time to reevaluate your menu design. While many of these tips are universal for a variety of business owners, by carefully curating your offerings, optimizing pricing strategies and staying attuned to customer sentiments, businesses can weather the inflation crisis while continuing to provide memorable experiences.