Price Increases—Can They Be a Good Thing?

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Steak Dinner

Currently, the American economy is showing signs of making a recovery. With
gas prices down and unemployment rates lowering as well, many Americans are
finding themselves with more disposable income than has been the case in recent
years.


With that increase in spending money an interesting idea comes to mind
for those in the restaurant industry looking to recoup costs: raising some of
their prices.  Not too long ago, such an
idea would have been met with hesitation, and outrage from consumers.  Times were tough and no one could afford to
go out to eat if prices were going to be raised.  In their desire to show the appearance of
being an affordable option, and to compete with the common concept that buying
food from grocery stores and cooking at home was the more affordable choice for
consumers, restaurateurs have been keeping the prices on their menus low, and
have been relying on the deal or special to bring in guests.  Now that more Americans have more money to
spend, it may be time for restaurants to make up some of their losses.


Premium Prices
With the recovering economy, some restaurants are beginning to slowly
roll out small price increases on certain menu items, yet they are doing so
cautiously.
There is a risk when making
price increases. Too many, or too much, and you may anger some of your
customers, yet by not increasing, you run the risk of deficits.


Costs of food production have risen with inflation, and many of the
price increases chains such as Chipotle are rolling out do not even cover the
inflation, yet they are starting to
raise prices.  For the first time since
the economic troubles began, many restaurants feel they are in a place to begin
to raise some prices, even if a bit slowly and in small increments.  It is important to fill those restaurant tables,
but it is equally important to make sure that by filling them, the restaurateur
is making money.  Restaurants, bars,
bistros, and cafes are businesses after all, and businesses are here to make
money.


Beef, it’s what’s
for dinner
Another factor that is spurring some restaurants to increase the prices
on their menus is the rising cost of beef. 
With that, some restaurants are finding creative ways of increasing the
costs on some items while keeping others low. 
One of the keys is to increase the cost of the high traffic items, such
as the burgers and sandwiches that sell the most.  By increasing those prices, restaurants can
keep the costs lower on other items, while still accounting for higher food
costs.


Another option restaurants have been using, and are rolling out in
greater numbers, is being more innovative in their menu offerings.  Chains, such as Applebee’s, offer deals such
as 2 for $20, where diners can pick from a variety of options to form a meal
for two. Other examples are offering smaller plates and shareables.  Whatever the innovation, the times are
changing and the restaurant industry is working towards adapting to the new
world we find ourselves in.