The Wall Street Journal published a piece, by writer Raymund Flandez, highlighting methods restaurants are taking to cut costs to offset reduced customer traffic and record-high cost of goods.
Restaurants are having to find creative ways to cover costs without increasing prices to customers.
Most ideas reported make perfect sense. Many should have been explored when the economy was going well. They would have provided the restaurant with a competitive edge. But, they say necessity is the mother of invention.
A few of the ideas could harm them in the long run… you be the judge… Here’s the rundown.
- Ruth’s Chris Steak House [$20,000 annually] – The franchise in Pikesville, MD has consolidated its meat deliveries to one vendor. For the three locations in North Carolina fewer shipments and larger orders will save them $22,000 a year.
- Church’s Chicken – [$4.2 million] – (1) They’re eliminating the “chicken diaper” (a pad used to absorb the liquid in raw-chicken cases), (2) testing filtering shortening to extend the life from 10 to 14 days, (3) reducing the scoop size of their biscuits from 3 tablespoons to 2 tablespoons to save $1.8 million annually, and (4) are changing their french fry sleeve from cardboard to paper.
- Applebee’s and IHOP – [Millions] These two chains, now both owned by DineEquity Inc, realize there is an overlap in their vendors. Consolidation will reduce food costs for the franchisees.
- Marco’s Pizza – [$2.1 million] – This Toledo, Ohio-based chain is (1) ordering larger amounts with less frequent delivery, (2) locking transportation costs with vendors, and (3) is eliminating the small pizza box. They will use their CheezyBread box for both products.
Has your company explored ideas like these? If you haven’t, you should. These companies were forced to take action. What if you took preemptive action? Where can you find hidden savings without passing costs onto your customers?
Here’s the URL to the original article: Restaurant Chains Look for Creative Ways to Cut Costs – Wall Street Journal