Rising inflation has taken a significant toll on the hospitality industry in Nigeria. Inflation can be explained simply as a price increase that decreases a customer’s purchasing power. Restaurant owners are confronted with rising food prices, the inability to pay their whole team, and a dwindling number of customers. Not only do you have to spend more on ingredients, but you are losing customers.
Running a successful restaurant in Nigeria requires more than a flair for cooking and hospitality. As food prices continue to rise and consumer purchasing power diminishes, food businesses must adapt and strategize to survive and thrive in this current economic climate.
We’ll be sharing with you five practical tips and strategies for you, as a restaurant owner, to navigate rising food prices and sustain your business operations in Nigeria.
- Inventory Management:
Effective restaurant inventory management is important for navigating the challenge of inflation in the economy. The perishability of ingredients, coupled with rising food costs, requires a strategic approach to purchasing, storage, and menu pricing. For inventory management to be effective, you need to implement a system that will track ingredient usage and waste, control stock levels, and make smart purchasing decisions. This will help to avoid overstocking or understocking ingredients, which can lead to spoilage, waste, and increased expenses.
- Menu Engineering
Analyzing your menu offerings and identifying items that are not selling well or have a high ingredient cost can help you optimize your inventory costs, reduce food waste, and improve overall profitability. Identify your different menu categories and sort them according to their profitability and popularity. Promote the high-profitability items, remove low-popularity and low-profitability ones, or decrease the cost of certain dishes with high popularity. You can also make your menu smaller. A smaller menu means fewer ingredients and lower food costs. Include add-ons such as toppings, make small changes to your menu pricing, and reduce portion sizes while keeping your customers in the loop.
- Marketing and Branding
Effective marketing and branding are important for attracting and retaining customers in the competitive hospitality industry, but they do not have to break the bank. Instead of relying solely on traditional advertising methods, which can be costly, explore cost-effective marketing channels to promote your restaurant. Social media platforms offer a powerful and affordable way to engage with your target audience. Create captivating content that showcases your menu items, behind-the-scenes moments, and customer testimonials. Encourage user-generated content by running contests or offering incentives for customers to share their experiences on social media. This not only increases your online visibility but also builds brand loyalty and word-of-mouth promotion.
- Diversify Revenue Stream
The adage “don’t put all your eggs in one basket” holds true in the hospitality industry, especially when it comes to revenue generation. Diversification can help food businesses weather economic uncertainties by reducing reliance on a single product or market segment. Explore opportunities to expand your product range, introduce new offerings, and cater to evolving consumer preferences to maintain revenue streams and stay competitive. For example: dine-in, take-away and delivery, catering, etc.
- Optimize Labor Costs
To optimize labour costs, you need to create an efficient staffing schedule. Carefully analyzing your staffing needs and ensuring that you have the right number of employees scheduled at all times is essential for reducing labour costs. Cross-training your employees to handle multiple tasks, reducing the need for additional staff, and increasing productivity is also an effective way to optimize labour costs. Well-trained staff can increase efficiency, reduce errors, and ultimately save money. Investing in comprehensive training programs that educate your employees about proper portion control, food handling procedures, and efficient service techniques is essential for reducing restaurant expenses.
Benefits of Implementing the 5 Strategies
By implementing these five strategies for navigating inflation and rising food prices in Nigeria, your food business stands to gain financial stability and long-term success. Here are the key benefits of the above strategies:
● Improved Financial Stability
● Better Guest Experience
● Brand Reputation
● Operational Efficiency
● Adaptability to Market Changes
● Long-Term Success
We know trying to implement these strategies can be overwhelming while trying to run your business’s daily operations. That is why Vertiline Synergy Limited has a team of professionals who are willing and ready to work with you to tailor these strategies to fit the uniqueness of your business. We also take the stress of implementation off of you while you focus on your business. Overall, we will help you navigate this challenging time while helping you build a business that will stand the test of time.
