Restaurants are getting lots of bites these days—into their profitability, that is. 

Beyond rising restaurant labor costs, inflation has been eating away at many restaurants’ bottom lines. Wholesale food prices are up about 30% over February 2020 levels, according to the National Restaurant Association. 

Consumers also report that they’re dining out less due to inflation’s toll. Recent data from the Ipsos Consumer Tracker found that more than one-third of Americans say they’ve cut back on restaurant meals, including fast food, sit-down restaurants and delivery service, since the start of 2024.

These converging cost and business pressures mean restaurant owners are wise to assess their operations and look for opportunities to shave costs and grow revenue in ways that won’t deter customers.

So, how can you fight inflation without drastically hiking menu prices? Here are some strategies to consider.

Related: Lessons and Advice for Growing a Restaurant Business

1. Revamp your menu.

While consumers still have the appetite to eat out, fast-rising restaurant bills have them doing a double-take. Refreshing your menu can allow you to keep prices in check, so you’re not turning customers away.

Even if your current menu has been popular and profitable in the past, it’s worth reviewing it to look for these types of opportunities:

  • Add value-oriented menu options. Upscale restaurants can continue to offer premium-priced fare, but they may be able to draw in cost-conscious diners by adding a few economical menu offerings (think tacos or lower-priced appetizers).
  • Offer discounts during slow times. You can draw in diners with happy hour, early-bird or late-night specials—allowing you to cater to frugal customers while smoothing out your traffic across your open hours.
  • Consider reducing portion sizes. Consumers are always on the lookout for “skimpflation,” yet they may be willing to stomach smaller portion sizes over rising prices.
  • Maximize ingredients. You may be able to make more out of the foods you purchase by using the same ingredient across multiple menu items (such as using the same type of cheese in a salad that you also use on sandwiches—reducing the different cheese you have to keep on hand).
  • Remove less-profitable menu items. Data is your friend. Evaluate which menu items sell the best—and the worst—and calculate your profit margin on each item. Typically, the cost of preparing a food should be no more than 35% of what you sell it for. Consider removing menu items that aren’t as profitable as others.

2. Optimize staffing.

Labor accounts for about 25% to 35% of a restaurant’s total expenses, depending on the restaurant. Rising minimum wages and labor shortages around the U.S. have put labor cost pressures on many restaurants in recent years.

You can relieve labor costs by understanding customer traffic trends throughout the day to avoid overstaffing at slow times. Data from your point-of-sale system can help you identify the “peaks” and “valleys” of diner traffic and sales. Restaurant scheduling software, such as that offered by Restaurant365 and 7shifts, can help you determine ideal staffing levels based on historical data and forecasting.

At the same time, you need to balance your staffing process with retention of your best employees—especially since hiring and training new workers is expensive. Pay a competitive wage in your market to keep valued employees around, and provide some flexibility in determining their work hours.

3. Evaluate your hours of operation.

Rethinking your restaurant’s hours of operation may help you reduce costs. Some restaurants, for example, close for a few hours between lunchtime and the dinner rush. Others are regularly closed on Mondays and Tuesdays, which tend to be slower days.

Restaurant management tools that analyze customer patterns can help you do a cost analysis to decide whether it’s worth staying open at particular hours or days of the week. For example, you may discover that offering breakfast on weekdays isn’t worth the cost of staffing those shifts.

4. Look at revenue growth opportunities.

The pandemic forced a lot of restaurant owners to think outside the box about how to keep serving customers, whether by offering curbside pickup or selling through restaurant delivery services. The lesson: You can adapt your restaurant to the current climate and customer needs by being agile. Some opportunities include:

  • Increasing takeout orders. Customers may be more willing to do takeout orders due to the cost savings. Consider offering meals and menu items that are easier to sell via takeout and promote takeout more prominently as a service.
  • Hosting special events. Hosting themed events—such as a special dinner with live music or weekly trivia nights—can help attract a bigger crowd and generate more revenue.
  • Starting a customer rewards program. Offering discounts or rewards to repeat customers can motivate them to keep coming back. Rewards can range from providing redeemable points for every dollar a customer spends to giving them a free dessert or discount on their birthday.
  • Extending hours of operation. While analyzing your customer traffic and food sales can help you strategically reduce your operating hours, it can also help you spot opportunities to extend them. For example, some restaurants have added Sunday brunch or breakfast if they see customer demand.

5. Use technology to bolster efficiency.

Managing a restaurant is a highly complex task because there are so many variables that affect its finances and livelihood—and there are many risks. Thankfully, many technologies and tools introduced in recent years can help restaurant owners streamline and manage their operations.

A 2024 survey by the National Restaurant Association found that consumers want technology that makes for a more efficient customer experience: 60% of customers saying they’d be comfortable using tablets at full-service restaurants to place their orders and 63% would be comfortable ordering from their smartphones. 

Among restaurant operators surveyed, 52% said they planned to invest in technology and tools that made operations more efficient, such as back-office tools like financial and payroll management apps, and inventory management solutions.

Here are some tech tools that can help restaurants increase revenue and becoming more efficient:

  • Online ordering technologies like Toast and Bentobox, which integrate online ordering into your website and online presence while handling payment processing for those orders.
  • Reservation booking platforms like Tock and OpenTable, which let customers easily see when tables are available and self-book reservations. They can also offer additional features to engage customers, such as reservation reminders and loyalty rewards.
  • POS systems like Toast and Square that offer flexible payment options, such as mobile payments, along with analytics to offer insight into your sales trends.
  • Restaurant management platforms like 7shifts or Restaurant365, which help  facilitate staff scheduling and team communication.
  • Email marketing tools such as Popmenu and Mailchimp, which help you stay connected to customers and promote new offerings, events and discounts.
  • Social media tools like Hootsuite and SproutSocial that make it easy to post on multiple platforms and track engagement.

Controlling costs and driving revenue are always top priorities for restaurant owners, but rampant inflation over the past couple of years has made it more important than ever. Restaurant owners who take charge of their costs and look for innovative ways to drive revenue will be best positioned to survive and thrive in the future.

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