3 ways to minimize the impact of price volatility
Restaurant supply chain prices might as well be on the spring with their endless cycles of highs and lows, with mostly highs. Whatever the causes of all this price volatility, it’s certainly a time when restaurants with the best tools – like revenue and operations management tools – will win.
As restaurateurs are well aware, the prices of almost every basic commodity required for business are on the rise. And, in some cases, they are very high.
Pandemic supply chain disruptions – even as COVID-19 fears a ebb – have caused some of these price spikes. But, a host of other factors, more expensive gasoline, higher commodity prices, and even a shortage of truckers, are all contributing to the current stratospheric price increases.
Whatever the causes of all this price volatility, it’s certainly a time when restaurants with the best tools – like revenue and operations management tools – will win. And stepping out of the gate now well-equipped could be the difference between long-term survival and brand expansion and… well, not so much.
This process begins by asking three questions about your brand currently, as follows:
- How have previous disruptions affected my business?
- What can I do to reduce the business impact at this time?
- How to anticipate change instead of being a victim of it?
Change is coming … but now it’s coming faster
While the pandemic has undeniably impacted all aspects of restaurant operations more than any other force in recent memory, one area where the change has been particularly noticeable is in restaurant technology.
To survive during COVID-19, brands have turned to technology to handle a new operational reality. Some made the switch quickly, while others did not, with brands that used lighter, open and versatile tech stacks most capable of responding quickly during the early days of the pandemic. Meanwhile, their heavier, non-integrated counterparts struggled and couldn’t capitalize on the accelerated digital switchover.
Flash-forward to today when the full lifting of the pandemic era restrictions is in sight. Now, however, increasingly volatile commodity prices threaten brands. But again, the right technology still pushes some brands ahead of the pack as they are better able to adapt quickly to new circumstances and prepare for the changes to come.
So to that end, you may be wondering what a restaurant tech stack groomed for change looks like? Here are some defining characteristics:
- It unifies by including points of sale, business management tools, order channels and operational platforms.
- It’s flexible, with an open architecture that encourages simple, standardized data flow across your ecosystem.
- It can evolve with change as applications and tools enable proactive and reactive changes as business conditions change.
Of course, the uncertainty in many areas of the restaurant industry cannot be managed by technology alone. But having the right technology helps brands manage turbulence and mitigate the impact of external factors that directly impact their business.
For example, brands are wise to consider a business management system tool that can manage stores, menus, and prices dynamically, reducing the time and effort required to maintain consistency. This tool also allows brands to anticipate things like price increases.
Additionally, your brand’s system should be configured to receive valuable updates that will further simplify price management, for example:
- Version management, which reduces the number of items and prices that must be maintained in the system. This decreases the number of “versions” within the tool, which facilitates long term maintenance. This is especially useful when updating prices on a technology stack, especially when there are multiple order channels to manage.
- Grouping, which allows the brand to assign prices to groups of items. This update can be thought of as a “price book,” meaning that restaurants can award prices to multiple items and item versions. All prices can be grouped together outside of a menu structure, making them easier and faster to update, allowing restaurants to react quickly when prices go up or down.
So while external factors such as supply chain disruptions, droughts and global pandemics are beyond a restaurant’s control, having the right mindset, the right tools and the right technology empowers brands. the ability to mitigate the impact of events such as price increases, and can potentially be the difference between going ahead with the change and falling victim to it.
It is essential that restaurants anticipate the potential changes that may be on the horizon, especially in light of increased competition and unparalleled convenience at the fingertips of customers. The right preparation and approach can allow brands to reduce the impact of volatility, while making the right decisions afterwards, can help brands really get ahead of their competition.