Inflation is Changing the Ways Restaurants Operate

As everything gets more expensive, consumers are panicking, and business owners are in a predicament. To cover supply chain costs, restaurant owners need to raise their prices. However, will raising these prices cause them to lose some loyal customers who cannot afford it anymore?

With any shift in costs, business owners will see the effect it has on profitability. However, since inflation is impacting all businesses throughout the nation, and some parts of the world at a much faster rate than it was it the past, business owners are rapidly adapting to these drastic economic shifts.

Restaurant inflation overview

According to Jonathan Maze from Restaurant Business, limited-service and full-service restaurants have raised prices to at least 7% over the past year as grocery prices are soaring as well, which means a more expensive supply chain. With that being said, this has been the steepest 12-month inflation rate since 1982.1

Therefore, to be able to keep up with the cost of items, restaurant owners have increased their menu prices. It was reported that restaurant menu prices have increased drastically that this has been the highest rate in 41 years, according to new federal data.2

“Inflation impacts restaurants in a variety of ways, but it hits them hardest in basic food costs. According to the report, the largest 12-month increases in food costs were in meats, poultry, fish and eggs, which rose 12.2 percent over the year.”3

How customers feel

“A new study shows consumers’ concern with inflation is the highest on record, according to Yelp’s Economic Average.”4

Consumers are now trying to eat more at home rather than spend on going out, but grocery prices have risen as well, so it is a demanding situation. Gas prices have also increased, so some consumers do not think it is worth the drive to go grab a quick bite to eat or celebrate at a nice restaurant.

Customers are looking for ways to save money now more than ever, and once they see the price raise for a restaurant they often go to, it may make them take a step back, or find some place “cheaper.”

However, consumers tend to be motivated to spend money for rewards, such as restaurant loyalty programs. Consumers are also willing to experiment with new brands and new menu items even with the price changes.

While working on your loyalty programs, the best way to ensure customer retention, is to build a relationship with them. It was reported that 76% of consumers say that no matter what the issue is, they will continue doing business with a company or brand if they have built a connection with them.5

How can restaurant owners tackle this issue?

Restaurant owners must understand that they need to adapt to the ever-changing economy while also focusing on keeping their current customers to help cover the costs.

While making these necessary changes, restaurant owners not only have to focus on retaining loyal customers, but they must also prioritize staff retention, hiring new employees, and keep up with new technology systems.

Business owners should consider using third-party delivery services if they are not already to help bring in new customers. Also, some restaurants should consider opening a ghost kitchen.

Ghost kitchens will help with customer retention and bring new customers into the business. Find which one would work best for your restaurant and help you save by using the ingredients you already have in your kitchen.

Loyalty programs play a big part in customer retention as well, despite the increase in menu prices. For example, customers at Starbucks can earn 2 stars per $1 order. Starbucks have increased some of its menu items as well, but thanks to its star rewards program, customers are still visiting.

So, even with the price increase, they will be able to reach a certain goal in their point system to win something from the menu much faster than they were before. This can be a free menu item, a side item, a discount, or merchandise.

Moreover, keeping the menu items updated can also help retain and bring in new customers. Customers love trying new things, especially if it is currently trending or never heard of before. This can be limited-time only items, so you will not have to spend too much on new ingredients.

Lastly, just have a conversation with your customers and build that trust and connection with them. If they feel like they have a bond with you, they will come more often just to have a chat and buy something small.

Goliath Consulting Group is a restaurant consultancy group based in Atlanta, Georgia. For more information on our services visit or email us at

Published by Linda Springer

Hi! My name is Linda Springer, and I am the Digital Marketing Manager at Goliath Consulting Group. During my free time, I enjoy reading fantasy novels to escape from my everyday life and traveling to countries with rich histories and cultures.

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