Friday, 29 October 2010

Don't put up your prices ... take less profit

Horizons, the hospitality industry analysts report a 5.6% increase in the average cost of pub grub. Even with 3.8% global food inflation this means pubs are charging more for their food beyond margin protection.

Whilst I had to remain competitive against all the managed offers that are available I took the deliberate decision several years ago to reduce my GP on food to 40%.

By doing this I was able to source quality ingredients, many locally sourced (but especially meat and poultry), go with the seasons and serve decent sized portions.

Not only did it mean a consistent food trade, but also is a great PR success - our Sunday Lunches, for instance, were the talk of the area and always over-subscribed.

It may not suit all venues but I would recommend this as a strategy if you think you will be able to make up overall net profit on throughput.
Consumer confidence is still low and many potential customers will be considering reducing their eating out in the face of continuing austerity.

Offering value for money and quality may well be the key to success in the coming years and if operators can manage it they should resist the urge to increase retail prices in the face of increased costs.

1 comment:

Cooking Lager said...

It's what the Spoons do, lower margin, higher throughput. They appear to be doing okay.