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  • Slow Restaurant Sales – Low Food Cost to Blame?

  • All of your problems are not necessarily related to a lack of sound online branding strategies/infrastructure.  The problem is usually not related to your lack of online strategies, but you end up being punished more because you compound a larger economic problem with your lack of online strategies. 

    In some way, it's all tied in to your lack of online knowledge that harms your business, but that is not always the main problem at hand.  The main economic problems our industry faces tend to be items we can not control, hence why they are overall economic issues.  One of them, believe it or not, is food deflation. 

    Yes, low food costs, when extreme in nature, actually harm restaurants because we are not just competing with other restaurants, we are competing with anyone that serves food.  In this case, grocery stores.

    Grocery stores are competing for transactions and they are cannibalizing margins just to get traffic in the door.  The net loser of this ends up being restaurants.  I was scratching my head at first how low food costs could be a bad thing for restaurants, but it all makes sense.  The low cost of eating at home compounded with the high cost of living (low wage growth, high taxes) is punishing restaurants, particularly Independent Restaurants. 

    The good thing is, if we can survive long enough, the food costs should rebound to normal levels making grocery stores reset pricing back to normal levels.  When that happens, restaurants should see "some" relief since they will be more competitively priced in comparison. 

    At RBS, we filter through a lot of the filler articles for good data-driven articles pertinent to you.  You can read more about this food deflation and lack of restaurant sales on NRN here.

    If you are seeing your competition online and unsure how to compete, RBS provides free consultation to your restaurant (and select non-restaurant businesses).  Contact us here.