A Cool Way to Raise Prices Without Negative Impact

Any food business owner will agree that inflation is here. Check your Sysco invoice and your gasoline credit card bill and you'll have all of the necessary evidence.  Spending cuts can help in the short term, but eventually menu prices have to be raised. Usually, this is a most uncomfortable process since most customers will not vocally rebel about a price increase.  Some will accept it and continue to order, but some will just fade away as they find cheaper caterers.

The answer to this dilemma is to raise prices while preserving the existing price level for current customers. The process takes a bit of work, but the results can be amazing.

First, create a loyalty card for all current customers.  Plastic credit-like cards can be custom made and easily purchased online.  Contact all current customers and frankly tell them that you have to raise prices, but you are going to honor the current price they pay for a period of 6 - 12 months.  Give them a nicely designed card, and tell them that all they have to do is mention the card at the time of order to be exempt from the price increase.  (Of course this means your price increase will not generate any income from sales to existing customers.)

However, any new customer automatically pays the new menu price.  The process may take some time, but any new (including last minute) customers you get will seriously help the bottom line.  Regular customers will be happy you thought to protect them and new customers won't know the difference.  Try this--it can be the best of both worlds.

Rising Food Costs and What To Do About It: Part One

Anyone in the food business knows that we are again witnessing another spike in food prices.  Even though government statisticians conveniently remove the "volatile" elements of food and energy from the consumer price index, business owners are reminded with the arrival of  every new invoice that raw material costs are rapidly escalating.

Two quick solutions to this problem are product substitution and menu price increases.  Both are uncomfortable propositions, but there are strategies to implement these changes without causing damage to your brand and/or loss of customers.

Basically, product substitution means finding cheaper alternatives to products the kitchen uses.  Now instead of repeating the old mantra that your chef should be able to use cheaper chicken and yet produce the same quality entree,  I firmly believe that existing menus should be left alone.  Customers become accustomed to your products and will quickly discover what you've done if  you start purchasing a lower quality chicken for your fajitas, for example.

That said, if you decide to use grade B chicken, create a new menu item for it.  Maybe it will be a variation of your stir fry chicken recipe, but with a different sauce. Give it a different name. You can charge the same price as your regular stir fry chicken, but since no customers will have tasted this recipe, there will have been no cuts in quality.  You can obviously accomplish this with many of your current menu items.  Yes, it means stocking more products, but it can help blunt food cost increases.

Watch for Part Two:  How To Raise Menu prices Without Negative Impact

Creative Ways to Get Those Last Minute Orders Out The Door

A successful drop off catering day requires serious planning.  By Tuesday afternoon at 5:00, for example, you and your staff should know how you are going to handle Wednesday's business.  Whatever systems you have in place should be helping to ensure that Wednesday's orders are produced to your specifications and delivered on time.

But what do you do on Wednesday when two customers request food at the last minute?  Your kitchen staff should be able to produce a couple more orders, but how do you get them delivered on time?

Here are 6 creative methods my clients have successfully utilized to solve the last minute order delivery dilemma:

1)  Give yourself some time flexibility to double up deliveries.Your telephone answerer should be trained to ascertain the last minute customer's actual eating time.  Even if the customer requests an 11:30 delivery, he may not really need the food on the premises until 11:50 in order for it to be served at noon.  This way, a driver with an 11:30 delivery could also take the new 11:50 order.  Going further, you could call the original 11:30 delivery and ask them if it would be OK to arrive just 10 minutes earlier. This gives your driver even more time.  Most  existing customers will agree to this if you don't request this accommodation too often. 

2)  Carefully analyze the day's orders.  If you have a simple box lunch order for 10 scheduled to be delivered at 11:30 to a large office, make a call to see if the office has a refrigerator large enough to keep their lunches cold.  Be honest and explain that you are extremely busy and ask for the accommodation.  If your customer gives the OK, deliver that order ASAP, even if it's only 9:30.  In actuality it doesn't make much difference if the already prepared box lunches sit in your refrigerator or your customer's.  Now you have a driver available for the new order. Again, don't use this trick too often with the same customer.

3) Every employee is a potential driver.  Team them up to get the job done!  If your dishwasher does not speak English, for example, and your office manager is not able to lift heavy boxes, you may have a match made in catering heaven.  Have the office manager drive the dishwasher to the location. The manager can properly communicate with the customer, while the dishwasher can haul in and set up the order.

4) Call Aunt Ruth and Uncle Billy.  Obviously, not all drop off orders are suitable for what I call "amateur delivery."  But many are, and if your relatives are available, they may be happy to help you out on a busy day.  If you've really planned ahead, you will have  previously "trained" Ruth and Billy in the rudimentary skills of drop off delivery, and they'll be set to go.

5) Call those who make money from your business.  Accountants, attorneys, insurance agents, and especially Sysco and US Foods reps all have cars and therefore they are all potential drivers.  All they need is a 45 minute window to put an order in their car and deliver it.  Never say never.  Several of my clients have gotten through a difficult delivery day because they took a chance and made a phone call.

6) Train a local courier service to take your orders.  One Midwest client often used Quicksilver Messenger Service to deliver catering orders on time.  They started with simple box lunch orders, but after six months, Quicksilver was setting up hot buffets!  If you've trained your staff to deliver properly, you can train the staff at a courier service to do the same thing.  If the courier company senses a load of repeat business, you will find a willing delivery partner who will be willing and able to respond quickly to your needs.

Last minute orders, as I explained last week, can be crucial to building your business.  Remember, you must think out of the box to get those boxes delivered on time.

Last Minute Orders--Why You Should Take Them

Many caterers enjoy their business because, unlike restaurants, caterers usually have a reasonable idea of what is scheduled for the next day.  Although not absolutely unheard of, last minute weddings that require catering are uncommon.  Short notice events can pop up, but again, this is not the norm.

When you enter the realm of drop off catering, however, the rules drastically change. Breakfasts, lunches, and dinners for any number of guests can appear on your doorstep with sometimes only an hour's notice!

If you've got 10 orders for lunch today, and they're all choreographed  perfectly so that the food arrives on time, a last minute order can be a challenge.

Now note that I did not characterize the last minute order as a "problem."  I called it a challenge for a reason.

No situation should be characterized as a problem, if it involves a customer who offers you money for your product.  It may definitely become a challenge to produce and deliver that order along with your other orders in a timely manner, but you need to take that last minute order.

Why?

1)  If the order is from an active customer, they naturally depend on you to service them.  If you can't, there will be someone else out there who can.

2)  Maybe the order is indeed from a customer who has had their order denied by their regular caterer. (Probably not a client of mine!)  In this case, you can start a long term relationship by solving the customer's problem.

3)  Maybe a last minute meeting occurred and the team leader needs food delivered ASAP.  For whatever reason, someone found your number.  Service this new customer properly and again, you can begin a long term relationship.

4) Possibly a regular customer simply forgot to order.  They'll look really bad if lunch doesn't arrive.  If you can save them, you can have a customer for life.

5) A new customer misunderstood the ordering process.  Maybe they're used to merely calling a restaurant an hour before they need their food.  You can explain your ordering guidelines later.  Take the order now and make money!

Remember, your regular and potential customers most likely do not understand the inner workings of your business and they shouldn't be expected to do so.  They don't want to know how many orders you have, how many employees have called in sick, or how many of your vehicles are down. You advertise that you deliver great food on time and people will call you for that reason.  It may seem trying and inconvenient for you, but the rewards can be great.

Next time--CREATIVE WAYS TO GET THOSE LAST MINUTE ORDERS OUT THE DOOR

Rising Fuel Costs -- Get Compensated

Rising gasoline prices are not only annoying--they can be extremely troublesome to any company that delivers food.  To solve the problem, do what the big guys do and add a fuel surcharge to every invoice.  When Sysco and US Foods deliver to you, chances are you'll see this charge at the bottom of your invoice.  Do the same with your customers.

On each invoice add 5.00 or 7.50 and call it a fuel cost adjustment. After you've done it once, most customers will accept it and not question it.  Of course explain the situation to the customer when you take the order, or include a written explanation like this on the actual invoice:

"Due to the recent  increase in fuel costs we have had to institute a minimal fuel cost adjustment. Thank you for your understanding."

Think about it.  Ten orders today and each now produces a 7.50 surcharge.  That 75.00 should help fill the tank.

Delivery Charges--Are They OK?

Customers know that it costs money for your company to deliver their food on time.  These costs are above and beyond the the expenses for food, labor, and packaging.  It is reasonable to add a delivery charge for each drop off catering order.  Here are some important points to remember, however:

1)  First check competitor's delivery charges.  You don't want to be the only one who charges $30.00 when everyone else is at $20.00 or below.

2)  Consider a flat rate for all deliveries, regardless of distance.  Note the success the Post Office has had with flat rate Priority Mail marketing.  You can always tack on a surcharge for a true long distance order.  Prix fixe is the way to go!

3) Make sure the customer is notified up front about the delivery charge.  No one likes surprises.

4) Check local state taxing regulations to see if you should charge sales tax on the delivery charge.

5) If you pick up your drop off equipment later, don't add another charge for this service.  Customers are usually annoyed by this practice.

Delivery charges can be a great way to recoup labor and vehicle expense.  If one driver delivers three lunch orders, you could receive an extra $60.00 in income if you charged a $20.00 delivery charge on each order.  That definitely adds up!

Next:  Rising Fuel Costs--One Way To Soften Their Impact

Abundant Labor Supply Won't Last Forever

Even though we are in the very beginning stages of the economic recovery, and even if your job posts on craigslist net you 50 or more applicants, this will not always be the case.  Although this recession was unusually deep and nasty, unemployment will eventually drop.  Now is the time to position yourself for the coming changes.  If you were in business 5 years ago, you will remember the chronic food service labor shortages that plagued many operators.  Whether this occurs again late this year, next year, or in 2013, now is the time to position yourself to blunt the effects of the inevitable tightness that will occur in the labor market.

Figure out today how to retain employees in the future. Rethink profit sharing plans.  Consider an allowance toward health insurance premiums.  Remind your employees of their current benefits such as free or reduced price food and beverages and flexible scheduling.  Never think that employees "can't quit" because they have no where else to go.  Do what you can now to retain staff for the future.