In order to help you manage the potential effects that rising costs may have on your business, I’m sharing my ideas on changes you can make to it now or within the next few months.
Prepare for Pricing Changes
I advise you to make your life simpler by setting up a system to easily track your costs so that you can adjust your prices as needed, even though I don’t advise doing so every time the price of eggs increases by a few cents. As the price of ingredients fluctuates, using an Excel spreadsheet or bakery costing software will be helpful.
To ensure that your pricing is still set up in a way that enables you to maintain a profit in your business, make it a point to analyze your costs every quarter. Adjust your pricing as the rising cost of ingredients and supplies starts to have an effect on your profit margin so that you can continue operating.
It is entirely up to you whether or not to inform your clientele publicly if you decide to raise your prices. I don’t think it’s necessary, personally. It goes without saying that you shouldn’t alter pricing in relation to earlier quotes or signed contracts. Future orders or purchases, in my opinion, should be priced to support your company’s profitability.
Alternative Ingredients
Consider substituting less expensive ingredients for more expensive ones when it’s possible to do so without sacrificing taste or quality. I understand that for bakers or chefs with sophisticated palates, this can be a difficult adjustment, but I advise you to modify your recipes to maximize their cost before testing it on your target market. You might have discovered a successful adjustment if the feedback is favorable or if they don’t even notice the change.
Compare prices
Although shopping in your neighborhood can be very convenient, there may be better options when it comes to buying ingredients or packaging. To see if you can find more affordable alternatives for some of your primary ingredients or supplies, search online vendors. To help you lower your costs and boost your profits, think about switching brands or purchasing in larger quantities.
Your Menu Should Be Limited
I previously talked about how you can track your ingredient costs using technology. Analyzing the profitability of your menu items should come after you’ve taken the time to determine your costs. Even though you might adore having that incredibly distinctive flavor on your menu, the current economic climate might make it unnecessary to continue serving it. Those menu items that simply don’t make financial sense at this time might want to be temporarily removed. They can’t order it if you don’t offer it. If you have to take something off your menu, make sure to charge more for it so that when a customer chooses it, it will still make money for your business.
Look for opportunities to change.
Let’s face it: are five distinct packaging styles required for five distinct menu items? Even though you might enjoy giving your customers unique experiences, there are probably changes you can make to some aspects of your business that will help you cut costs without sacrificing the customer experience.
Rubber stamps can take the place of brand stickers. Fully customized printed boxes can be replaced with craft boxes. Individual cupcakes can be packaged in plastic party/cocktail cups, which can also serve as customers’ actual water cups. Review your supplies and other costs to see if there are any areas where you can make minor adjustments that, over time, will add up to significant savings.
Final Reflections
In conclusion, operating a food business is becoming more and more expensive as the world changes. There are effects of the pandemic that may eventually go away, but neither life nor costs are guaranteed to return to normal. As a result, it is your duty as a boss to make sure that you have made the necessary adjustments to keep your company operating profitably. Don’t ignore the minor adjustments. If you can reduce your expenses by $85 a month, you will be able to make over $1,000 more in profits in a year. That could cover the cost of a nice beach vacation or a new piece of equipment. In either case, it’s up to you to pay attention to the numbers and make the necessary adjustments to ensure that your business not only survives but also thrives during these trying times.
