Jared Castronova’s Post

Restaurants for months have said menu prices in California would rise as the state raised the minimum wage for fast-food workers. Now they are following through. Consumers picking up burgers, burritos and chicken sandwiches at chains in the Golden State are grappling with prices that for months have been rising at a faster clip than in other states, according to market-research firm Datassential.  Since September, when California moved to require large fast-food chains to bump up their minimum hourly pay to $20 in April, fast-food and fast-casual restaurants in California have increased prices by 10% overall, outpacing all other states, the firm found in an analysis of thousands of restaurants across 70 large chains. In Los Angeles on a recent April afternoon, Seth Amitin, a 39-year-old therapist, said his usual $16 meal that he picks up weekly at the Chick-fil-A in Hollywood, Calif., now costs $20. The price for a spicy chicken sandwich at that location had gone up to $7.09 from $6.29, or 13%, since mid-February, according to research by Gordon Haskett Research Advisors. Chick-fil-A’s prices increased 10.6% on average in California during that time period, Gordon Haskett found.  #inflation Heather Haddon Gordon Haskett Research Advisors Datassential

Sunday night thoughts. Sharing this from a 518-Foodies group and couldn’t agree more, plus I’ve been a Chef in the restaurant industry for over 30-years. “Please put into perspective the increase of pricing in everything. I keep seeing reviews come through, “this was too expensive for what we ordered” etc. Trust me, restaurants are not getting rich off of you, they’re just simply trying to survive. In order to pay people a livable wage, menu prices need to increase. Fryer oil is $60/box, 3 years ago it was $17. Menu prices need to increase. (This is just an example of something so small we wouldn’t even think about, that increased x2 in cost) Proteins have skyrocketed in pricing, menu prices need to increase. The cost of running a business in NY state is insane. Businesses are paying roughly 30% of their payroll in taxes/workers comp/etc. Menu prices need to increase. If you want to get served GOOD food that isn’t a frozen hamburger or tough piece of chicken, you’re going to pay for it. If a restaurant cares about the quality of food they’re putting out, don’t expect to pay under $15 for a sandwich anymore, don’t expect to pay under $20 for an entree. Typically, the calculation to price food at a restaurant is x3, which should cover utilities, labor, rent, operating costs, etc. But since the other numbers have increased drastically, prices have increased as well. I’ll say it again, restaurants aren’t trying to rip you off, they’re trying to survive. There’s a reason so many restaurants SHUT DOWN in the past few years. So think twice before you leave that review and mention pricing. Thanks for coming to my early Ted talk.” #sundaythoughts #coachtodd

Navigating the ongoing minimum wage increases seen across the U.S. restaurant industry requires a strategic approach. By making proactive decisions guided by data-driven insights, businesses can implement changes that enhance pricing strategies and boost their bottom line. Rooted from California's FAST act challenges, discover three strategies that restaurant operators can adopt to refine their pricing approach: https://lnkd.in/eibetyWR #pricing #restaurantpricing #restaurantindustry #fastfood #QSR

Managing restaurant labor costs is a crucial aspect of running a successful restaurant. Labor costs include wages, benefits, and other team member expenses making them both the biggest expense and, because of rising minimum wages, staff shortages, and a rising turnover rate, the hardest to control. It follows that finding ways to control these costs can help to improve restaurant profitability. Across all restaurant types, labor cost runs about 33% of sales. Often, the labor target percentages are based on industry averages. This is misguided if it is assumed restaurant will be profitable in this setting. Each restaurant is its own average, varying widely based on the type of restaurant. There is no such thing as an average restaurant, so it doesn’t make sense to use an industry average. #laborcosts #restaurants #profitability Read more: https://buff.ly/3Ec9CBj

They warned them this was going to happen.....Restaurants for months have said menu prices in California would rise as the state raised the minimum wage for fast-food workers. Now they are following through. Consumers picking up burgers, burritos and chicken sandwiches at chains in the Golden State are grappling with prices that for months have been rising at a faster clip than in other states, according to market-research firm Datassential. Since September, when California moved to require large fast-food chains to bump up their minimum hourly pay to $20 in April, fast-food and fast-casual restaurants in California have increased prices by 10% overall, outpacing all other states, the firm found in an analysis of thousands of restaurants across 70 large chains. 

My advice to a restaurant owner who was in a comparable situation post-pandemic: Be more effective at managing supply, but not at the expense of demand. Doing so may force customers to choose a basket of goods that is not acceptable due to taste or preference, resulting in additional revenue losses. An example would be a restaurant deciding to adopt a strategy of reducing its sandwich size by 20 percent but charging the same price. If a portion of their core customer base is indifferent to a price increase, but more sensitive to a reduction of size and quality, these customers will react as if an actual price increase had occurred (and to them it has, in the form of a lowering of quality and/or quantity) and will search elsewhere to recoup that loss of value. Strategically synchronizing supply (i.e., business costs) and demand (customer preferences and tastes) can be a more effective way to increase revenues than focusing solely on minimizing costs.

Diners may get sticker shock at menu prices but many don't know how challenging the restaurant business has become and how even menu increases may not be enough to save your neighborhood bar and grill. Insightful reporting on the challenges that restaurants face and the lengths restaurant operators are going to simply to stay open. Side note: support your local restaurant and help it remain part of what makes your community special! Repost to spread the word. 🙏 #foodservice #foodserviceindustry #restaurantindustry #restaurantsupply #fooddistributor #foodmanufacturing #foodmanufacturer #foodmanufacturers #foodmarketing #supplychain #restaurantoperations #supportlocal #supportlocalbusiness   https://lnkd.in/gUcv2Am2

In these challenging times of inflation and high labor costs, already low restaurant margins continue to tighten. This webinar will provide a roadmap to increasing profits in all these areas. Register: https://lnkd.in/eTHzzD5r

"Chipotle, the burrito and salad bowl giant, announced on Monday their decision of elevating the hourly wages of their restaurant workers to $15. The company also said that they are also going to offer employee referral bonuses worth $200 for restaurant workers and worth $700 for general managers. It promotes the ability to be a restaurateur, which is a manager of several Chipotle restaurants, within four years. Chipotle said that the position pays more than $100,000 a year, and they intend to fill 20,000 restaurant positions." #RestaurantIndustry #MinimumWage #Chipotle #WageInflation #LaborMarket #EconomicImpact #BusinessStrategy #InvestmentAdvice #StockMarket #MexitNews

"Chipotle, the burrito and salad bowl giant, announced on Monday their decision of elevating the hourly wages of their restaurant workers to $15. The company also said that they are also going to offer employee referral bonuses worth $200 for restaurant workers and worth $700 for general managers. It promotes the ability to be a restaurateur, which is a manager of several Chipotle restaurants, within four years. Chipotle said that the position pays more than $100,000 a year, and they intend to fill 20,000 restaurant positions." #RestaurantIndustry #MinimumWage #Chipotle #WageInflation #LaborMarket #EconomicImpact #BusinessStrategy #InvestmentAdvice #StockMarket #MexitNews