Biz Blog#1-A: Inflationary Pricing

My last post was about location and what you need to make per square foot (as a general rule of thumb) to succeed. Towards the end I discussed my own place and how I need to capture more money per order this calender year to sustain and hopefully increase my 2007 price per square foot level. To increase it I plan on going after off-premise sales pretty hard, which should add about 30% give or take. But to just sustain it I will have to increase some menu pricing to reflect my suppliers price increases on to the consumer. I have added an article below that came out a month or so ago in the New York Times discussing the surge in prices, which is affecting all of us as consumers and business owners. Its affecting you at the pump, the restaurant, etc. Some things you notice immediately such as rising fuel prices. Some are more subtle, such as a restaurant like mine raising some of the menu prices. Some restaurants wont raise their prices right away, especially those that lie in the "Full service" category. They will make other little subtle changes. Remember that free bread they used to bring to the table, notice you have to ask for it now? Wheat is up 270%+ this year....a year ago bread was so cheap they could afford to give you some for free, now its relatively expensive.....why give you free bread if they dont have to? Remember all that butter that used to lay next to the salt & pepper shakers? Where is that now? Milk has also seen a HUGE % increase and is expected to rise another 40% in the coming months, milk based products are included in that figure. Why would they leave a pile of cube butters on the table for you dump 4 of them on your baked potato to stuff your head-hole with? How about creamer for your coffee? Why would they leave creamer on the table for you now.........so you can dump 5 of them in your venti coffee? Not to mention the parents of that little bastard kid at the table next to you whose opening the creamers up and drinking them straight, or that good ol' sweet "christian" grandma who never leaves the restaurant without stuffing her purse full of your complimentary creamers. Thieving wench.
Why this is happening is another blog that I dont have time to explain, but a lot of it is due to the high demand for ethanol. You'll notice these things now and if you are going to open a place up you cant just sit idle and pay attention to whats going on in the world markets. They affect you directly, and if you are not paying attention they will sting your ass. If you dont your sales per square foot will start dropping, and the next thing you know you'll be in trouble. Read the Wall Street Journal and/or Business Day in the New York Times. Every weekend pick up a copy of Barron's and read it. Keep up with whats going on......you'll be glad you did........trust me.

Check this article out........

http://www.nytimes.com/2008/01/15/business/worldbusiness/15commodities.html?_r=1&scp=1&sq=commodities%27+relentless+surge&st=nyt&oref=slogin