When market prices for ingredients drop, restaurants with a contracted markup in writing with their distributor will benefit from immediate price reductions. However, those without a contracted markup are at a significant disadvantage because their prices will drop much slower, potentially losing out on profits.
This disadvantage becomes even more pronounced during times when customers are watching their spending closely. Competitors with a margin in place can offer more competitive menu prices and see greater profits from similar sales. This allows them to offer higher wages to their staff and outspend the competition on advertising.
To avoid falling behind, it’s crucial to have a solid contract in place with your suppliers that outlines a set markup for everything you buy. This provides stability and protects your business from the fluctuations of the market. Take some time to review your supplier contracts and ensure you have a contracted markup in place.
In short, having a contracted markup in place is essential for restaurants to stay competitive and maintain their profits. Don’t let deflation harm your business – take action today. If you need help or advice, don’t hesitate to contact us at Thriving Restaurants. We’re dedicated to helping growing restaurant operators compete with big chains, leveraging our 30+ years of relationships, large buying power, and aggressive contracts. Gain an advantage over your competition before they gain one over you.