3 Ways Small Businesses Can Continue To Thrive Despite Inflation
3 key ways that food and beverage establishments can cope with inflation, and find success.
Inflation is at a 40-year high, and according to a 2022 Intuit Small Business Insights report, 99% of small business owners are concerned about how it will affect them. For lack of a better word, oof.
The good news: There are 3 key ways that food and beverage establishments can cope with inflation, and find success despite of it:
- Adjust & Optimize Current Business Operations
- Diversify How Revenue Comes In
- Lean On Savvy POS Technology
1. Adjust & Optimize Current Business Operations
There are operational changes you can make right now in order to cut costs and maximize profits. Because we all know that raising menu prices is much easier said than done.
Reconsider Where You Source
First, analyze where you’re getting ingredients and materials from. If you’re experiencing increased shipping costs and delivery delays, it’s a good idea to try sourcing local.
This not only is a sustainable way to do business, it ensures your materials are fresh. If you’re concerned about a certain ingredient that’s not in season year-round in your area, consider replacing it with a seasonal ingredient. Guests appreciate fresh, local food from other businesses they love, and they may even be willing to pay a higher price for it!
Small Business Benefits From Sourcing Local:
- Opportunities to collaborate and support other small businesses around you
- Save money on shipping costs
- Use a dependable, convenient source of materials
Try A Smaller Menu
Using reports from your POS, you can identify the best sellers and the items that aren’t ordered as often. It may be a good idea to cut those less popular offerings!
Small Business Benefits From Smaller Menus:
- Save money storing ingredients for items that aren’t ordered often
- Save staff time on perfecting and crafting a multitude of menu items
- Guarantee guest satisfaction by serving them a best seller they’re sure to love
Offer Trade Downs
Trade downs are menu options that give price-sensitive guests an opportunity to “trade down” for less expensive items. The last thing you want is for guests’ immediate reaction to your menu to be: Wow, this place is expensive. If instead, they see plenty of affordable options, they’re bound to come back again and bring their full-wallet friends.
Offering trade downs doesn’t contradict the suggestion to sport a smaller menu either. Trade downs could be smaller portions (appetizer or taster) of your best selling flagship items, for example. Snack-size portions on the menu can convince guests to order dishes despite visiting you in the afternoon between meals, too!
Small Business Benefits From Trade Downs:
- Compete with other businesses around you by offering something at every price point
- Capture revenue you otherwise wouldn’t from those price-sensitive guests
Provide Exclusivity Instead Of Discounts
It’s obviously not the ideal time to be pricing any items at a discount. But some small businesses depend on those deals to bring in revenue, oftentimes at certain days of the week or hours of the day.
But, if done right, here’s what can be just as effective as discounts: limited-time offers (LTOs). LTOs could be personal pizzas offered only during lunch hours, or beer flights only offered on weekdays. Of course, the LTOs you offer are dependent on traffic and your business’s bandwidth.
The point is, by focusing on exclusivity rather than lower pricing, your small business can drive sales without missing out on precious profit margins.
Small Business Benefits From Limited-Time Offers:
- Drive traffic to certain items during certain days and times
- Profit positively since you’re not offering discounted rates
2. Diversify How Revenue Comes In
How can you make more money? Add more ways for revenue to come in! Here are some ideas:
No Food? Add Some!
If you run a beverage-only business, there’s a profitable opportunity for you in offering food. It doesn’t have to be a huge lift: You can start super simple by selling and marking up premade bagged snacks from the store. (Bonus points if it’s local!)
Take it a step further by bringing hot food on premise. Inviting food trucks to park in your lot is a great strategy, and those folks are excited to make an extra dime, too. Or, try a small scale kitchen operation yourself!
Buckstin Brewing Company in Nederland, TX made (metaphorical) lemonade out of an oven, simple ingredients, and a lot of creativity. They found that a little labor and some home cooked grub went a long way in satisfying hungry guests:
“I think our biggest advantage right now is our kitchen! I know that many people are afraid of doing a full kitchen especially if they’ve never worked in one before, but I designed our kitchen off of a food truck layout and every ingredient on our menu is on at least 3 items. We bake everything, no fryer or grill.”
-Gabrielle Blanco, Co-owner of Buckstin Brewing
Small Business Benefits From Food On Premise:
- Increase tab sizes
- Inspire longer term stays at your establishment
- Provide a family-friendly environment (which drives up tab size, too!)
Expand Into New Markets
Hey, craft beverage producers and lunch/dinner spots: What if you offered coffee, too?
After all, if your small business falls in one of those categories, your space sits untouched until the lunch rush. Breweries have had success adding coffee to their menus because now guests have a reason to come in the morning when they typically wouldn’t! Plus, since you’re spending precious rent money, coffee presents an opportunity to bring in more revenue to offset that cost.
Offering stuff that can be consumed at all times of the day keeps your small business top of mind, anytime.
Small Business Benefits From Expanding Your Offerings:
- Increase tab sizes
- Optimize the time spent using your space
- Diversify why guests visit you
Lean Into Merchandise Sales
If you’re treating merchandise as a checklist item instead of a revenue-building opportunity, your wallet is missing out. Your small business can make substantial margins on swag sales, and outfitting your fans in branded merch is free marketing!
Take it from Daniel Callender at Salty Turtle Beer Co.: “Merchandise has been a huge revenue generator for us, especially being in a touristy area. During the summer I can’t keep shirts in stock, can’t keep hats in stock.” He claims merch sales have been critical to Salty Turtle’s growth!
Austin Beerworks is another great example of optimizing their swag sales to maximize revenue. Their merchandise options go far beyond shirts and hoodies—there are baby onesies, cufflinks, river tubes, dog toys, and even Crocs Jibbitz! Hey, if Justin Bieber can rock them, so can you.
Small Business Benefits From Maximizing Merchandise Sales:
- Build brand awareness
- Maximize tab size
- Inspire brand loyalty among your fanbase
Rent Out Your Small Business For Events
You’re proud of the space you’ve made uniquely your brand. Chances are, there’s a birthday, anniversary, or work party that would love to rent it out!
Renting your space out for events guarantees a hefty amount of business. Not only do you make money on the rental fee, you also bring money in from all of the party goers! Plus, it establishes your small business as a community gathering hub, and first-timers are bound to come back for another taste of that peanut butter burger.
Small Business Benefits From Renting Out Your Space:
- Substantial revenue opportunities
- Build brand awareness
3. Lean On Savvy POS Technology
Now, you might be thinking all these diversification avenues add more work to your plate. And while you may have a newly dedicated barista or event coordinator, there is technology available to help you streamline all things operationally.
Turn to your trusty POS system!
Identify Metrics Key To Your Success
Making a plan for a successful future is impossible without good POS reporting. Here are some key metrics to look into, and why they’re so important in mitigating the effects of inflation:
Sales By Category Report
A Sales By Category report gives a summary of sales broken down by category, item type, quantity, and size. If inventory is moving, guests like it and you should make more of it.
The best POS gets granular with these reports. For example, Arryved filters by item size and uses ounce-level tracking so small businesses can determine which beverages are the best sellers, down to the drop!
Average Tab Size Report
You’re curious, aren’t you? This report tells you how long a party stayed, if they ate, and how many people were there. Now you have the insights necessary to inspire longer stays and bigger tabs!
Perhaps a popular event doubled the length of time parties spent at your meadery. Throw another!
Maybe the addition of chicken fingers to the menu is bringing more families in. Talk to your chef about other kid-friendly options you could offer!
Hour By Hour Report
This report tracks the rate of orders coming in by the hour, so you can determine when your small business is the busiest. It’s especially helpful nowadays with limited staffing resources: Now you can staff up during the busiest hours and work with a smaller team during the slow ones. (Or try contactless ordering—more to come on that!)
The Rayback, Boulder’s highest volume community gathering space, successfully utilized Arryved’s hourly reports and others to optimize efficiency among their staff and even maximize beverage sales. As Mel, their GM, said, “Labor is probably one of the biggest expenses and biggest factors of cost and profitability.”
There’s a reason her team depends on this report, and your small business should, too!
Small Business Benefits From POS Reporting:
- Informed business insights set you up for long term success
- Efficient staffing schedules keep staff and guests satisfied
Streamline Service Operations With Contactless Ordering Tools
QR codes save staff from having to deliver menus, collect orders, and run cards. Empowering guests to do all of this on their own allows staff-guest interactions to focus on the more fun stuff, such as brand education, event invitations, and upsells!
Plus, QR codes have proven to increase tab and tip size by 24%. Now we’re talkin’!
Online stores offer similar benefits in guest convenience. But, because online stores capture off premise sales, that means your small business can sell to fans out of state!
In addition to shipping merchandise cross country, online stores help facilitate to-go orders for those guests that have a craving for your goods but they’d prefer to enjoy them at home.
Both opportunities from online stores ultimately boost revenue potential.
Small Business Benefits From Contactless Ordering:
- Increase tab size, and therefore revenue
- Improve staff morale from increased tips and freedom from tedious admin tasks
- Diversify revenue streams by collecting off premise orders
- Delight guests with convenient, easy-to-use ordering tools
POS Integrations Make Your Systems Work Together
Inventory management integrations specifically help small businesses cope with inflation. They help you track supply and demand by calculating:
- The minimal amount of inventory you need to keep in stock
- Costs of the inventory in stock
- How often you need to buy more of each type of inventory
This integration keeps the back of house staff organized and makes sure you’re not wasting time or space on unnecessary inventory. Plus, there’s less of a chance that something goes bad!
Small Business Benefits From POS Integrations:
- Maximize operational efficiency
- Save staff time by leaving inventory management to the robots
- Better understand inventory needs
Looking for more resources on how to grow your small business despite increased expenses all around? Learn about the tipping culture shift and how you can easily supplement higher staff incomes!