Hi!
I am doing my books and looking to offset the cost of min wage. It will mean an additional $8500/yr and I am not absorbing this.
I am looking at my options every which way from Sunday and one of them is to cut out the free refills.
What are your thoughts? Since I have been doing it, will I look like a cheapo and put a bad taste in their mouths? Note that I offer $5.99 lunches every day and am building up my lunch crowd… will I lose their business if no free refills?
Do you currently offer free refills? Have you in the past and then discontinued? If so, what was the reaction?
Also note in cunjunction (if I do this) I will be raising a few prices as well…
Your advice, as always, is anticipated… Thank you!
I think it would be a terrible move. In this day and age people expect refills, especially because that is what you do now. I would rather collect an extra quarter for each soda and extra quarters from other places. Do you charge for extra dressing? Are you weighing cheese? When was the last time you checked your phone bill for better rates? Could you send one person home 1/2 hour early everday, bring someone in 1/2 hour later everyday. ETC.
8500 bucks isn’t that much money…really. Look around and you will find the quarters.
You can also look at recovering some revenues in your daily specials. You could revise them from, say, $2 of your sandwich to $1.50 . . . change your Friday buy one get one half price to a “Dinner for Two” promo that has a higher return for you.
Instead of giving away over $4.25 for pasta on the most popular dine out night of the week, you could possibly put together a pricing that is half that discount, or has some other add-on, like a dessert. Heck, a combination appetizer with a price point around $8 or $8.50 could net some higher tickets for dine-in groups (prov sticks, onion rings and mushrooms; for example).
Accouting for cost increase is balanced by cutting costs . . . or increasing revenues. The best way to look at this is probably that the monkey is on your back to find new revenues. Sure, some menu/pricing adjustment will help. Getting more butts through the door and in seats will help more. Nothing cures a skewed balance sheet like added sales. Maybe tell your staff that the wage increase is going to put a pinch on the business, and that you want to try to raise sales instead of cutting hours/staff.
Improved efficiency and service will add to your rep . . . new and more effective marketing plans will get more people to try your place . . . Loyal customer program could encourage repeat sales among existing customer base . . . push that catering/group sales angle you have going with those party trays. Find as many “excuses” you can imagine for a customer to get one of your trays, and start exploiting them. I am actually assuming you guys are the better marketing wizards we are (good ideas and average implementation commitment usually) and can find the new angles that will work for you.
Someone here said it was easier to find $5,000 in new sales than to find the much to cut from the operation. I don’t think it is ALWAYS true, but it changed my outlook on balancing the budget with revenues as well as cost cutting. Labor % is a ratio to sales . . . more sales means better ratio.
You can offset labor costs also by bringing people in later and sending them home earlier depending on business. In the corporate world, increasing sales is the cure all for most problems including labor and food costs. Cutting out free refills isn’t a good idea, besides, pop on tap is cheap anyways.
Nicks is absolutely correct in the fact that you need to have specials that won’t break the bank. We’ve really looked at how much we’re offering for specials, and even if it’s $. 75 off, the customer still feels like they’re getting a deal. One thing we did in the mall was put lasagna as a special, full price, and a pop,full price, sold a ton that day. It’s all about customer perception.
With rising costs weekly, if not daily, you need to appear to not look cheap. Raise your prices a little to help as well. You’d be surprised on what a dime or a quarter will do. It won’t appear to be different, but it will take a big chunk out of your rising costs.
DO NOT CHARGE FOR REFILLS!!! You’ll get the whole town talking about you, but not for the right reasons.
I don’t know how my servers would even hope to keep track of that without slowing service down to a halt.
The evening news every night gives you every excuse to raise your lunch special $.50 each. This is the time to take a price increase, everyone will understand. And I would think $6.49 is still one of the cheapest lunches in town. I went up last fall from $5 to $6 on many lunch specials, and to $5.50 on the two most popular. The mix works out just fine, and NO, it did not hurt the server’s tips.
Absolutely, if you are giving your employees a raise to cover the min wage level, you should trim the hours a bit.
Seriously, who is going to argue with you for going home 1/2 early, or coming in 1/2 hour later. If you paying them a little more, you can expect them to get done a little quicker. I’m sure that will be the philosophy of most other business owners facing the same situation next month.
Finally, as usual, I’m with Nick on the specials. Unless you are introducing a new item at a special price, independents should really be focusing on packaged promotions. Find you best markup items, try to make some type of special with a pizza, that item, maybe a 2 liter, at $19.99.