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When asked to name the top three margins pressures they will be facing in the last half of 2008, 83 percent of survey respondents named rising commodity prices (corn, beef, chicken, cheese) and energy costs (oil and gas) as the two most influential factors affecting margins. The third greatest concern, with 67 percent in agreement, was an ability to maintain revenue and traffic growth.
Reflecting the impact of rising costs, 45 percent of survey respondents also expect profitability to decrease somewhat over the next 12 months, and 27 percent reported expectations of moderate increases in profitability.
The top strategy cited by chain operators for easing pressure on margins to improve profitability was improving procurement processes and inventory control.
Other key strategies for strengthening the year’s financial outlook include switching to lower-cost food and beverage products (64 percent), increasing menu prices (45 percent), simplifying the menu (18 percent) and revamping labor compensation practices (9 percent).

Filed under: Restaurant News