The Key to Managing Restaurant Margins with Rising Supply & Labor Costs
Dynamic pricing and inventory management can double margins, reduce labor costs, and offer high ROI for profit-focused restaurants.
- Dynamic pricing and inventory management systems: A two-pronged approach that involves dynamic pricing systems like Sauce and inventory management solutions to combat rising food costs. Restaurants can 2x margins by targeting cost of goods sold (COGS) and optimizing gross sales using these tools.
- Combating rising labor costs at Dog Haus: Dynamic pricing offers two benefits, easy implementation and reduction of labor costs as a percentage of gross sales, providing cost savings and more margin.
- The ROI of using a dynamic pricing platform: The return on investment from using a dynamic pricing platform like Sauce can be 10 to 15 times the original investment, providing a sustainable solution for profit-focused restaurants.
Combating Rising Food Costs With Dynamic Pricing And Inventory Management Systems
Dog Haus Operator Faizan Khan: To combat rising food costs, we take a two-pronged approach that involves both dynamic pricing and inventory management systems. We view supply chain costs from a cost of goods sold (COGS) perspective, while using dynamic pricing as a tool to optimize gross sales and margins. Our systems use Margin Edge to price out our recipes, targeting the appropriate COGS. This feeds into the baseline pricing, which is then controlled by upper and lower bounds. Although not fully integrated yet, this approach helps us address the issue of rising food costs. Improving the fluidity of the integration is on our roadmap, but for now, our focus is on making it easy to get started.
How Dynamic Pricing Helps Combat Labor Costs at Dog Haus
When it comes to labor costs at Dog Haus, dynamic pricing offers two benefits. Firstly, it is easy to implement and offers the ability to perform "what-if" analysis to see its impact. Secondly, it helps to reduce labor costs as a percentage of gross sales, thus allowing for a little more margin and cost savings.
The ROI of Using A Dynamic Pricing Platform - From a Dog Haus Operator
Faizan Khan: If the return on investment isn't there, our business won't be sustainable. The ROI from using a dynamic pricing platform is approximately 10 to 15 times the original investment. The optimization of margin is dynamic, so it can fluctuate, but after a period of trial and error, it has settled into an average of 10 to 15 times the investment.
