With inflation rates surging over 8.5%, and even more so in foodservice, food costs have been off the charts. These inflationary challenges are very similar to what all companies faced in 2009, 2010 and 2011 as we migrated through the great recession. The difference in that time frame versus today is that we had little supply chain disruption and the inflationary trends were not nearly as rapid. In order to overcome these challenges we need to really take a look at the current state of the economy and what we can do to persevere by focusing on the things we can control.
Our current economic landscape has certainly been a challenge of mountains and valleys to navigate. Not only have inflation rates been excessively on the rise, we have seen the international supply chain take major hits since the beginning of the pandemic. In the past, we have been fortunate enough to not have the need for consumer facing price increases, for even as long as a year. This is no longer the case from a supply and inflation standpoint. However, we are not alone in facing these particular challenges.
Historically, we've not seen the same degree of these challenges. Annual contracts with manufactures are no longer able to be locked in at particular costs, and we've seen products such as our tenders increase 3x in price, more than ever before. We have to keep in mind that the supply chain in more complex than we realize and is not something to take for granted. Everyone has to be profitable in the supply chain so that you as our retailers can remain successful. While margins have dwindled, we continue to recognize and drive home our guiding principle that profitability is essential to your success.
Having gone through something similar in past years, we've done considerable research on how to pivot recessions and found that branded accounts come out ahead when pivoting through these demanding times. Quality products, services and value remains our primary focus, and through these efforts, we will overcome. Thank you to our retailers that continue to remain committed to our brands and the quality we strive for.
We are committed to your success. Be sure you are implementing the tools we provide to set you up for victory.
- Utilize our technology: Our cloud-based menu board technology allows us to make quick pivots to pricing and promotions – look around at other QSRs and how their menus are printed with magnets and such—with our format, we can execute updates quickly. This simplified menu will not only help you pivot labor shortages, it is key to turning our brands in to household names. If you have not made the switch to our SMART menu, we appreciate you reaching out to your Regional Growth Advisor to do so.
- We have developed our mobile app technology this last year, which we encourage all our franchise programs to be using. Consumers are looking for those values and kickbacks, and this rewards the most loyal customers with points for the dollars they spend at your location, along with extra deals.
- Expand your customer reach through catering and off-premises ordering (like UberEats).
- Implement value promotions and pricing strategies: Early on we got aggressive with passing on some of the pricing challenges to the consumer through menu price increases. We’re continuing to monitor that while also researching portioning and other options to ensure we protect our retailers’ margin and profitability. Our pricing is right in line with competitors. That said, as inflation rises and cuts into the consumer wallet, we think VALUE focused, LIMITED TIME OFFERS are going to be key in driving sales in the coming months.
- We have Labor / Employee support: People are worried—there’s a lot going on in the world. At PFSbrands we have an open book management approach—we encourage this format for other businesses and our retailers too. We also have a great team ready to support our partners’ labor struggles.
- Focus on continuous improvement: To state it bluntly, you will not be able to continue grow your business without focusing on continuous improvement. If you have not made efforts to implement any of the above practices, you can expect to remain stagnant and not hit that next level of business we are all striving for.
I just really want to drive home that our support is your success. Reach out to your Retail Growth Advisor with your challenges, and most importantly, keep looking forward! We WILL weather this storm together.