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President’s Message
By Melvin Gitler

 

COMBATING HIGH PRICES

Have you looked at your invoices lately? Pricing is going up as fast as President Bush’s approval ratings are going down. Dairy prices are hitting highs never thought imaginable. Steaks and meats are 40% higher than the previous year. Finally, gas and oil is in the stratosphere. What about labor?

So what can we do about all of this? There are three fundamental choices. The first is IGNORANCE. With ignorance you can stick your head in the ground and take the position that things will get better in the future. You can expect prices to fall and calm to return to your business after sustaining losses for the year. This approach can only backfire. The second choice is to BLAME, your distributors and all the additional expenses you have at your business such as your insurance company that respond to 9/11. The reality of all this is that your distributors margins are lower. Still, it’s easier to place the blame on someone else. The last choice is DOING SOMETHING. Find out what your customers want most and give them more of it. Review everything from top to bottom. Leave no leaf unturned. This is not business as usual and if need be raise prices.

Here are seven tactics to help stem rising costs. The first thing that you must do immediately is to lower waste. How is your space utilized by adjusting your seating can you serve more people? Turn seating for two into seating for four. I have always been a proponent of keeping the back of the house to a minimum. Take a look at your back of the house. You all know what number two is, it’s more sales. Market your business to other businesses. You would be amazed about how much more in sales you could have just by having a corporate event each and every month. Remember, never forget about your core business ask them to get involved. What about an event that your customers can create a new menu item or drink. Number three is to maximize your partnerships. Since, nearly 40% of your operating costs come from these distributor partnerships, does it not seem reasonable that you should spend 40% of your time with these groups. When you talk to insurance agents ask them if there are programs that can give you the same insurance but with fewer costs. When talking to your food distributorships ask them if there are alternate items that have the same quality but lesser costs. Number four is know when to say NO. You can measure this by the money you haven’t lost and the quality you have not sacrificed. Keep your EMPLOYEES HAPPY. Retention of employees saves money, money and more money. Start by hiring the right employees and then doing what you have to do to keep them. Number six is DO NOT BE AFRAID TO TELL EMPLOYEES WHAT TO DO. If your employees have been trained properly they will understand what you want them to do and will want to assist in that plan. Show them the specifics of your ideas and they will then follow them. The seventh and final area of concern is to RAISE PRICES. This is a legitimate thing if all else fails. Remember if you are raising prices your competition is already higher and you will not scare anyone off. Remember do not overcharge. If you have been in business for any length of time price changes happen. Price changes are part of the business. Today, we are looking at the most difficult environment in the last 20 years for our business. It is time to look hard and get focused. Remember if you do not change with the times the times will change you.

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