Restaurant Operational Efficiencies or Price Hikes

 

Operational efficiencies be dammed, price matters. The old formula for the price, value, service equilibrium was: Price + Quality + Service + Portability = Value.  That formula has evolved with Gen Z and Millennials today.  Foodservice Solutions® Grocerant Guru® has once again retooled, reevaluated, calculated then evolved the formula and here is the new formula:  Price + Quality + Social + Portability = Value.

According to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions® when prices are going up so much consumers are uncomfortable paying the price it’s time to focus your messaging on the quality, service, and portability attributes.

Regular readers of this blog know that, U.S. wholesale food prices in July were up 15.8% on a year-to-date basis, according to new BLS data. Food at home prices soared another 1.3% in July and are up 13.1% over the past year. Consumer prices increased 8.5% in July from a year ago, a decrease from June which hit 9.1%, marking a new 40-year high, the BLS reported.

CPG food categories with the five largest increases in prices include those that were at the low end of the price range including refrigerated eggs, frozen dinners and entrees, butter and margarine, frozen pizza and center store bread. Restaurant food is fresher and consumers don’t have to cook.  Advantage restaurants albeit pricing.

Jack in the Box reported same-store sales declines of -0.6%, which was offset by Del Taco’s strong first full quarter under Jack in the Box ownership of 3.5% same-store sales growth. The decline in Jack in the Box sales was largely attributable to a continued traffic slowdown and reduced operating efficiencies as staffing slowly begins to improve, though partially offset by growth in late-night traffic.

Jack in the Box CEO Darin Harris, stated, “Inflation, staffing and operating hours continued operating hours continue to create pressure on our restaurant level performance,”... “However, increased pricing, improved training and focused restaurant level execution is helping franchisees deliver a better guest experience and assisting with financial fundamentals.”

When you consider the one-two punch of traffic declines and macroeconomic issues caused Jack in the Box to take a nearly 10% pricing increase during the quarter, which helped boost average check. Moving forward, the company plans to focus on value to build average check and not just pricing increases.

Jack in the Box CFO Timothy Mullany, stated, “Pricing of 9.7% helped us manage the cost environment and we will continue to take a disciplined and measured approach to pricing strategies as a means of mitigating the impact on our margin and bottom line,”.

Focusing on product helps, and one of Jack in the Box’s strategies for value creation is a focus on menu innovation, a focus that helped to boost Jack in the Box’s performance during the challenging quarter. During the third quarter, the company introduced a new grilled chicken sandwich and Girl Scout cookies shake, and also brought back some older fan-favorite items like popcorn chicken.

Moving forward, Harris said, Jack in the Box will hone in on growth of the breakfast daypart, as regular readers of this blog know, kicking off with the return of French toast sticks. The return of the menu item was marketed with celebrity guest, Star Wars star Mark Hamill, who was fired from a Jack in the Box years ago for impersonating a clown.  

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Jack in the Box will also continue to focus on rolling out the previously announced store redesign, and digital technology, driven by its partnership with Miso Robotics and launch of mobile web ordering.

Time will tell but the team at Foodservice Solutions® believes; operational efficiencies be dammed, price matters. The old formula for the price, value, service equilibrium was: Price + Quality + Service + Portability = Value.  That formula has evolved with Gen Z and Millennials today.  Foodservice Solutions® Grocerant Guru® has once again retooled, reevaluated, calculated then evolved the formula and here is the new formula:  Price + Quality + Social + Portability = Value.

Don’t over reach. Are you ready for some fresh ideations? Do your food marketing ideations look more like yesterday than tomorrow? Interested in learning how Foodservice Solutions® can edify your retail food brand while creating a platform for consumer convenient meal participation, differentiation and individualization?  Email us at: Steve@FoodserviceSolutions.us or visit us on our social media sites by clicking the following links: Facebook,  LinkedIn, or Twitter