Floods in Spain, a country that provides 25 per cent of the UK's vegetable imports, plus freezing weather across Southern Europe earlier in the year, and the uncertainty of Brexit are all pushing up food prices.

According to the latest figures released by CGA Prestige Foodservice Price Index, for example, food price inflation rose to 9.3 per cent in August, up by over 2 per cent on the previous month.

Sebastián Fernandez, chief research & development officer for Revenue Management Solutions, suggests licensees need to compensate for these higher costs, in a way that won't drive customers away.

"After all, what's the point of charging higher menu prices if fewer people are coming through your doors?" he says.

He offers these seven "well tested tactics" to help pub operators be ready to act quickly, as commodity costs change:


1 Look ahead to price increases

It's better to do several rounds of smaller menu price changes, than to make one dramatic change, which could drive customers away. If you know higher costs are coming later in the year, related to a certain item, make more frequent, smaller price increases to compensate ahead of time.


2 Know when it's good to talk

In some cases, where cost increases relating to certain items are being highly publicised, consider telling customers why menu prices have gone up. However, take this approach sparingly.


3 Make your ingredients work for you

It is not possible to completely compensate for higher food costs by only adjusting menu prices. Consider re-engineering the menu to boost profitability, perhaps with new products or by dropping items with low demand and ingredients that consistently create issues from a cost perspective.


4 Polish your tin hat

When producer costs are stable and business is good, look for ways to push more favourable menu prices. The result: higher profitability that can provide a cushion for when you must compensate for future cost increases.


5 Know the limits

Remember that customers have thresholds in their minds for how much they want to pay within their chosen restaurant. Changing a £7.60 price to £7.99 usually results in less consumer pushback than changing it to, say, £8.10. And, if your customers are used to paying around £40 for a party of four, be careful not to push this to £50.


6 Get clever with smart promotions

Use your promotions wisely by thinking beyond simply driving customer traffic. Consider ways to use promotions to steer your customers to menu items that work best for your profitability, and away from items that are causing headaches.


7 Know your data, know your customer

Everything you change on the menu should be based on a deep understanding of your customers' behaviour, revealed by a pub's EPoS data. Smart menu engineering comes from knowing how products trade with each other, driving demand to products with higher profitability when the situation allows.