Pricing

Inflation is the best time to raise your prices

By José, Mise en Profit · The upside nobody talks about.

Every operator I talk to treats inflation as a threat. Costs are up, margins are tight, and it feels like the walls are closing in. But inflation quietly handed you something you have not had in years: permission to raise your prices.

For a long time your costs climbed faster than you could pass them on. Wages, proteins, dairy, all of it crept up while guests still expected last year's prices. Raising a price with no obvious reason felt like a cash grab, so most operators ate the increase. That has changed. Your guests have watched the price of everything go up, groceries, gas, their morning coffee. They expect restaurant prices to move too. That permission is rare, and it is worth using, as long as you do it right.

The wrong way to raise prices

Say a dish costs $9 to plate and sells for $34. That is a 26% food cost and $25 of margin. Your supplier raises the protein and now it costs $13 to plate, four dollars more. The instinct, drummed into every operator, is to protect the food cost percentage. To hold 26%, you have to reprice that dish to around $50.

The guest who happily paid $34 last month is not paying $50 this month. They feel gouged, and they are right to. You defended a percentage and lost the customer.

The right way: protect the margin, not the ratio

The cost went up four dollars, so the price goes up four dollars. That is it.

The price moves to $38, your food cost percentage climbs to 34, and you make the exact same $25 you always did. The guest sees a small, fair bump in a world where everything costs a bit more, and they stay. You protected the dollars, not the ratio. (This is the same lesson as pricing for margin instead of a food cost percentage, applied to a cost increase.)

Why a price increase is the best money you will make

Here is the part that should change how you think. When you cut costs, you grind for every dollar, and it is slow and painful. When you raise a price, almost the entire increase drops to your bottom line. There is no extra labor, no extra rent, barely any extra cost at all on that one dish. A fair, well-placed price increase is close to pure profit. There is no cheaper money in your restaurant.

How to raise prices without losing regulars

Add the dollars, not a percentage. Match the price increase to the cost increase on each dish, so nothing jumps to a number that triggers sticker shock.

Start with the dishes that can take it. Your most popular plates are usually the least price-sensitive, and often the most underpriced. A dollar or two there is invisible to the guest and real money to you.

Hold the experience. A price increase only stings if the value drops with it. Keep the portion, keep the quality, and the small bump reads as fair.

You can only do this if you know your numbers

All of this depends on one thing: knowing what each dish actually costs and makes you. You cannot match a price increase to a cost increase if you never costed the dish in the first place. Cost your menu, watch the dollar margin on each plate, and when a supplier price moves you will know exactly how much to add, on exactly which dishes.