How Do Restaurant Franchises Fair During Inflation?


On one level or another, we all feel the effects of inflation. But restaurant franchises in particular feel the pinch as costs rise and consumer spending falls.

In the face of these challenges, successful franchises must navigate a delicate balance between maintaining affordability for customers and ensuring profitability for themselves.

Luckily, there are plenty of tactics to help strike that balance.

Inflation shouldn’t spell the end of your franchise. In fact, there’s opportunity to thrive and come out of high inflation periods ahead of the competition.

What Is Inflation?

Inflation is an economic phenomenon characterized by a general increase in prices for goods and services. Essentially, it means that the purchasing power of money decreases as prices rise.

Inflation is typically measured using an index, such as the Consumer Price Index (CPI), which tracks the average change in prices paid by consumers for goods and services.

When inflation is high, consumers and businesses alike feel the impact as the cost of living and operating expenses rise.

How Does Inflation Affect Us?

For businesses, especially those in the restaurant industry, inflation poses challenges that can impact operations and profitability. One of the most noticeable effects is the increase in the cost of ingredients, labor, and overhead expenses.

Another effect is consumers’ decrease in discretionary spending. With higher prices for everyday items and services, people tend to cut back on expenses like dining out at restaurants.

For restaurant franchises, navigating inflationary periods requires careful planning and strategic decision-making to maintain profitability and sustain growth.

How Franchises Deal with Rising Inflation

Adjusted Menu Pricing

One key strategy to navigate inflation is adjusting menu pricing. First, franchises must analyze their cost structures to determine the impact of inflation on their overall expenses. With this understanding, they can make informed decisions about how to adjust menu prices accordingly.

Increasing prices too much can risk alienating customers and reduce demand. Maintaining prices at pre-inflation levels can erode profit margins.

Franchises must carefully consider the optimal pricing strategy that allows them to cover their costs while remaining competitive in the market.

Focus on Marketing Spend

In a competitive environment heightened by inflation, marketing spend plays a crucial role for restaurant franchises, helping them differentiate from competitors.

By strategically allocating resources toward marketing initiatives, franchises can communicate their value proposition, highlight promotional offers, and drive foot traffic to their locations.

Examples of innovative marketing campaigns by franchise restaurants may include:

  • – Limited-time promotions or menu items that create urgency and drive customer traffic
  • – Collaborations with influencers or local celebrities to generate buzz and reach new audiences
  • – Targeted digital advertising campaigns that leverage data analytics to reach specific demographics or locations
  • – Events that enhance brand affinity and customer loyalty

By implementing creative and impactful marketing campaigns during periods of inflation, franchise restaurants can maintain and even increase sales volumes despite rising costs.

Driving Brand Loyalty

Another strategy for restaurant franchises to weather the challenges of inflation is building brand loyalty among their customer base.

This is where a concept like Twin Peaks can excel, offering unique menu items and a distinct dining atmosphere. A scratch menu, 29° draft beer, extensive bourbon and tequila selection, Twin Peaks Girls, and the lodge environment create a craveable dining experience that brings customers back.

Specials and events can also help build brand loyalty. Happy hour deals, gameday specials, customer appreciation days, and themed parties bring in new customers and create regulars.

Scrutinized Operating Expenses

During periods of inflation, rising costs of ingredients, labor, and overhead expenses can significantly impact a franchise’s bottom line if not managed effectively.

Franchise owners must proactively assess their operating expenses and identify opportunities to streamline operations, optimize resources, and minimize unnecessary expenditures.

Examples of such measures include renegotiating supplier contracts for more favorable pricing terms, optimizing inventory management to reduce waste, and saving energy to lower utility expenses.

Drive Online Delivery

To increase sales during high inflation, restaurant franchises can leverage online delivery platforms as an additional revenue channel.

With more consumers opting for delivery or takeout options, franchises can capture a larger share of the market by offering their menu items through online ordering platforms. This additional revenue helps offset rising costs and provides a buffer against fluctuations in dine-in traffic.

What’s the Verdict?

Inflation may be an unavoidable reality, but for restaurant franchises, it’s just another hurdle to overcome on the road to success. With strategic decision-making, some franchises aren’t just weathering the storm of inflation — they’re thriving in it.

If you’re interested in starting a franchise of your own, check out the Twin Peaks franchise process or contact our franchise team to explore opportunities with the #1 Sports Bar.