Many business owners — inside and out of the restaurant industry — are struggling to cope with inflation. In the August edition of the Merchant Digest, we’ll explore the impact of rising costs and share strategies, like menu engineering and pricing tactics, to help you keep your restaurant's sales sizzling and boost your bottom line.
How to fight inflation
If you feel like you'll make less this year, you're not alone. With rising costs of food, labor, and other expenses, 50% of restaurants are expecting a decrease in profits in 2023 according to the National Restaurant Association. Here are some tips on how to cut costs and increase sales during the current tough economic climate:
1. Assess where costs have gone up
Rising prices are a challenge for many restaurants. For example, grain and wheat have gone up in price by 48%, making it difficult to maintain menu prices on items that use these ingredients. One way to tackle this is negotiating with suppliers. Assess cost-cutting measures like bulk ordering or prepaying, try out innovative shipping and packing techniques, and look into alternative suppliers for better prices. Another option is to reduce food waste. The first step is conducting a waste analysis to optimize ingredient usage, use sales data to implement smart inventory management, and consider offering smaller portion sizes. For more suggestions, check out this article on how to reduce restaurant costs and improve profits.
2. Design a high performing DoorDash menu
Make sure to audit and update your menu to cut more expensive, less popular items. An effective means of addressing this is to drive orders with photos. In fact, menus with item photos get up to 44% more monthly sales. If you feel like taking photos isn’t your strong suit, you can request a free photo shoot. Another strategy that increases orders is offering a seasonal menu. Changing your menu to reflect trendy, seasonal items or locally grown produce can help attract more customers while incorporating less expensive ingredients. Take a look at these 11 tips to design a high performing DoorDash menu, to boost orders.
3. Manage supply chain shortages and inflation
Navigate supply chain difficulties by having backup sources and alternatives, even at a higher cost. Another option is adapting your menu. Make appropriate substitutions or even replace a dish entirely during periods of ingredient scarcity. Additionally, make sure you find backup suppliers. Learn how other restaurants take supply chain shortages in stride.
4. Participate in the new and improved Most Loved
We heard your feedback and want to add some clarity on how your restaurant could get more visibility on DoorDash. Starting on August 1st, you’ll see a new and improved Most Loved program, including:
Simplified qualifications and performance goals within your control
Better visibility and recognition in the app
Access to a free marketing toolkit
5. Understand DoorDash pricing
Over the past month, several stories have been published about DoorDash’s stance on menu pricing. Those stories are incorrect and misinformed:
DoorDash does not require restaurants to match in-store prices on delivery orders
Customers do consider price a key indicator of quality
Menu pricing is a factor in how visible a restaurant is on the Marketplace
While DoorDash does not require delivery prices to match in-store prices, we recommend pricing as close to in-store as possible. While it may seem like higher margins could increase your profits, our data suggests this isn't necessarily the case. Based on a 2023 internal one-month study of over 4500 small- and medium-sized restaurants, those that inflate their menu prices on DoorDash saw an up to: 37% reduction in sales, 59% reduction in conversion rates, and 78% reduction in re-order rates. To learn more, check out Setting the Record Straight on Menu Pricing.
6. Build loyal relationships in your neighborhood
Have your voice heard on issues that impact your business by joining DashRoots, an advocacy network of Dashers, merchants, and consumers. DashRoots drives outcomes on important policy issues that lead to economic opportunity and empower local economies. By becoming a part of DashRoots, you'll benefit from initiatives focused on protecting and strengthening independent work, investing in programs that can end hunger and promote public safety, and helping other local businesses in your neighborhood grow.
7. Reduce order errors
Certain items or categories of items are more prone to order errors than others — like combos, drinks, desserts, and sauces. Find out which items on your menu are frequently reported as missing or incorrect in the Operations Quality tab in the Merchant Portal. Once you identify these items, add reminders (like in-store signage for your employees) at the point in your process where errors may occur, whether it’s an assembly line, expo station, or right before Dasher handoff. To learn more tips, check out how to avoid missing or incorrect items.
We’ve also heard your feedback on fraudulent error charges and Dasher mistakes and are working to solve these issues. If you feel an error wasn't your fault, here’s how to request a refund.
8. Increase sales with alcohol orders
Alcohol is a major selling point that can significantly boost your sales. In fact, between 2021 and 2022, alcohol orders for pickup and delivery on DoorDash increased by over 100%. Maximize the potential of alcohol delivery by keeping timing in mind. Around dinnertime, DoorDash users in the US most typically order alcohol for delivery or pickup. Think of Happy Hour specials you can offer around that time to boost sales. Additionally, make sure you pick drinks that sell. The top three fastest-growing alcoholic beverages ordered for delivery among DoorDash users in 2022 were vodka, ready-to-drink cocktails, and tequila. For more actionable insights, check out this article about alcohol delivery trends in 2023.
9. Make the most of upcoming holidays
Download the Restaurant Holiday Marketing Calendar and Toolkit to learn creative ways to drive sales and grow your social media following year-round. Here are a few upcoming holidays you want to keep in mind for marketing:
August 4: National Chocolate Chip Cookie Day
August 15: National Relaxation Day
August 31: Eat Outside Day
September 4th: Labor Day
Need inflation-busting peer inspiration?
From food prices skyrocketing to escalating expenses, we interviewed a number of Miami restaurants that managed to still turn a profit. Owners with a creative streak are donning their thinking caps and devising innovative ways to tackle rising costs and keep those delicious dishes on customers’ plates. For example, despite debt, inflation, and hurricanes, Phuc Yea went from $15k in debt to a $4 million, three-restaurant business. Learn how more Miami restaurants are finding crafty solutions to make a profit.
Did DoorDash help your restaurant? Refer others near you!
If you know of small business restaurants (75 stores or fewer) in your area that aren’t on DoorDash, you can refer them and get a $1000 referral bonus when they sign up and complete 15 orders within 60 days. For more specifics, check out the Merchant Referral Program Terms & Conditions.
