Are Higher Gas Prices Showing Up on Your Restaurant Invoices?

If you've been in the restaurant business for any amount of time, you know that when one cost goes up, it rarely stops there. I've been in this business for a long time, and one thing I've learned is that you have to pay attention to the little things because those little things have a way of becoming big things.

Lately, I've been thinking about fuel prices and how they are impacting restaurants and businesses across the board. We all see the price at the gas pump, but as restaurant operators, are we really looking at how those increases are making their way into our businesses?

Are You Seeing Fuel Charges on Your Invoices?

I'd encourage every restaurant owner and operator to take a close look at their invoices. Check your food distributor, linen company, trash and recycling service, equipment service, and other vendors. Are you seeing a fuel surcharge, transportation fee, energy surcharge, or another delivery-related charge? If you are, has that charge always been there, or is it something that has recently appeared or increased?

I've always believed that you can't manage what you don't look at. We spend a lot of time focusing on food cost and labor, but there are plenty of smaller expenses that can quietly chip away at our margins.

How Are You Adapting?

Think about how many deliveries a restaurant receives every week. Food, beer, wine, liquor, paper products, cleaning supplies, linen, equipment and smallwares all have to get to your restaurant, and transportation is part of that cost. Even if we're not directly paying more at the gas pump for the restaurant, we may still be paying for higher fuel costs through our vendors.

That brings up an important question: What are you doing about it?

Are you consolidating orders, reviewing delivery schedules, comparing vendors, or asking suppliers about new surcharges? Are you looking at your menu pricing more frequently and making sure the items you're selling are still producing the margins you need?

I'm not suggesting that every restaurant should immediately raise prices or start cutting costs. Every restaurant is different. The important thing is understanding where your money is going and making decisions based on what the numbers are telling you.

Look at the Entire P&L

When I look at a restaurant's financials, I don't want to focus only on food and labor. Those are obviously major expenses, but profitability can also be affected by all of the smaller increases happening throughout the business.

A slightly higher delivery charge, a new fuel surcharge, increased supply costs, and higher service expenses may not seem significant individually. When you add them together over the course of a year, however, they can make a real difference to your bottom line.

Restaurant operators have always been adaptable. We've dealt with staffing challenges, supply-chain issues, rising wages, changing customer habits, and increasing costs across nearly every part of the business. Higher fuel costs are simply another challenge we need to understand and manage.

For me, the answer starts with paying attention, knowing your numbers, asking questions, and being willing to make adjustments when necessary.

What Are You Seeing?

I'd really like to hear from other restaurant owners and operators. Are you seeing fuel surcharges on your invoices? Have your delivery costs increased? Are your vendors passing their increased transportation costs along to you? Most importantly, how are you adapting?

Some of the best ideas in this business come from other operators who are dealing with the same challenges. If you're seeing something different in your market, I'd love to hear about it.

— Jason Sweet
Plate & Prosper Restaurant Consulting

Smart Strategy. Sweet Results.