With costs on the rise, restaurants avoid transfers to avoid losing customers

Dealing with financial projections on a weekly basis, eliminating ingredients from the menu and insistently reviewing processes are some of the efforts that restaurant owners have put in place to keep their business alive — in a scenario that mixes soaring inputs and the dollar with debts from the pandemic.

“Today, one of my missions is to manage inflation. To give you an idea, filet mignon went from R$50 to R$99 (a kilo). at R$ 180 with 300 grams [do crustáceo]”, says Fabrício Lemos, who heads four restaurants in Salvador, Bahia.

To avoid full transfers to the consumer, the chef now performs weekly (instead of monthly) calculation of results. Thus, you can make corrections in time to avoid losses.

At the Origin restaurant, which offers a tasting menu (R$ 220, with 14 stages), Fabrício has more flexibility to create — and, thus, replace products that had a substantial increase.

“The customer may discover that a tongue or a termite can be extremely well-made, depending on the treatment they have. With that, I end up ‘unlocking’ these items in the consumer’s mind as well”, says Fabrício.

Even so, at the Ori and Omi restaurants, which have an à la carte menu, the chef says that it was necessary to add 5% to the bill to remain sustainable.

“I didn’t operate at a loss, but at a very high risk, and, to get out of it, I had to make a transfer. We are paying the bills for last year and late. We took a loan of R$ 600,000”, says Fabrício.

With a typical French menu, Le Jazz, a group that has five houses in São Paulo, even tested alternative dishes to those it already served — but the strategy had a side performance.

“Some proteins had an increase of almost 100%. One of the champions was filet mignon, used to make, for example, ‘filé au poivre’, which is a best seller. bistro”, says Paulo Bitelman, partner responsible for finance.

With annual revenues of R$ 50 million, the group has a purchase budget of R$ 20 million – of which 15% is just beef. Even with the volume, says Bitelman, it was not always possible to trade in the pandemic.

“In some cases, it was take it or leave it [a mercadoria]. In others, suppliers who always did everything for us looked us in the eye and said ‘this time I can’t take a penny’. So I don’t think I could,” he says.

The increases generated by inflation were one of the reasons for the brand to hire, in August of last year, a professional to review processes and understand what could be optimized in each department of the business.

In the inventory area, for example, the review was carried out based on indices that measure the theoretical cost of goods and their difference in practice. “In the midst of this are waste, deviations, a larger portion that was not to be served. This is not an easy thing to solve, especially when you have a thousand dishes, productions, sub-productions”, says Bitelman.

With the arrival of the process manager, the financial terms also ended up on the lips of employees in the salon and kitchen, who hold up to three monthly meetings to be updated on the operation.

“It’s not that this beat inflation and other increases. But it gave us the security to make punctual decisions both for readjustment and to provisionally assume the margin worsening. Now, we are swallowing a frog, but at least we know his breed”, says the businessman.

The information obtained also gives restaurant lounge staff ammunition to more confidently explain changes to customers. For example, with process adjustments, instead of passing on the 15% cost increase for steak tartare, it was possible to reduce this margin to 5%. “Maîtres report that customers have been understanding. They know about inflation and protein prices,” says Bitelman.

The trend for 2022 is that there will be smaller increases for both food and electricity, another relevant cost for restaurants, says André Braz, economist at FGV Ibre (Brazilian Institute of Economics at Fundação Getulio Vargas).

“There will be no refreshment in the sense of a drop in the price of inputs that have become more expensive, but there may be less perverse inflation than in the last two years”, he says. Even so, says the researcher, other issues can affect the sector, such as unemployment and the fall in family income.

“It’s going to be a year of adjustments. Services, for some income brackets, are seen as superfluous. So, to the extent that people can, they will avoid eating out in the hope of compromising their budget less. Restaurants are businesses that survive better in a context of growth, and we are only seeing a downward revision of the GDP”, he evaluates.

As consumers cannot absorb a pass-through of prices in the same proportion as the rise in costs, restaurants have adopted a mixture of strategies to retain customers, says Fernando Blower, executive director of the ANR (National Association of Restaurants).

“It’s a way to guarantee minimum margins to pay a significant liability that the sector has contracted on account of the pandemic, and which it will still carry for the next two or three years”, he says.

The flow of customers in the second half of 2021 caused a small “boom” for the sector and, at Cuia Café e Restaurante, in downtown São Paulo, this guaranteed positive months. “But not making a profit yet, because we are making cash to make up for the bad months”, says chef Bel Coelho. In some of them, says Bel, the billing reached 10% of the projected.

In this context, the cost of each commodity has its price monitored, item by item, and compared with that of the sector. That’s how one of the recipes, the red salad, ended up being removed from the menu, due to the increase in price of one of the ingredients, tamarillo, a fruit originally from the Andean region.

“It’s a very laborious process for a business that, if very successful, will have a 15% profit margin, never 40%”, he says. Therefore, a readjustment in the menu was not ruled out.

In parallel, another issue has been gaining importance in the restaurant: the salary of the employees. “They were paid worse and what is happening is that no one wants to work in the sector without receiving a minimum wage”, says Bel.

The chef is studying a way to grant a raise to the team within two months. However, the decision is taken with the approval of the business partners. “And for that, I need the restaurant to be economically sustainable”, he says.