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Retail Foodservice

One More Outcome From the Wage Increase to $15 an Hour

Some foodservice operators and restaurants dabble with creative promotions and pricing

lempert report

Pizza Hut is now testing a 99-cent container of 0.88 ounces of grated cheese and another with 0.61 ounces of red pepper flakes in California, according to reports.

“This is currently not an initiative being widely implemented, as we’re in the early stages of capturing consumer response,” the company said.

It was the Kalinowski Equity Research report that broke the story, saying that “wage inflation in California” is the likely reason for the offering because it is “putting a big pinch on restaurant-level profits and cash flow.”

A photo obtained by Kalinowski shows a point-of-sale placard with two mini shakers advertised for 99 cents each. The headline was: “Shake Up Pizza Night.” 

“Some operators are understandably trying out creative methods of dampening their [profit-and-loss statement] pain,” he wrote. “While we do not blame operators for seeking out creativity in this regard, nickel-and-diming guests might not be the best way to go.”

While it’s among the most blatant moves, the desire to raise prices is not new in foodservice. El Torito, El Torito Grill and Chevys introduced a 3% surcharge at 46 of the company’s 52 locations in California.

Right down the block from us, Chaya, a landmark white-tablecloth restaurant, started charging the same 3% surcharge three years ago. Customers complained, and after 29 years in business the restaurant is now closed.

Understanding what consumers will and won't accept is the key to success.

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