Recession or not, the fact is that the turn of economic events has got a lot of business people running around, trying to keep their heads above water. It does not matter at what scale you are operating â€“ the economic crunch is affecting everyone. Perhaps we can learn a lesson or two from the â€œbig boysâ€ of business. Inc. recently interviewed some executives about how the recession is affecting them and what they are doing to survive. Here is the most interesting answer to the question â€œMany companies are currently reorganizing, revising fees, or looking for ways to cut costs. What kind of changes is your company making to adjust to the economic climate?â€
A few years ago, we redid our menu. So while you saw food prices growing at almost double-digit rates over the last few years, we actually lowered prices. In a tough economy, you can’t just raise prices, pass them on to the customers, and survive. You might be able to cover margins in the short term, but ultimately, you end up losing transactions and it’s not good for business. Our objective is to make sure that we keep prices down like we have so diligently in the past. – Kevin Reddy, CEO of Noodles & Co., a Broomfield, Colo.-based restaurant franchising company
This might not sound so attractive from the perspective of a business man as the margins will definitely lessen but as Reddy said, even if you do keep your prices and margins up, the bottom line is that you will lose customers if you do not try to keep prices as low as possible. Itâ€™s your choice â€“ keep margins temporarily and lose customers in the long run or lose margins temporarily and keep your customers.
Put that way, the answer seems easy enough, doesnâ€™t it?