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Inflation continues to rise, taking the hopes and dreams of small businesses with it, like a hot air balloon breaking free from its tether. Reluctant to raise costs on the consumers they serve, small business owners have turned to innovative solutions to stem the tide of the cost of raw materials that just keeps going up and up. Big box stores can weather increases more easily, but for small businesses, creativity is key.

Manipulating the Menus

One place that has certainly felt the pinch of inflation is in the restaurant industry, where food prices have climbed 7.9% over the last year, according to the Bureau of Labor Statistics’ Consumer Price Index. But restaurant owners are wary of just raising their prices and passing the cost off on consumers.

Instead, owners have analyzed the food sales and data and are making decisions about what items to keep, which to take a loss on, and which to remove from the menu entirely. And one way to engineer what people buy is to specifically design the menu. With certain products highlighted in a slightly larger font or eye-catching box, restaurants can highlight items they want consumers to buy, which will keep them coming back.

“To me, menu engineering is the layout of the menu that makes the order process the most profitable for the restaurant,” said Michele Benesch, president of the menu design firm Menu Men.

“We are thinking about future limited-time offers and about margin impact, with an eye toward supply chain, specific to products that we know will see significant inflation and moving those LTOs to at least be on balance with margin or even margin accretive,” Chipotle Mexican Grill Chief Restaurant Officer Scott Boatwright said.

Productive Projections

With the rising cost of food, bakeries have also been forced to be creative. Amanda Nguyen, the owner of Butter&, has always featured buttercream cakes, usually for weddings and milestone birthdays. When the pandemic hit, she also offered more affordable “quarantine cakes”, with clever messages like “Wash Your Hands,” “Don’t Touch Your Face,” or more recently, “Just Vaccinated.” These quirky cakes allowed her business to stay afloat.

“You can’t just sit still,” she said. “You have to change.

In response to higher costs, the San Francisco baker raised the price tag of her larger cakes by $5, or about 4%, while holding the line on the quarantine cakes, which start at $30.

But that still wasn’t enough to keep up with inflation. In January, wholesale prices were up 9.7% over the past 12 months, according to the producer price index from the Labor Department.

Nguyen pushed prices as high as she dared, and then got creative. For Nguyen, the solution was to do what came naturally, to be innovative, so she opened a second business, Pastel, expanding her business base with a delivery service from Butter&, as well as other eateries in the area. She has averaged an additional $1,000 in revenue for this venture.

“Change looks like raising your prices, or growing the business to meet the costs of just doing business or reevaluating the conventional ways of doing business and finding a new way that is more efficient,” Nguyen said.

Inventive Initiatives

Inflation is still on the rise, and business owners, especially from independent businesses, are reluctant to pass all the costs on to their beloved customers. In doing so, they are afraid of losing customers.

“Inflation continues to be a problem on Main Street, leading more owners to raise selling prices again in February,” said NFIB Chief Economist Bill Dunkelberg. “Supply chain disruptions and labor shortages also remain problems, leading to lower earnings and sales for many.”

For owners who have already come to terms with rising transportation costs with the surge in oil prices, the burgeoning price of raw food is offering another hit. And on the horizon, many small companies are worried about a recession.

Even companies who don’t need a lot of raw materials to do business are feeling the pinch and also need to get creative.

Michael Vaughn, general manager of Worth the Fight Boxing said, “If someone’s having a hard time, they speak to us, and we’ve been empathetic as well as flexible. Being a small business, we can make [changes] helping people.”

All across the country, business owners are using ingenuity to keep their businesses in the black. Consumers themselves are also innovating to keep their family budgets intact. Single mom and realtor Shanon Crutchfield, a small business owner who is burning the candle at both ends, explained: “I’m not sure how much longer we can as a country continue to endure these prices and these pinches when there is not an increase of wages to match it,” Crutchfield said.

No one knows whether the untethered balloon of inflation will continue to rise, but by employing visionary tactics and ingenious ideas, small business owners can stay rooted to the ground, even as they make it through inflation.