One More Outcome From The $15 An Hour Wage Increase

The Lempert Report
April 11, 2019

Pizza Hut is now testing a 99-cent container of .88 ounces of grated cheese cheese and another with .61 ounces of red pepper flakes in California

According to Nation’s Restaurant News, the test is ongoing at “select” restaurants in Southern California. 

“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 who broke the story, saying that  “wage inflation in California” is the likely reason for offering as 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.” The shakers contain and, Pizza Hut said.

 “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 table cloth restaurant started charging the same 3% surcharge 3 years ago. Customers complained and after 29 years in business the restaurant is now closed.

Understanding what consumers will and wont accept is the key to success.