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Inflation forces mom and pop restaurants and chains like McDonald's to lean on their strengths - CNBC

Inflation forces mom and pop restaurants and chains like McDonald's to lean on their strengths - CNBC

Inflation forces mom and pop restaurants and chains like McDonald's to lean on their strengths - CNBC
Nov 20, 2022 1 min, 7 secs

As the restaurant industry battles inflation, the large size of chains and their access to cash gives them the upper hand, but independents have advantages of their own when managing higher costs.

Aaron Allen, founder and CEO of restaurant consultancy Aaron Allen & Associates, compared restaurant chains to oil tankers and independents to speedboats.

In the United Kingdom and other European markets, which have seen even higher inflation than in the U.S., large franchisors have said that they're providing financial assistance to operators who are struggling to cope with higher costs.

If a mom and pop notices much higher prices for a key ingredient in an entree, the restaurant can quickly change prices, slim down the portion size or even remove the item from the menu.

Portillo's restaurant chain CEO Michael Osanloo said independents do have greater flexibility when it comes to changing prices.

Consumers care more about prices when they're visiting a chain restaurant, according to findings from a survey of roughly 2,400 U.S.

More than a third of respondents said everyday prices mattered when picking a chain restaurant, while just 22.5% said it factored into their decision making when selecting an independent eatery.

"There's this perception of authenticity, like a family Italian restaurant versus a big chain like Olive Garden," Allen said.

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