Stop the Price Wars

If I could name one topic that crept up more often than any other during the recent NRA conference, it was undoubtedly economics. Yes, the bottom line is a perennial concern, wounded economy or not, but these days it’s do or die for some folks.

One common knee-jerk response to hard times is to cut prices—and if that doesn’t work, cut and cut again, often to unreasonable lows. This can be seen across the board in foodservice these days, as well as in some sectors of retail. And from the consumer’s perspective—what with the diminishing level of cash in their pockets—it seems like a great deal. Super-low prices might dictate higher sales, and the operator then sees more profit (albeit at a slower rate due to the lower prices…). Win-win, right?

Wrong. Lose-lose.

As pointed out during a conversation this week with noted Chicago food reporter Steve Dolinsky, such behavior only hurts both operators and consumers in the long run (he led a panel at NRA the likes of Daniel Boulud, Steve Ells and Sally Smith, among others, on it, and this was a key point of discussion). Price-cutting wars force operators into untenable positions with illogically dictated margins. And then what are they to do when the economy recovers (which it is already showing signs of…)? That’s right. Raise prices. Think the consumers will appreciate that?

Modest “economic incentive” price cuts may be welcome and even advisable in some situations, but all-out price wars never benefit anyone in the big picture. There are other, better, more-sustainable ways to get more folks cranking through the revolving doors. Give peace a chance.