Commentary: When eateries quietly shrink food portions, customers notice – and get angry

SINGAPORE: Have you realised lately that the fishball noodles you regularly order at the food court has shrunk in size?

Recently, a blogger complained that her salmon fillet from a popular cafeteria was so skinny – and netizens responded by poking fun and calling it salmon fries. This is the phenomena of shrinkflation where we receive less for the same price that we used to pay.

Inflation is showing no sign of slowing down and the frustration is global. According to review app Yelp, the number of reviews by US users mentioning inflation has risen by 28 per cent in the second quarter of this year as compared to the same period last year.

In Singapore, disgruntled customers have taken to social media to complain about dwindling food portions. Some may feel they have been ripped off in the name of inflation.

But is this an overreaction – especially when food and beverage (F&B) businesses may not have a choice, faced with mounting costs? Or is the customer always right?

DIPS IN STANDARDS DON’T GO UNNOTICED

Dining out, after all, is an experience. Any deviation from expectations will heighten disappointment and anger, particularly when we are not informed of it in advance.

This is especially the case when customers patronise an eatery and are familiar with the food’s quality and serving size, and trust will be delivered based on past experience.

When expectations are not fulfilled, customers will feel betrayed, which could trigger anger or even anxiety.

Customers may also feel insulted when eateries assume that they won’t notice reduced serving sizes or that they got shortchanged. Ultimately, they lose their sense as a valued customer.

In the worst-case scenario, customers will stop their patronage of the F&B outlet and identify alternatives. In the long run, the outlet may lose customers.

Negative word of mouth will spread from a few highly dissatisfied customers – some posts and photos on social media platforms have already gone viral. This will be detrimental to the reputation of any F&B business.

THE DILEMMA FOR F&B BUSINESSES IN RAISING PRICES

Although bearing the brunt of complaints, F&B businesses have indeed been facing challenging times. Against the backdrop of the Ukraine war and supply chain disruptions, their cost of operations – including raw materials, labour, rental and utilities – has risen significantly.

Singapore’s core inflation, now at 5.3 per cent, is inching to a 14-year-high. Prices of food services and non-cooked food recorded a 6.9 per cent year-on-year increase in September. 

It is inevitable that F&B businesses need to increase prices to catch up with rising costs. The plight of local hawkers, where margins are already razor-thin, is even more drastic. According to the Federation of Merchants’ Associations, 80 per cent of their hawkers have raised prices as of April.

From a business perspective, there are two options for F&B businesses to stay afloat: Increase the price of their offerings while retaining the same quantity, or keep the same price but reduce the quantity.

Although the most obvious option is to increase prices, those that cater to largely price-sensitive customer segments will decide otherwise. They prefer to keep to their prices and reduce the serving size portion for fear of losing a majority of their customers.

In reality, there are customers who do not agree with this practice and feel upset over it.

HOW F&B BUSINESSES CAN TACKLE SHRINKFLATION

Generally, most consumers are well aware of the wrath of inflation for F&B businesses, and can be reasonable when faced with price adjustments.

The whole issue is about respecting customers, managing their expectations and the manner of execution. It’s important to understand that customers want pricing and services to be transparent.

F&B businesses can start by offering two options: A small portion at an unchanged price, for price-sensitive customers who may not be able to afford more; and a medium or large portion option with increased pricing for customers who want to satisfy their appetite. 

The next thing food vendors should do is to explain their actions to customers. They should outline the challenges of keeping their business going amid rising costs, and thank them for their understanding. Such communication goes a long way in building customer trust, which reinforces brand loyalty.

Besides this, eateries need to update the visuals on their menu to better reflect new serving portions, so that customers will not feel deceived. This could be costly if physical signages need to be changed, but are more feasible for digital menus.

Finally, F&B operators, including hawkers, can introduce a loyalty programme, such as a simple stamp card that rewards customers with a free meal or side dish after a certain number of purchases. This can secure a higher volume of sales from returning customers, and in the longer term, offset the marginal costs of the reward by building a loyalty base.

These measures will take the confrontation out of shrinkflation and turn it into a win-win outcome for diners and vendors.

Lau Kong Cheen is an associate professor of the marketing programme at Singapore University of Social Sciences’ (SUSS) School of Business. Associate professor Allan Chia is SUSS’ School of Business Dean.