Inflation, which refers to the gradual increase in prices of goods and services over time, is a matter that we at Dogtopia recognize and have actively taken steps to address. With the annual inflation rate in the US currently sitting at 7.5% after rising from 1.4% in 2020, it’s clear that inflation has become a major issue causing instability and uncertainty in the economy, and finding ways to stay on top of it is essential for businesses.
This article will explore what inflation is and what we are doing to address it at our Dogtopia locations.
Demand-pull vs. cost-pull inflation
Before we get into our inflation measures at Dogtopia, let’s first review what causes inflation. There are two main types: demand-pull and cost-push.
Essentially, demand-pull inflation is the demand for goods and services that exceeds the ability of an economy to produce them, and this causes pressure on prices. In other words, demand is greater than supply. Cost-push inflation, on the other hand, is the decrease in the supply of goods and services as a result of an increase in the cost to produce them. While the demand for the supply of goods and services remains the same, accessing them is much more difficult, which causes the rise in prices.
The impact of inflation on businesses
As a result of inflation, purchasing power (which is the number of goods and services that one can purchase), decreases. This means that inflation lowers the value of a currency and its ability to make purchases since it takes more money to buy the same items. This is why when inflation rates rise, one’s income also needs to rise as well. Otherwise, making necessary purchases is much more difficult, and this can result in lower levels of consumer spending, which leads to reduced sales and revenue for businesses.
Inflation can also result in businesses having a more difficult time accessing the products and goods that are necessary to operate. This means they need to increase their prices for the products and/or services they offer. However, with the decrease in purchasing power, inflation leads to a reduction in the number of goods and services consumers can purchase, which results in businesses selling less. With lower sales, businesses can face a reduction in total revenue and less of an opportunity to grow and evolve.
Having a plan in place to address inflation is a great way for businesses to not only acknowledge the issue at hand, but it can provide reassurance to employees and business owners that there is some form of strategy established to address some of the very valid concerns that arise from high inflation, which will look different for every industry.
How Dogtopia handles inflation
At Dogtopia, we have chosen to address inflation through our pricing model that allows pet parents to pay a consistent rate for our daycare. Our easy-to-understand pricing structure not only provides savings and benefits to our customers, but it also benefits our employees and business owners as well, as they can better schedule daycare days and there is a consistent flow of income coming in, which offers greater revenue stability. It also helps us adjust wages accordingly to satisfy employee needs and remain ahead of inflation. If you are interested in learning more about our pricing model, please fill out this form.
No matter what industry you are in, inflation will ultimately have some impact on how you operate. Implementing a plan on how you will address it is key, as this is what will help provide great stability and consistency long-term.
If you are interested in franchising with Dogtopia, please review our next steps page, which will take you through what to expect from the franchise process.