It’s no mystery that owning and operating a restaurant is difficult, especially over the past two years. In fact, according to Restaurant Engine, 60% of businesses fail in the first year. So, what can your restaurant do to avoid this? Are there certain pitfalls that pop up again and again that you should be on the lookout for? While there may be more than three problems you’ll face, we believe that staffing, expenses, and reaching new customers are major hurdles that, with work and knowledge, can be overcome. Let’s take a deeper look:
Obstacle one: Quality of staff and retention
Even before COVID-19 changed the food service industry, restaurants struggled to find and retain quality employees. Now more than ever, motivated and enthusiastic employees are few and far between, leaving restaurants under-staffed, with a limited pool of potential employees to choose from. And while it is difficult, placing a greater emphasis on quality staff to lower turnover rate can reduce overall costs and bring your restaurant experience to the next level.
Unsurprisingly, you can’t magically flip a switch to make quality workers appear. You can, however, attract quality talent and improve the working environment for existing staff by emphasizing the importance of communication. To cultivate a welcoming environment, make sure to be transparent during staff meetings and encourage suggestions. Make your team feel heard and find out what motivates them, whether it’s bonuses, more recognition, schedule flexibility, free meals, or getting the proper training that helps them reach their goals. Once those pieces are in place, make sure you only bring in talent that is a good fit for your restaurant and not a reactionary quick fix.
Obstacle two: Increases in expenses and operating costs
It goes without saying, operational costs are rising – as much as 5% year over year – and restaurants are feeling the squeeze. We’ve seen restaurants close due to high costs of rent, food and liquor, back-of-house maintenance, credit card fees, uniform rentals, and labor.
If managed properly, rising operational costs won’t break your business. Start by looking at your menu and consider reducing its overall size. Getting rid of unpopular menu items and sticking to a single style of cuisine can help reduce food waste and unnecessary costs. You can also work with suppliers to see if any items have less expensive substitutes. Most importantly, you need to monitor your cashflow to ensure your food and labor costs aren’t higher than 70%. If they are, it will be crucial to come up with a plan and adjust accordingly. A more modern approach you can take is to implement contactless payment. It is estimated that this payment method will triple from 2 trillion to 6 trillion by 2024. You’ll be able to lighten the load of your current staff while providing a more convenient payment option.
Obstacle three: Reaching new customers
In addition to the litany of struggles facing restaurants, there are new dining options opening every day, making it difficult to stand apart from the competition. The hard truth is that foot traffic alone probably won’t help boost your sales substantially and grow a loyal customer base. So, what can you do to make sure your operation gets noticed?
Focus on going above and beyond customer expectations and create a unique selling point. That means pushing for quality in all aspects of your business, not just food and service. Your unique selling point will help set you apart from your competition and give diners an idea of what makes your restaurant special. Once you establish yourself in that regard, you’ll need to develop a solid online presence. This can be daunting but being easily accessible online and on social media can make a world of difference for your customers. Offering an online experience also opens the possibility for customers to leave a review of your restaurant. And while reviews can be a scary thought, 89% of customers claim they won’t act until they read reviews, so they are critical for your success. From there you can start pushing out special promotions and embrace your community to bring in even more potential patrons.
Implement your solutions
It can seem like quite an undertaking to address these major problems, but by making incremental steps and using the information at hand, you can start your journey towards lasting success. At the end of the day, it is all about enticing new and loyal customers, finding quality staff to serve them, and reducing your costs while doing so. They really do lead into each other and will make a substantial difference for your operation long into the future.
Be sure to regularly visit our free resource section dedicated to navigating the constantly changing foodservice industry. There, you’ll find blog articles, free downloads, and restaurant guides.