Businesses across industries are going through a tough time; one industry that seems to be more in a challenging situation is the restaurant. In many states, restaurants are still not fully functional; for example, they can only sell food with delivery or takeaway.
Moreover, it is the time when customers are facing financial uncertainty and unsure of going out for dining due to possible risks concerning exposure to the coronavirus. Therefore, to thrive or just survive in the market, restaurant owners must build innovative solutions keeping in mind the new reality and customer’s expectations and demands.
Current situation of the industry:
Around 17% of restaurants in the US closed permanently in 2020, and the number is likely to be higher when this year’s reports come out. Besides, as coronavirus cases are anticipated to rise in the coming festive time, and we are heading toward the winter season, outdoor dining can be affected, and the industry might face more challenges than the current ones.
The hope for the best
Consumers are waiting for their favorite restaurants to reopen. In a consumer survey conducted by Datassential, 45% of consumers said, “they missed dining out at their favorite sit-down restaurants.” This response scored the highest points where other options were:
Visiting movie theaters, shopping centers
Meeting friends and family members at their house
Going to coffee shops
Attending events at stadiums
Following the stay-at-home guidelines, many people have realized that they miss going out with their loved ones and how meaningful those social interactions are for them. While complying with health safety precautions, consumers are likely to start visiting restaurants more often once things go normal again.
Despite these hopes, the restaurant industry faces a series of other challenges discussed in this article. So let’s get further and read them along with their possible solutions.
Challenges Facing Restaurants & Solutions to Meet Them
- Recruiting and retaining quality employees
While some restaurants are yet to reopen, many are functioning and looking for skilled candidates for open positions. But with an increasing number of restaurants posting job vacancies, applicants are getting more opportunities to choose where they want to work. So now, attracting the right talent becomes a huge challenge here.
Launch a referral program to find potential applicants; your friends, knowns, and staff members can act as recruiters using this program. That way, you can also expect people coming via references to stay with you for long.
Hire energetic, enthusiastic people who are ready to learn and train them once they get onboard. For example, hiring a qualified accountant and then training them to mold them into a restaurant business accountant.
If you have tried a lot but could not fill a vacancy, you may consider giving that responsibility to a multi-talent member of your staff.
Once hired, keep your employees happy and satisfied with the job. For this, you can ask for their feedback regularly and, more importantly, take action according to their needs.
Providing additional perks can help you stop employees from moving out to your competitors and enhance retention.
- Rising food costs
The pandemic took a toll on the supply chain; the disruption could be seen across the world. In 2020, the closure of restaurants, grocery shops and transport issues led farmers to dump their produce. These and other relevant factors influenced food costs that are increasing by 5% each year. Simply put, from vegetables to eggs, everything used for food preparation is coming into restaurants at a high cost – a challenge that owners must tackle now.
You need to control food expenses and reset prices on your menu.
You may start with asking your vendors for some discount on bulk purchases; however, they will need you to ensure stock management goes well.
Talk to your industry peers and try to make a ‘group organization’ so that you can also put your concerns upfront and effort to reduce rising food costs.
Train your staff to ensure the least wastage of food, raw materials, ingredients, and everything required to prepare meals.
Reuse vegetable and meat trimmings; instead of tossing them into the bin, you can use them for sauces, sides, soups, etc.
Add seasonal dishes to your menu, especially those that do not need expensive ingredients.
Calculate your food costs and then assess your pricing to determine the prices of meals on your menu.
You may also consider discontinuing a few items (temporarily) that are not ordered frequently.
- Getting more customers
This challenge was already there before the pandemic, and post that, it has just become more prominent. If you know your food is the best in your region, but people in that region are unaware of it, you need to take a few steps forward to let them know.
To get more customers, you need to gain the attention of localities; run an ad campaign in the local newspaper of magazine.
Hire a cost-effective marketing agency.
Get on social media platforms and engage more audience with your brand.
On top of all, get more reviews on review/rating websites.
90% of customers research a restaurant before dining – source
77% of consumers visit a restaurant’s website before ordering – source
33% view reviews given by other customers before dining – source
- Poor inventory management
Your restaurant serving good food is the main factor why customers visit you. Therefore, keeping your inventory updated with the best and most fresh raw materials and ingredients is highly important. However, inventory management is not as easy as it seems.
Restaurants dealing with low profitability would know how poor inventory management can lead to a poor bottom line. Around 60% of struggling restaurants cite operating, and food costs as their top challenge.
In contrast to other industries where inventory counts can be done quarterly or annually, restaurants need to count inventory items regularly (weekly or sometimes daily). This is because inventory items are prone to spoilage, theft, wastage.
If inventory management is taking a toll on you, you may use inventory management tools. These tools can help you streamline inventory management and evaluate inventory values, essential in preparing financial reports.
- Being unaware of the cash flow
Many restaurants have gone under overnight due to poor cash flow management. While there can be several other reasons behind a restaurant closure, cash flow problems are most common. Cash flow is an integral part of restaurant accounting. Not paying attention to how much cash comes in and goes out of your restaurant business checking accounts can lead to further economic problems, making it even more difficult to survive.
There are a lot of tips for you to handle your cash flow; however, since you already have a lot on your plate, you might want to hire a restaurant accountant for most financial accounting needs so that you can fully pay attention to your daily chores.
An accountant can help you examine your cash flow regularly, helping you have a comprehensive understanding of how much you are earning and how much you are spending. In addition, this assessment can help you predict your future earnings and expenses, enabling you to plan your budgets and finances effectively.
- Final thoughts
Running a restaurant amid a global pandemic is challenging. Nevertheless, if you also face the challenges discussed above, consider the solutions provided, and implement them right, you will be in a better position to safeguard your restaurant business against multiple disruptions. Not only this, you will be able to fight back the economic and other operating problems you are currently facing, leading to higher efficiency, productivity, revenue, growth.