What to Do Now? How Restaurants Survive in a Tough Economy
Eateries such as Bennigan’s, Village Inns, Old Country Buffet, Bonanza, Black Angus, and FatBurger have all filed for U.S. bankruptcy protection within the past 18 months. This is harsh evidence that the restaurant industry is not immune to today’s economic crisis. This crisis has left independent, chain, and franchise operators wondering what to do now?
Before addressing the question let’s consider what we know about today’s business climate. We know consumers are spending less. Given the lack of easy credit, substantial loss of wealth, and massive job losses; consumer simply do not have the spending power that they once enjoyed. As a result, we can also conclude that less total spending will translate into some combination of less frequent restaurant visits and less spending during each visit.
Given these realities there are three things restaurant operators must do now to improve their potential to survive and thrive:
1) Tune-out the noise
2) Tune-in to market opportunities, and
3) Tune-up their operations.
Tuning-out the noise
Most of us are inundated with negative information on the economy. It is difficult to turn on a media source without getting some report of economic bad news. Although it is useful to monitor industry trends and relevant news, it is important to avoid becoming caught up in the depressing economic hysteria.
The fate of AIG, General Motors, and Chrysler, is not something you can likely impact. Spending an inordinate amount of time on such macroeconomic concerns can become a distraction. Under the current circumstance, our operations needs our full, focused, and sober attention. Quieting some of the sources of noise could prove helpful.
Tuning-in to your market opportunities
In his 2008 book, Tuned In: Uncover the Extraordinary Opportunities that Lead to Business Breakthroughs, Craig Stull describes a powerful “Tuned In Process” for delivering products and service that resonate with consumers. The author believes that by understanding your customers and their evolving needs, you are better able to create products and services that succeed in the market place.
Now is the perfect time to look to the market for new opportunities. You may want to consider how your guest’s needs have changed in recent months, if your current promotions are working, or if your marketing channels are reaching the intended customers. The hope is that by focusing on your guests and potential guests, you can discover new ways to increase traffic and sales.
Tuning-up your operation
No one can afford to leave profits on the table today. So, once you know what your market wants and how to reach them, the next step is ensuring that your restaurant is operating efficiently. Assuming you have identified a few new ways to increase sales, focusing on maximizing margins and controlling costs will help you realize better profits. Your menu, recipes, production practices, and service standards are good places to start.
Have you analyze your menu’s performance lately? Have you consider removing slow selling items? Have you thought about replacing low margin items? Do you feature or promote popular high margin items? These are just a few ways to easily improve your bottom-line.
When it comes to recipes and production practices, have you tested any new items recently? Have you looked at recipe batch sizes and productions routines to reduce waste. By producing smaller batches more often you can improve quality and reduce waste? Finally, have you minimized waste associated with over portioning and service mistakes. I’ll admit that these nuts and bolts aspects of the business aren’t sexy. However, they are the most frequently overlooked sources of untapped profits.
It was Winston Churchill who said “It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time” As much as I favor a strategic approach to business, I must agree with Mr. Churchill. Times like these require us to Tune-out the noise, Tune-in to market opportunities, and Tune-up our operations.
Restaurants face numerous challenges, but with proper planning, innovation, and adaptability, they can increase their chances of surviving and thriving in a competitive industry. Here are some strategies that can help restaurants survive:
- Embrace technology: Technology plays a vital role in modernizing restaurants and improving efficiency. Implement online ordering systems, mobile apps for reservations, and delivery platforms to reach a wider customer base and streamline operations.
- Enhance online presence: Establish a strong online presence through social media platforms, a user-friendly website, and online reviews. Engage with customers, promote specials, and provide updates to build a loyal customer base.
- Focus on delivery and takeout: With the rise of food delivery services, offering delivery and takeout options can significantly boost revenue. Partner with popular delivery platforms or develop an in-house delivery system to cater to customers who prefer dining at home.
- Menu innovation: Regularly update your menu with new and exciting dishes while keeping customer favorites. Consider incorporating healthier options, accommodating dietary restrictions, and offering seasonal or themed menus to attract a broader range of customers.
- Build customer loyalty: Implement a customer loyalty program to encourage repeat business. Offer discounts, special promotions, and personalized rewards to loyal customers. Engaging with customers through email newsletters or loyalty apps can also help build a strong relationship.
- Collaborate with local businesses: Partner with nearby businesses to cross-promote and share resources. Collaborations can include joint marketing campaigns, co-hosting events, or providing exclusive discounts to each other’s customers.
- Enhance the dining experience: Create an inviting ambiance, offer excellent customer service, and focus on consistent food quality. Pay attention to details like presentation, cleanliness, and staff training to provide a memorable dining experience that sets your restaurant apart.
- Explore catering and events: Capitalize on special occasions by offering catering services or hosting private events. This can provide an additional revenue stream and increase brand exposure.
- Control costs: Monitor and manage expenses carefully. Optimize inventory management, reduce waste, negotiate with suppliers, and ensure efficient staffing levels to maintain profitability.
- Adapt to trends: Stay updated with the latest industry trends and consumer preferences. Incorporate popular food trends, such as plant-based options or sustainable sourcing, to attract customers who align with these values.
Remember that every restaurant is unique, and these strategies should be tailored to your specific business model, target market, and location. Regularly evaluate your performance, gather customer feedback, and be open to making adjustments to stay competitive and thrive in the challenging restaurant industry.
Yes, the state of the economy can sometimes be challenging. Economic conditions can fluctuate due to various factors such as changes in government policies, global market trends, natural disasters, or geopolitical events. When the economy is facing difficulties, it can have significant impacts on individuals, businesses, and society as a whole. Some common challenges during a tough economy include high unemployment rates, reduced consumer spending, declining business revenues, and limited access to credit.
During tough economic times, individuals may experience difficulty in finding employment or face reduced job security. This can lead to financial strain, making it harder to meet basic needs and cover expenses. Businesses may struggle to maintain profitability due to decreased demand for their products or services, leading to layoffs, downsizing, or even closures. Additionally, consumers may cut back on their spending, affecting various industries and further exacerbating the economic challenges.
Governments and central banks often implement measures to address economic downturns, such as fiscal stimulus packages, monetary policy adjustments, or structural reforms. These actions aim to stimulate economic growth, increase employment opportunities, and restore confidence in the market. However, recovering from a tough economy can take time and require concerted efforts from various stakeholders.
During challenging economic periods, it is essential for individuals to focus on financial planning, budgeting, and seeking opportunities for upskilling or retraining to enhance employability. Businesses may need to adapt their strategies, explore new markets, or streamline operations to weather the economic storm. Overall, navigating a tough economy requires resilience, adaptability, and strategic decision-making at both the individual and organizational levels.
Prepare and write by:
Author: Mohammed A Bazzoun
If you have any more specific questions, feel free to ask in comments.
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