If there’s one thing that’s true about the restaurant industry, it’s that it can be very volatile at times. But the pandemic and many additional factors have created an even more extreme roller coaster of issues than usual. Shutdowns, restrictions, reopening and even more restrictions have taken the industry through the wringer. As some restaurants failed and some flourished, many restaurants simply tried to keep their doors open. However, the pain of the past couple of years has created many new options for businesses that have survived.
There are still five key issues that need to be considered when planning your strategy.
Remain Agile
The pandemic threw many restaurants off stride, requiring significant flexibility and agility of owners, staff and consumers to get through the crisis. Preferences that were evolving before the pandemic were both disrupted and accelerated. This is why owners who invested in substantial off-premises operations saw strong growth from that investment, allowing restaurants to flourish, even as others made rapid adaptations to their operations and business model to remain operational. Continued changes took place, but what has remained prevalent are the changes in buying behaviors. The convenience of being able to purchase through a mobile app, use a range of delivery options and off-premises opportunities will continue to thrive.
Similarly, businesses that provide quick service may need to adapt their operating models and restaurant layout so that more throughput can be handled at peak business hours. On-premises operations will need to enhance the shopping experience to maximize profitability and customer satisfaction as people begin dining out again, but businesses cannot do so by neglecting the off-premises operations. Though it can be very tempting to return to pre-pandemic conditions, that path leads to loss of operational flexibility needed in the new normal.
Leverage Tech
Technology has made a huge impact during the pandemic, with new options being quickly developed, implemented and operated to keep restaurants open during this difficult time. Companies that had already started digital transformation and had strong platforms in place operated and continued to grow during the crisis, while others began building platforms and introducing new tech at an accelerated rate to remain competitive.
As owners began to change their operating models to keep pace with rapidly-changing customer preferences, the technology infrastructure needed to be assessed at the same time. Where it was found lacking, new technologies and solutions could be introduced. Data analytics have also become more popular, helping evaluate operations, schedules and consumer preferences. Cybersecurity should also be addressed and assessed as technology is added, with enhancements as needed for all levels of the business.
Labor Shortages
As workers stayed home from closed restaurants, they began exploring other options, such as returning to education, trying new career paths and similar prospects that have kept much of the labor force from returning to the service industry. As costs continue to rise, labor shortages will be exacerbated as minimum-wage laws fail to keep pace with inflation.
By using analytics to better understand traffic patterns, you can more effectively deploy your human resources in your restaurant. Mobile apps for payment are becoming more commonplace for quick-service and fast-casual restaurants, while handheld tech for servers and hosts allows more effective service using fewer workers. Creative recruiting and retention will also ensure that your restaurant can be fully staffed when it’s needed most.
High Inflation
Inflation is at a 40-year-high, with no signs of slowing. As inputs and labor costs continue rising, operators will also have to raise prices and adapt their menus to these conditions. Although revenge demand – or demand that has been pent up and causes people to overspend to get back to normal – will drive some elasticity, increased costs in other areas will impact buying behaviors as consumers see diminished disposable income.
Providing menus with low and moderate price points using quick-serve concepts will help many restaurants survive through this difficult time, allowing you to keep profits up by bringing more people in at lower per-ticket profits. At the same time, reengineering your menus to provide superior value and a better dining experience will help boost on-premises operations.
Growth Investment
With the opportunities that were brought along for off-premises dining, there are still options for investing in growth for your business. Consumers continue to demand off-premises operations, while restaurants that have closed due to the crisis provide opportunity for savvy restaurant owners to grow their market share.
Investment in the industry will continue through 2022, especially for tech-enabled and on-trend concepts to expand their operations. Distressed restaurants may also look for partnerships, giving you the ability to grow into a small chain or regional option while keeping the restaurant running and evolving to new operational models. Look for fresh, on-trend brands with room for growth as well as bargains for established restaurants that need capital to make the needed changes.
If you’re making a shift in your restaurant and need help with your strategy, our experienced professionals are ready to help. Please reach out to our office at contact DMJPS.