High food costs? Unpaid loans? Is there truly an end in sight? 90% of restaurant operators say costs are still rising while profits continue to fall. In this post we will discuss what restaurants have had to do to counter these ever-increasing operating costs and also dive into some cheap tips to navigate these murky waters.
According to Michelle Korsmo, CEO of the National Restaurants Association, “Consumers are watching prices rise faster in grocery stores than they are in restaurants and see an increased value in spending their food dollars in restaurants.” The problem is the costs for operators to deliver their product have not balanced out with their increase in customers, forcing them to cut hours, change their menu, and reduce their third-party delivery options.
To give you a better understanding we’ll dive into some numbers. 29% of restaurant owners say their operating conditions will never go back to normal while 43% said it will only get worse over the next 6 months. 88% of all operators said they have seen a large increase in their food & beverage costs, 86% saw an increase in their labor costs, and nearly 66% said their occupancy costs have gone through the roof. Finally 90% of restaurant owners have had to increase their prices, and over 60% have changed menu items & reduced their hours of operation significantly.
The only reason so many restaurants have been able to stay in business is through loans such as the PPP or EIDL. Unfortunately over 35% of those who took on the EIDL loan won’t be able to make correct payments once they are scheduled to begin. So what’s next?
Most restaurants have not been able to find the correct solutions to returning their profit margins to normal. However, 24% of restaurants have incorporated more technology since the start of the pandemic and it seems it could be the most valuable solution. Here is a quick look at some solutions including the addition of tech.
The first possible solution to go over is simplifying your menus. Reducing your wholesale food costs is the top priority right now so try to get strategic about shortening your menu. Get rid of things people don’t buy and keep the items that are really easy to prepare. Think critically about what items are necessary and which ones can go in order to save time & money.
Next up, prioritize retaining staff. We’ve mentioned this in other blog posts, but replacing an employee can cost up to ½ to 2 times that employee’s salary. Invest in the training & happiness of your employees so that you don’t have to keep up the hiring process. This might mean more time & money being spent up front but in the long run, it’s highly worth solidifying your staff as much as possible.
Next, reduce food waste. According to a blog by Workstream, “For every $1 invested in programs to reduce food waste, restaurants save an average of $7 in operating costs.” This is going to mean some more work on your end. Do research on the exact amount of food you’re wasting on a monthly average. Then figure out how to repurpose the waste, manage your inventory more efficiently, and reduce your purchases of items you see most frequently wasted.
Finally it’s time to talk about technology. Restaurants seem turned off to the idea since the upfront costs can be so menacing but there are cheap solutions that will save you a ridiculous amount of money every year. The most important being, digital ordering.
The only cost in digital commerce platforms, like tabski, is for the QR Codes that go on each table. We’re talking $200 maximum for a service that has the ability to save thousands of dollars on labor costs, decrease table turn times, and increase overall sales as well as staff tips.
The main idea behind companies like tabski is to provide the consumer with the ability to order & pay using their smartphones. This means your servers can focus on important tasks like hospitality & running the food. The cost for the platform is put on the consumers through a $0.75 convenience fee per tab and I don’t think they’ll mind it seeing how much they’ll pay DoorDash to bring their food to them.
To wrap up, all restaurant operators have the same problems and it’s becoming rather agonizing to see prices rise exponentially. However, with a little research into restaurant technology you can find cheap ways to not only keep your restaurant afloat, but return to the green. If you’re interested in the idea of giving customers the control, click here to learn more. Digital commerce platforms, like tabski, are designed for restaurants, hotels, bowling alleys, etc. and the future of hospitality is digital so you might as well invest now.
The Research
https://www.workstream.us/blog/restaurant-budgeting-how-to-offset-rising-business-costs-in-2021
https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx
https://www.waste360.com/food-waste/report-how-restaurants-saved-money-reducing-food-waste