Restaurants Caught in Economic Vice
Spiraling costs and lower consumer spending are the jaws of a vice that is squeezing restaurants across the country. Notable chains are closing non-performing operations, independent restaurants are closing at a record pace and some food wholesalers are trying to survive record receivables that have put cash flow in negative numbers.
Chains have reacted by offering special lower priced proteins while making slight price increases to menu items. Independent restaurants may fare better in the long run because savvy operators who saw the changes coming in the fourth quarter of last year, made slow steady adjustments to their operations early in this cycle. Quick service restaurants like McDonalds, Burger King and Taco Bell have resorted to the 99¢ specials they always seem to revert to for more traffic.
To survive, there is one thing you cannot do – cut the guest’s experience. Your customer’s expectations must be met even though you are struggling to stay in the black. On the bright side, consumers know that unless you are in the oil business, everyone is suffering equally. Slight price adjustments are anticipated, but maintaining the value, portion size and quality is a must.
Here are a few tips to keep your operation from being a victim of the economy’s vice;
- Feature more specials to your guests using higher margin proteins, new preparations and special purchases many of your suppliers will be offering.
- Reduce waste. Shorten shelf time for perishables like produce, fresh fish and breads. You may have to implement a new inventory schedule to order more frequently. Use every scrap from stale breads for croutons to produce cuttings for soup stock. New menu items can evolve from effective control of waste.
- Look to comfort foods for help in the profit picture. Traditionally, comfort foods are lower cost menu items that are well received by guests in tough times. Pork chops and pan fried potatoes may sound pretty good at $14 if you just paid $100 to fill up your gas tank!
- There are still some food bargains out there. Even though eggs have gone from about 75¢ a dozen to $1.40 a dozen in the past year, at about 12¢ each they are less than many other ingredients for salads, sauces and side dishes. Seafood has seen some increases, but look for low priced wild caught species that make excellent fillers for seafood cakes, soup additions and entrees.
- Take a very close look at employee schedules. Can you cut 15 to 30 minutes off anyone’s (or everyone’s) schedule without impacting customer service?
Finally, gear up that marketing plan you have been putting off for months. There are hundreds of ways to implement low cost marketing ideas while making adjustments to expenditures. Remember, a 2% increase in sales for a restaurant doing one million dollars annually is $20,000. While a 2% reduction in food cost for the same restaurant is only about a $7000 savings. Which would you rather have? Why not both?
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