During the pandemic, the restaurant industry was one of the most affected industries financially. Since then, people opening and running restaurants have been just a little bit more careful about their finances and the plan B in case something as severe as a pandemic happens again. Postpandemic financial concerns are a real thing and are taken very seriously.
We all know that the ambition of opening a restaurant and the reality of actually operating one are completely different things. Studies show that 30% of restaurants close down within their first year, due to several reasons. However, a big part of those reasons can come down to only one, and that is money.
We’ve put up a list of the most comprehensive pieces of advice to equip you with some knowledge on how to successfully run a restaurant.
4 tips for overcoming financial challenges in the restaurant industry
Whether you have a great idea to open your restaurant, renovate, rebrand, or expand your existing one you’ll need some help regarding the financial challenges. Here are some solutions to potential problems that may arise.
Do your research on restaurant financing
Unless you have the money in your bank account or your pocket ready to use, you’ll need a financing plan. If you’re truly serious about the topic you should do your research and read more on restaurant financing and loans, to help you decide on the best options for your particular vision.
Here are some options you can consider:
- Write a very detailed business plan. With this business plan, you’ll try and get people to invest in your idea, in exchange for some ownership in the business.
- Explore the option of being a franchisee. Maybe there’s an already existing franchise that you would want to be a part of and that will allow you to start with a very small investment provided that you already have a ready-to-go restaurant space. Just be careful, it sounds a little simpler than it is.
If done right this essential phase where you work out your finances can become a solid base for preventing future financial challenges.
Implement energy-saving practices and sustainability
Sustainability in restaurants can be implemented in so many different small ways offering your customers the feeling that they are in a place that cares about the environment. The ideal combination is that you can turn these energy-saving and environmentally-friendly practices into benefits that will allow your business to cut or lower some expenses.
Here are some practical examples:
- Think about the lighting
Either save electricity by dimming the lights completely and use alternative lighting such as candles. Or invest in more sustainable light bulbs, and lighting solutions.
- Change your straws
Either invest in reusable plastic or metal straws, or the more popular option is biodegradable straws.
- Turn to a more meat-free menu
This doesn’t have to mean that you own a vegan restaurant. However, it’s very well known now that turning to a plant-based diet helps the environment. Although not a lot of people are willing to make this decision, the majority would agree to a plant-based meal a couple of times a week.
- Make your deliveries ‘green’
Make sure there is a minimum waste from your orders and don’t use plastic containers. The delivery vehicles should be eco-friendly, meaning you can use bicycles, electric scooters, and electronic vehicles.
Upgrade your food inventory management
Your food inventory is practically your warehouse and most of the warehouse strategies that can apply to save costs should be taken into consideration here as well. How much you order, spend and waste at the end of the day comes to the ability to manage your inventory and make smart choices based on data about your business. Some of the things you can do to build or improve your food inventory management are the following principles
- Use the FEFO method
FEFO means First Expired First Out. Simply put, the products that are about to expire first are placed in front of the other ones, making it easy for everyone to use them first and prevent food waste or even worse using expired products.
- Create a schedule and a checking system
A schedule will help you keep regular track of your inventory without forgetting to do so or omitting something. Worksheets, to-do lists, and POS system, all help here.
- Calculate your ‘sell-through rate’ formula
This helps you see how much of a given item you sell over a period of time. It’s calculated by dividing the number of items sold by the number of items received, then multiplying it by 100 to get a percentage.
Don’t forget about efficient staffing
It’s not about how many people you’re paying to work at your restaurant, but rather about what those employees do for your business. The number of employees is not equivalent to your restaurant’s success. We’re not saying you should go understaffed but rather, choose wisely and don’t waste money on inefficient workers.
Their daily presence and efficiency are of utmost importance. Some tips you can use when hiring and retaining staff:
- Look for potential rather than experience
- Keep an open eye for people coming out of restaurant schools
- Give a chance for existing employees to prosper, and hire from within
Creating and managing an efficient team can do wonders for your business.
Over to you
We hope that this list we’ve put up for you will meet your expectations and give you a solid base on how things should be done in the restaurant industry. As in any other business, it’s only natural that issues will arise.
How you handle or even better prevent them is what makes you a great manager. Keep yourself on track with all the latest information to achieve this.