The dynamics of the restaurant industry are changing at an unprecedented rate. Disruptions caused by increased monotony and advancement in technology has created a number of advantages and drawbacks for restaurants.
Business owners can take consolation in the fact that they’re not alone confronting these challenges, and they can overcome these problems using proven techniques. In fact, many struggling businesses have used challenges as an opportunity by changing the way they conduct their business.
Here is a list of some of the major challenges faced by the restaurant industry and solutions to such problems:
Table of Contents
Challenge #1: Trying to SURVIVE without a Unique Selling Point
Seth Godin in his book, The Purple Cow, emphasized how important it is for every business to differentiate itself from others. Consider this example from the book: Everybody knows cows are usually white and no one pays attention to them but if the cow changes its color to purple then it will have everyone’s attention.
Standing out from the crowd is becoming more necessary than ever and it is probably the hardest challenge a restaurant will face. To beat the competition, the business needs to offer something unique; therefore, here is an outline that will help you in building a unique selling point.
- Differentiate, Differentiate, Differentiate: Do you make mind-blowing tortilla sauce? Or do people keep licking their fingers after they’ve had a slice of your cheesecake? In order to succeed, you must know what makes your restaurant distinct. Know what your strengths are and then capitalize on them. Successful differentiation alone can help you make giant leaps forward.
- Know Your Customers: Don’t try to be somebody to everybody. You will lose customers this way. Conduct thorough research and find out who are your target customers. Once you have identified them, then mold your restaurant according to their needs and wants.
- Don’t be afraid to toot your own horn: Once you have identified your customers and locked in on a niche, then it is time to craft your unique selling point statement. Use this statement to remind your customers, how your restaurant will benefit them. As long as you follow the ethical boundaries of marketing and you are not making any misleading claims, you have the right to let everyone know that you offer something unique. You never know who might be listening and become your next customer.
Challenge #2: Having a LACKLUSTRE marketing plan
Most restaurateurs understand the significance of following through a unique selling proposition and promoting it, but they are clueless about marketing. Apart from distributing flyers, most restaurant owners expect the customer to find them. This is a recipe for disaster.
When it comes to marketing, there is a deluge of information. According to Forbes Agency Council, an average American is exposed to almost 4000 to 1000 advertising messages on a daily basis. He can’t remember all of them. To counteract this dilemma, you will need to build a 360-degree marketing plan so that the chances of your potential customer remembering your brand can go up. All these efforts must be done simultaneously to get optimal results.
- Social Media: Facebook and Instagram are possibly the most significant channels for building your brand image and interacting with customers. Post on social media as often as you can and keep the content relevant. Include pictures, videos, and appealing graphics in the marketing content. Running promotions and offering customers to be featured on your social media profiles can significantly increase customer engagement. Lastly, use paid advertising if you can spare the budget. Facebook and Instagram can target customers based on their interests, which makes boosting sales a lot easier.
- Don’t neglect your Website: Your website must be user-friendly and easy to navigate. Good user experience speaks volumes about your brand. A badly designed and poorly functioning website will negatively impact your restaurant sales.
- People use online channels! Millions of hungry customers are using the Internet looking to satisfy their taste buds. Your customers are now more inclined to order from your website, using a mobile phone, suggests ClickZ. Not providing a choice to order online may dramatically hurt your revenue.
- Don’t neglect bad reviews: Research by Hospitality Insights suggests that people decide where to eat by looking at online reviews. Everything is transparent these days. Bad reviews kill a business. The only option to rectify the reputation is to make an online apology and quickly make amends.
- Reward Programs will make customers stay for life. A reward program encourages buyers to become loyal customers and spread positive word of mouth. In fact, you can make customers brand ambassadors by offering loyalty cards, special discounts and giving shout outs on social platforms like Instagram.
- Reach out to your customers 1-on-1: Gary Vee, a famous marketing guru, suggests that a restaurant should use the opportunity to directly send a message to its potential customers on social media platforms. All you have to do is find around 50 people who have the biggest following of Instagram in your city and then send them a direct message individually, offering them a free meal at your restaurant. This will generate a humongous amount of free advertising for your restaurant, which is hard to earn even with paid ads. (Watch Video)
Challenge #3: Your Branding makes no sense
Just because branding is simple, it doesn’t mean it’s easy. The restaurant industry challenges owners to maintain consistency in their marketing efforts across all channels. Several people from your team may contribute to your advertising and marketing efforts, but it’s your job to maintain uniformity in your branding and marketing message.
You can set standards and guidelines for your team to follow, which will keep your brand consistent. Uniformity and consistency make your message clear to your audience and make it more recognizable. For example:
- Brand imagery: Choose your colors palate, graphics design format, and fonts, etc. And keep them the same in every marketing message, on every medium.
- Brand Vibe: Decide what feelings you want to evoke in your audience and use those specific words and slogans that can elicit the desired response in your target customer.
Challenge #4: Your menu is going off the RAILS!
Every restaurateur wants to please his customer, which is understandable. However, sometimes you’re putting items on menus that are doomed to fail. You can’t hit the target in every direction. Follow these tips to improve your menu and improve sales:
- Decide carefully. Keep menus simple and offer food that matches your brand personality. Then, stick to it and don’t change the menu. This will attract the right customers because not every customer is your potential customer.
- Use visuals wisely. According to the Restaurant Times, eye-catching items on your menu should be put at the top. This will motivate the customer to order more and to flip the pages for similar content.
- Speak with authority. Use top-notch descriptions that create a mouth-watering impact.
- A picture is worth a thousand words. Your menu is the only chance to convince the customer to order. Vivid images can evoke emotions like nothing else; therefore, get professional food photography done. This is non-negotiable.
Challenge #5: You don’t know how to STAFF effectively
There is no end to staffing and it can be very difficult to get it 100% right. Staffing will require a lot of your budget, hence, it is imperative that you plan carefully.
Here are some staffing guidelines to use:
- Keep Track. Make a close estimate of the number of people you will need. Hiring too many will waste your time and money. Hiring too few will affect your efficiency levels. To make the right decision, examine your past sales. This will give you a good indication of the necessary number.
- Don’t use manual scheduling. Manual scheduling processes cause a lot of delays because it is difficult to keep it updated in real-time. Last-minute shift changes are inevitable and this is where the manual system fails. In contrast, digital scheduling software will centralize your entire staff’s data making you communicate more effectively and save you more time.
- Schedule staff in advance. Keeping a rough schedule for the next two weeks will help you accommodate last-minute changes. Your staff will know what’s in store for them, thus enabling them to set their affairs in order prior to their upcoming shifts.
Challenge #6: Food prices & food shortages are skyrocketing
Business owners should keep a close eye on the pricey ingredients. Some ingredients are very popular in certain places, which can increase the overall price of a dish. One such ingredient is Avocados. According to NPR, the prices of Avocado have tripled since last year. Mexican restaurants are hit the hardest.
However, the price also affects other hotels and cafes that serve avocado-based food such as avocado toast. Similarly, avocado is very popular amongst the vegan dieters and people, who are on a strict low carb or keto diet.
The availability of food items is also the reason for rising prices. Flooding in the last season has had disastrous effects on avocados plantation. This caused the prices to go up. In recent years, Avocados has become much scarce than it used to be. As a result, business owners must offer dishes that doesn’t affect their budget.
Other examples include sweet corn and strawberry, which are often affected by natural disasters. Recently, fruit stands in Southwest Michigan reminded customers that there is a shortage of sweet corn in the market. To deal with the shortage in Michigan, Corn was imported from Indiana, Georgia, and Florida. In some areas, the strawberry season also took a hit due to heavy rain.
You need to remember that food prices and shortages will be an on-going process and this is something hard to predict accurately. Restaurant owners must have a contingency plan for all the necessary ingredients, which is a list of suppliers that can provide the ingredient at a moment’s notice, in case of an emergency.
Challenge #7: Good labor is getting expensive & hard to find
Despite the job openings, restaurant challenges continue to evolve due to the changing demands of the workforce. In the past, businesses reported a shortage of chefs and cooks but recently they’re facing difficulty in finding people at every level of the business, from bartenders to waiters, etc.
Despite job openings, there doesn’t seem to be enough skilled people to hire. For instance, “Job openings among restaurants are up 40% over the past two years”, said Joe Pawlak managing principal for Technomic said. Anyone with decent marketable restaurant skills can get hired in any major city in the US if the applicant has a good track record.
A recent article in Forbes claims that restaurants face an increase in higher wage costs, which is yet another factor in the shortage of workers. Higher minimum wages are adopted by a number of major cities and states around the U.S. While tipped wages are still low, restaurant owners still have to offer their employees an attractive wage to find the right employees. Pawlak also mentioned that median wages have risen more than 10% since 2017. As a result, higher wages are reducing profit margins and increasing labor costs.
Challenge #8: The competition is getting fierce
Regardless of which town you live in, you probably have seen several major avenues that are flooded with restaurants. Restaurants are cropping up everywhere, and this has turned the food business into a very competitive arena. New competitors are entering the market quite regularly to steal your customers.
Hence, business owners need to commit to continuous improvement in their standards and find new ways to come out on top. Think about a strategic move because you will need to mindfully adopt strategies to beat your competition without lowering your quality.
While all the new choices popping up are great for consumers, the competition makes it difficult for a restaurant to function. You must remember that people have attracted to novelty and new restaurants will always present an opportunity for a new and exciting experience.
Here are some strategies that can help you to beat your competition:
- Know your Competition inside & out
To beat a competitor, you must know their weaknesses and strengths. Go ahead, visit their restaurants and find out how good their ambiance is. How does their food taste, and how good their customer service is? Use their quality as a benchmark and measure yourself up against it. This is the time to be truly honest with yourself. If you feel your restaurant is lacking in one dimension, then admit it and quickly resolve to change it.
Try to keep a close eye on your competitor’s marketing efforts by visiting their website and follow them on every social media platform. This will give business owners a glimpse of how their competitors communicate with their customers.
- Price menu competitively
Your menu explains your business in a nutshell. Toasttab suggests that a well-designed and well-executed menu can significantly increase the number of customers you retain. Price it wisely!
While finalizing your prices, consider what your competitors are charging for similar items. However, you also need to be careful in dealing with price-wars because trying to match your competitors’ pricing can lead to a backlash and hurt your profits in the long run.
Be mindful of what item sells the most. If you think customers would be willing to pay more, then you can raise the prices. This will take some trial and error to get right.
- Deliver exceptional customer service
In any business, the customer is the King and they should be treated like one. This is exactly what your staff needs to learn. Make sure your team including the doorman, waiters, and receptionists are polite and courteous. Conduct weekly meetings with your staff to lay down the ground rules. Regular staff training is imperative to answer any customer queries, regarding the menu.
Customers can often get frustrated if they feel that you do not fully understand them. This may be a little unfair on the customer’s part but remember the customer as the final say. And they should get the best treatment and be made to feel special and important. This can only happen when you have exceptional customer service.
- Use technology appropriately
Technology can play an instrumental role in your business success as more and more people are using technology.
Is your target audience comprised of millennials? If yes, then put out as much content as possible that speak to them. This will put your business on the same frequency as your target customers. The more your customers like you, the more chances it creates for them to do business with you. Business owners need to be consistent in their efforts. Remember, earning the trust of your customers is a lengthy process that requires a lot of patience and hard work.
Technology can also help you manage your inventory. For example, a good POS system can help in understanding the preference of your client and their demographics, suggest Saleem Kathri, writing for Gather. This can provide an overview of your target market helping business owners raise average order value by catering to their needs exclusively.
- Stay connected
Business owners should remain in contact with their customers. Use the right marketing channels to reach them. You can use email marketing or social media ads to stay in close contact with your customers. Keeping your customers updated with the content helps refresh their memories and reminds them of your business.
Once the customer realizes that you can give them a viable solution, the connection between you and the customer will be much stronger. Ultimately, the time and effort you’ve built in building the relationship will be repaid many times in the long run.
- Serve the best possible food
You can redesign your restaurant front to back, change your menu, reconsider your prices, get new furniture, give regular discounts, but at the end of the day, beating your competition largely depends on the quality of the food you are serving. It’s imperative that you consistently provide the same taste and quality to everyone, every time.
These quality control measures can take a while to get streamlined; however, how hard it may seem, you only have to get the process right, once.
Challenge #9: Mobile is changing the marketing landscape
Do not ignore the dynamics of mobile phone technology in the restaurant business. New statistics make it clear that online ordering, especially for restaurants, carries even larger weight. Recent studies suggest a strong relationship between online ordering and brand loyalty. According to a National Restaurant Association LevelUp Whitepaper, consumers who order online on the mobile visit the restaurant 67% more compared to those who you don’t.
As mobile users grow in numbers, more and more people will begin ordering from their phones. When using technology, business owners need to provide a uniform experience across their mobile apps to create a unified user experience.
Customers visiting your mobile app will expect to be able to easily view menus, make a reservation, see rush hour times, order pick-up or delivery, and even use their own devices to make payments.
It’s no longer enough to just have a functioning website. Millennials like to do research, and when they need help, they prefer quick answers, such as instant contact with a customer representative online. Grubhub statistics suggest that 77% of food-based searches are done on cell phones. Make sure your website is user-friendly and loads quickly.
Challenge #10: Customer expectations are no longer what they used to be
Customers, particularly Millennials, have higher standards than the previous generation—even for quick-service restaurants (QSRs). They are more concerned about diet and nutrition, food allergies/sensitivities, and pay close attention to ingredients that are being consumed.
A report from the National Restaurant Association highlights the preference by declaring that, “The typical restaurant guest today is not the same as the typical restaurant guest 20 years ago. Having essentially grown up in restaurants, younger generations have a very sophisticated world-view when it comes to food.” Restaurant owners reiterated the fact that people are now more aware and expect more from the restaurants they are eating from, compared to the past two years alone.
According to the research, “Operators will need to carefully balance how to cater to these precise tastes without becoming too niche or alienating more mature guests.” Brands must be equipped to respond appropriately to customer queries about any issues, and as the menu changes over time, they must keep themselves updated with the latest ingredients information.
It’s also true that Millennials are less patient than their previous counterparts, hence, brands will have to provide the correct answer and updated information on their website and on the mobile apps. This is the need of the hour because the new generation is less forgiving and demands everything to be near perfect.
Challenge #11: Food quality is not the only thing that matters
Suggesting that food quality is not the only thing that matters may sound counterintuitive but the entire experience of eating out at a particular restaurant has its own merits.
Unlike prior generations, Millennials prioritize experiences over things, which means you should reconsider the way your customers are interacting with your restaurant. Probably, the most popular method for customers to decide where to eat is based on positive word of mouth.
Another criterion that has recently emerged for judging food quality is, “If the food is “instagrammable”?
You need to remember that people are now connected 24/7. They want others to know the kind of experiences they had. The better the experience you provide, the better you will become in the eyes of the new generation.
Challenge #12: Eating healthy is not just a cliché’
Today’s customers may want quick results but they’re simultaneously migrating to a more health-conscious lifestyle. It’s true that they eat from fast-food chains such as McDonald’s and Burger King but at the same time, they are obsessed with restaurants that offer quick and healthy options. The rise of healthy chains such as Subway is a perfect example of this phenomenon.
In fact, chains such as McDonald’s have also started to offer healthy options on their menu. Remember, the hospitality business is all about leaving no stone unturned to accommodate the changing food paradigm.
So, What Now?
The first step in dealing with problems in the restaurant industry is to understand the challenges you’re facing. Once you have determined the challenges, you can evaluate the most useful, timely, and cost-effective strategy to combat these challenges. While planning, don’t forget to put together an actionable plan for the intermediate and long term.
Whatever goals you set, make sure that you develop systems to execute those plans on a consistent basis. Applying all the above-mentioned changes may initially seem overwhelming but not taking appropriate action will cost you your business. You don’t need to do every item on the list and you don’t have to do everything by yourself. When implementing a change of this magnitude, it is best to start one step at a time and get help from others.