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7 Strategies to Recession-Proof Your Restaurant

7 Strategies to Recession-Proof Your Restaurant
Wed, 02/01/2023 – 07:31

These tips will help you thrive in a new restaurant era—no matter the economy.
February 2023
Bruce Reinstein & Tim Hand

These tips will help you thrive in a new restaurant era—no matter the economy.

Courtesy of Kinetic 12

Bruce Reinstein

Most full-service operators have come to realize that running a restaurant will never be the same. Fortunately, they have made significant pivots to their businesses to address this new post-pandemic world.

Where business used to revolve around in-house dining, there is now a greater balance with off-premises business. Where labor was once plentiful, it is now difficult to find and equally difficult to keep. Where expanding the menu and adding SKUs was easy, it is now almost taboo. And where cost increases were predictable and manageable, it is now a challenge to make money at all.

With change comes understanding and perspective. This can be incredibly useful as we move forward, especially given that the business environment is still in flux and a possible recession looms on the horizon.

Let’s now look to the following seven strategies, which can help operators lead a successful restaurant evolution.

Courtesy of Kinetic 12

Tim Hand

1. Be open-minded and flexible

Step one is to take emotion out of decision-making. Great leaders listen to their teams, customers, and partners and make decisions based on fact, perspective, and experience. The road ahead is clearer than it has been the last few years but will still require flexibility. It shouldn’t require a pandemic to make change. Operators must be willing to let go, to try a new way that allows for sales growth, cost reduction, and most importantly, greater profitability.

2. Keep the menu simple and the LTOs tight

Historically, many full-service restaurants operated with a “more is better” mentality and tried to be everything to everybody. This mindset changed over the last three years due to labor and supply shortages. “More,” as it turned out, was not better—it was inefficient and costly. Operators learned that consumers did not need all those menu items; in fact, they appreciated restaurants that were focused on doing fewer things really well.

In 2023, we see menus becoming more condensed, easier to execute, and more profitable, yet still every bit as satisfying for the consumer. We also see the pace of LTOs increasing but requiring fewer new SKUs. In general, SKU reduction will continue, and new SKUs will be challenged to carry their weight, either through use on multiple recipes or by being truly differentiated and value-added.

3. Become a hybrid

The history of most full-service restaurants involves large dining areas with even larger menus. Takeout business was an afterthought, packaging was cheap, and the quality of the experience was average at best. During Covid, being better at takeout was required to survive.

Post-pandemic, we’ve seen the share of off-premises settle in significantly higher than it was. Big dining rooms are not as important. A restaurant’s digital platform has become crucial to customer engagement, foot traffic, and business viability. Menus have become smaller. How staff are deployed has changed. This year will bring us more examples of hybrid models that incorporate some of the successful characteristics of fast casual and quick service, but still maintain full service at the core, just within a more compact system.

4. Be great at off-premises

For many consumers, the pandemic was a giant forced trial in off-premises. And as it turned out, customers liked it. Although social distancing was the initial motivator, it has become more about convenience. Restaurant takeout, as a result, has improved. Off-premises menus and promotions now offer more choices, and delivery packaging has improved. The whole experience is better.

From a menu perspective, dishes that are consumed off-site must now meet the quality standards of the products consumed at the restaurant. We predict this shift toward better off-premises foodservice will eventually prove to be Covid’s biggest impact on the industry.

5. Create a culture of labor productivity

“Doing more with less” is becoming the industry standard. After a two-year labor shortage, operators understand that staff engagement and building the right culture are essential to survival. It starts with team members who are well trained, who are listened to and feel appreciated, have a quality way of life, are competitively compensated, see opportunities to grow, and have fun at work.

A second critical element to engagement are managers who manage—not “firefight.” This will be a major challenge in 2023. Managers who work in an engagement-forward culture are likely to stay and grow with a company. On the other hand, firefighters tend to move on, which leads to further staffing problems.

6. Embrace technology

Clearly operators must prioritize where they invest in technology, but it’s tricky to determine the best system. Over the last few years, full-service operators have accelerated their investments in tabletop ordering, delivery tech, apps, websites, inventory management software, KDS, online training, and more. We can expect the pace of innovation in foodservice technology to continue; we are now in a new environment where operations management, training, and customer connectivity must have a foundation in technology. Investing smartly will drive traffic, employee satisfaction, and ultimately revenue.

7. Reinvent your supply chain

Many brands are using the same products as before the pandemic but paying more for them and still living with sporadic supply chain issues. Is there a better way?

In the year ahead, we expect more brands to further reinvent their supply chains. To do so, full-service operators must work closely with their preferred partners to build a supply model they can rely on.

This requires approved alternative products, elimination of some proprietary products in favor of more readily available SKUs, and being open to protein alternatives that provide more consistent availability and cost. It also demands a higher level of transparency and communication. Suppliers that cannot step up will be cut.

Product supply is critical to a restaurant’s success, and operators have run out of patience with unreliable systems. We’ll enter a new era of supply chain management as a result.

Bonus: Telling a story

Now is the time to reinvent your brand. Every restaurant can be improved. Be forward-thinking and determine how to appeal to today’s consumer, or how to become even more compelling to your existing core customers.

Become an innovative growth brand with real areas of differentiation. Reinvent who you are, if needed. These seven strategies are critical to running a great operation, but they don’t tell the whole story. Create your own story, and tell your story.

Bruce Reinstein and Tim Hand are partners with Kinetic12 Consulting, a Chicago-based foodservice and general management consulting firm. The firm guides multiple best practices projects and forums, and works with leading foodservice suppliers, operators, and associations. Their previous leadership roles in restaurant chain operations and at foodservice manufacturers provide a balanced industry perspective.

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