Running a business during a down economy can be extremely difficult. The obvious effect on businesses is a significant decrease in income flow.
A recession, according to the NBER, is a “significant decline in economic activity spread across the economy that lasts more than a few months.” As a result, many restaurants struggle to stay open.
However, if you have foreseen such events, you can devise strategies to help your business thrive. One thing to remind yourself is that being wise and proactive is the key to surviving the passing storm.
So to guide you, here are the tips to recession-proof your restaurant.
Check your finances
“Cash is king,” especially during a slow economy. Because this is what keeps your company running, you must determine its financial health.Keeping track of your restaurant’s finances is essential if you want to run a successful business. That’s why you need to structure your business in such a way that it increases profitability.
It also allows you to address the factors that demand your flexibility in order to implement the necessary solutions.
Tip 1: Don’t forget to maintain a cash flow statement
Having a cash flow statement will inform you how much money you have, how much will come, and how much is going.
To generate positive cash flow at your restaurant business, you need to increase the amount coming in through well-thought-out marketing techniques.
Moreover, it is important to maintain a cash flow statement to guide you in the present and help you efficiently plan for the future.
Tip 2: Pay your debts and reduce it
Take advantage of the good economy while it lasts because you never know when something unexpected will happen.
Start off by managing debts and paying high interest rates so that you won’t have to worry about making interest payments on your debt when the recession hits.
This gives you the opportunity to build up a cash reserve that you can draw upon as a tool when times are tough.
The average recession in the United States lasted around 17 months. So, it would be ideal if you could cover the slow economy for at least six months, which can only happen if you are financially prepared.
Tip 3: Build cash reserve
In any case, it is always better to be prepared. Build a cash reserve now so when the recession knocks on your door, you are ready to face the situation.
One way for restaurants to build a cash reserve is by having a budget. Yiming Ma, an assistant professor at Columbia University, suggests writing down daily expenses or using an expense tracking tool.
This will help you track expenditures and reduce unnecessary spending.
Having a budget will help you analyze your expenses and cut back on irrelevant spending to save money.
Do not place all your eggs in one basket
One wise decision you can make to help your business flourish even in difficult times is to not pour all of your efforts on one area.
Hence, you might need to take another step and look for revenue streams where you can capitalize.
Be flexible and try other sources where you can generate extra income. Don’t rely on a single source and try to implement strategies that you can incorporate into your business, such as these:
Tip 4: Sell merchandises
Selling branded merchandise can be a significant source of revenue for your restaurant, especially if you have a large number of loyal customers.
You can display at your restaurant or promote on your social media accounts merchandise items like t-shirts, hoodies, mugs, tote bags, and keychains.
With good marketing, service, quality, and audience analysis, you can have a financial gain.
Tip 5: Make your restaurant a millennial hotspot
Restaurant’s Marketing Lab said that millennials spend approximately $174 per month at restaurants. This is a great opportunity to get them at your restaurant, but how exactly will you do that?Don’t just offer a meal but also consider the exclusive and one-of-a-kind experience that you can offer to your millennial customers.
Make your place ‘instagrammable’ with mural artwork on walls and ceilings, a vintage-themed interior, or with unique decor.
Millennials showing off their photos on social media like Instagram while dining at your place is an advantage for increasing brand awareness. This can bring a new facet to your marketing efforts to attract new customers.
Tip 6: Cater to special occasions
When a recession occurs, it does not mean that the world comes to a halt. People will continue to live and celebrate life milestones such as graduations, birthdays, anniversaries, job promotions, and so on.Make sure that during special occasions, you are at the top of their mind. Advertise your facility and place, showing people why it’s the best place to celebrate special events.
Give them a diverse option, varying from simple parties to big and elegant celebrations.
This is an excellent chance to leave a positive impression and earn repeat business.
Maintain excellent customer service
Keeping them happy and satisfied as they step out of your door will encourage them to do business with you again.
Never cease looking for ways to improve your products and services in order to foster customer conversion and turn them into loyal customers.
When people go out to eat, they usually look for restaurants that provide good customer service. In this context, you must ensure that you will not only meet but also exceed the customer’s expectations.
Tip 7 : Train your staff to go the extra mile
As a restaurateur, you need to foresee the challenges that may come. One proactive action you can implement is upskilling employees.
Upskilling means training someone for a certain task to cover for someone who is not available.
For example, if your bartender is absent, you can have a trained employee cover the task, which will save you money over hiring a part-timer. This is also an advantage for them to add to their skill set.
Tip 8: Reward top performing staff
Make your staff motivated and excited to work by rewarding them for their hard work. Organize an awards ceremony to recognize performing employees.
Giving them incentives that they will enjoy will make them feel appreciated. However, it doesn’t have to be a monetary reward system.
You can give them something special like work-from-home incentives, paid-day-off, or travel incentive programs.
Practicing this at your business will encourage staff loyalty and make them team players.
Automate and Update your tech
Adapting to the trends in the market in the form of automation will help your business improve services and create a better standard for customer service.
Automation will help businesses in different ways. It could be in providing customer service or operating efficiently.
Moreover, updating your tech to a modern solution will also help you upgrade your services.
This can be the identifying mark of your business, which can be a boom to other restaurant businesses.
Tip 9: Use QR code menu for easy ordering and menu management
Investing in technology will benefit you in the long run and save money. The QR code menu is a good investment for your restaurant.This software allows you to experience smoother operations because it offers mobile ordering and payment. Moreover, menu management is made easy where you can customize and update digital menus regularly.
Investing in reliable software can help lean businesses thrive in a down economy.
Tip 10: Offer takeaway menu with MENU TIGER’s online ordering
Takeaway option is a great way to entice customers to place orders and enjoy their food in the comfort of their home.
MENU TIGER has a custom-built restaurant online ordering system that restaurants can utilize to cater to customers who are away. However, you need to design your website creatively by displaying mouthwatering photos of foods and drinks.
Moreover, you can add a promotional banner on your restaurant’s ordering page to draw customers’ attention and make them place more orders in their cart.
Reinvent your menu
Analyzing and redesigning your menu to meet customer demand will increase its profitability.
As their preferences and average cost of spending change because of the state of the economy, you must have a new game plan.
Re-engineering menus can make them more cost-effective for diners.
It will also allow you to be more strategic in designing your menu to entice customers to increase their check size.
Tip 11: Feature your signature dish
Customers dine at different restaurants looking for dishes that are unique to their taste. Hence, this is an opportunity to get them into your door.
Ask your chef about their best dishes they’re confident to highlight in the menu. Featuring your chef’s dishes that they are most passionate about can be your restaurant’s unique selling point.
Moreover, these dishes often have a high profit, which has a positive impact on your restaurant’s bottom line.
Tip 12: Add labels to your items
To make marketing easier, label food items with words like “Sold out,” “bestseller,” and “new.”.
Labeling menu items is a good way to prompt customers to take action, which could affect their purchasing decisions.
Perhaps customers take time to decide what to buy, and seeing those items labeled “Bestseller” can make them think they are tasty dishes since many have ordered them.
By labeling your dishes “Sold Out,” you can encourage new customers to order the item again when they return.
Tip 13: Upsell and cross-sell items
Upselling and cross-selling are used by different forms of businesses and are proven techniques to leverage to increase income.
Cross-sell by offering guests a complementary item with their current order. A steak goes well with a glass of red wine or whisky.
On the other hand, upsell by pairing a pizza with a Caesar salad.
These strategies encourage an increase in purchasing behavior, thus maximizing restaurant profits.
Tip 14: Display delicious photos of your food items
Displaying a perfectly photographed and delicious food item can make the menu more engaging to customers.
In a study, it was found that people are more likely to remember items if they are associated with pictures. When customers visit again, they can then recall those dishes with remarkable images they have seen.
Photos enable you to advertise dishes in numerous ways. Highlighting delicious-looking photos or high-profit dishes with awesome images.
Hence, pictures have a powerful effect that inclines customers to order them.
How automation can recession-proof your restaurant
Technology in the modern era has made life easier for people.
With technology, you can save money on labor, increase employee productivity, create marketing strategies, and better serve your customers.
It is also a good tool for assisting businesses, particularly during difficult times.
So, for your convenience, here are some of the advantages of incorporating automation into your restaurant.
Reduce labor cost
Automation provides an all-in-one solution to cut labor-cost issues. So, how exactly does automating business operations benefit your business?
Investing in technology can save you money down the road.
Instead of having more employees do repetitive tasks such as taking customers’ orders and payments, a tech tool can handle that.
This increases other relevant work that requires a human touch and helps employees be more productive.
Reduce employee turnover rate
Working on labor-intensive tasks on a daily basis can be tiring for the staff. One of the reasons they have to separate could be the exhausting workload they have to deal with every day.
However, with an automated solution, manual labor is reduced, allowing them to provide better service.
Customers are more likely to be affected by the friendly atmosphere that employees exude when they are motivated and happy at work.
Formulate promotions on social media
An economic downturn is a time where people tighten their pockets. However, it doesn’t mean that people will never step into your restaurant.
People will go out during special events, so make sure you are their number one option.
Social media advertising is a good opportunity to market your product since it is easy and free to use. But for those who can’t say no to good food, you can make them place an order online or even travel a mile to visit your store.
Make a proactive decision right now
Keep your restaurant business from failing by being proactive in the face of the economic crisis.
During these times, major decisions and prudent planning are essential. One thing you can do is find new ways to efficiently manage your restaurant business.
MENU TIGER may assist your restaurant in a variety of ways, not only today but also in future events.
This cost-efficient restaurant tool will help you streamline your operations and make the ordering process fast and easy for your customers.
Contact us now for a 14-day free trial with no credit card required.