Why You're Losing Money and What To Do About It

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How Restaurants Can Survive and Thrive Amid Rising Costs and Tight Margins

Navigating the Storm: Practical Strategies for Restaurant Operators

In recent months, restaurant operators have faced mounting challenges—from rising costs and interest rates to shrinking consumer budgets. Lauren Fernandez, CEO of Full Course, aptly describes the current situation: "When you think there's a light at the end of the tunnel, it's just another dumpster fire." But amid these pressures, practical solutions exist to not only survive but thrive.

Understanding Today's Challenges

Restaurants face multiple pressures simultaneously:

  • High Interest Rates: Traditional lending has become costly, limiting essential capital.

  • Rising Food and Rent Costs: Inflation and real estate shortages have dramatically increased operational expenses.

  • Consumer Spending Tightening: Despite consumer desire to dine out, inflation has made restaurant meals less accessible.

  • Persistent Employee Turnover: High employee churn remains a significant and costly industry issue.

Lauren Fernandez emphasizes, "It's daunting, and it can feel like you're flying without a safety net."

Creative Capital Solutions

With traditional loans harder to secure, operators should consider:

  • Exploring alternative debt structures such as friends-and-family raises.

  • Crowdfunding or point-of-sale loan options with clear cost understanding.

  • Seeking grants and sponsorships, especially for socially-driven initiatives.

"It might be worth your effort if it's free return, with no strings attached," notes Lauren Fernandez.

Cost Management and Efficiency

Rob Cortez, Director of Operations at NaanStop, stresses transparency with staff:

  • Tighten labor scheduling; cross-train employees to maximize efficiency.

  • Precisely control prep and portioning to reduce waste.

  • Engage staff openly to encourage ownership and proactive problem-solving.

"Being transparent and including your team in the solution dramatically improves efficiency," Cortez advises.

Boosting Sales Amid Declining Traffic

Lauren Barash, Chief Marketing Officer, suggests enhancing value perception and exploring incremental revenue streams:

  • Offer bundled menu items to increase average checks.

  • Prioritize catering and third-party delivery as growth opportunities.

  • Engage directly with local communities through sampling and events.

"Building local relationships and focusing on grassroots marketing can make a significant difference," Barash notes.

The People Factor: Reducing Turnover

Employee retention remains critical:

  • Create a meaningful onboarding experience with orientation and team engagement from day one.

  • Use employee referral programs to foster team cohesion.

  • Small gestures like welcome packages can significantly boost morale.

Aaron Wintheng, Director of Learning at Full Course, highlights the importance of day one: "Orientation matters—giving employees a strong first impression significantly boosts retention."

Key Takeaways for Immediate Action:

  • Implement thoughtful onboarding to foster employee retention.

  • Adjust in-store signage and merchandising to maximize profitability.

  • Identify and pursue incremental sales opportunities like catering or grab-and-go.

  • Focus on your team—valued employees create satisfied guests, driving repeat business.

By adopting these targeted strategies, restaurant operators can navigate current challenges effectively, positioning themselves for sustainable growth in the future.

 

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