Behind the glitz and glamour of running a restaurant lies the harsh reality – there are just too many challenges to keep the show running for long. While many are fascinated by the idea of starting a restaurant, only those who are in the industry know how stressful it can get. It is always best to be aware of all possible restaurant challenges so you can tackle them from the very beginning.

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We’ve gathered intel from some of the top players in the game and compiled a list of nine restaurant business challenges.Read on to discover what these challenges are, and how you can overcome them. 

1. Customer retention

The most common problem faced by many restaurants, especially during the pandemic, is getting customers to come back. Food alone cannot keep a customer loyal towards your restaurant. One mistake, one bad online review, one negative experience can cause problems for you. Not only will it take away a well-paying customer, it can also lead to a bad reputation in the industry.

Solution:

It is crucial to build connections with your customers to give them a reason to come back. Apart from serving consistently good food and offering top-notch customer service, organize restaurant contests that will keep your customers engaged. In addition to this, you can create a customer loyalty program that rewards returning customers. 

2. High employee attrition rate

Staffing issues are at a peak post the pandemic, but employee turnover has always been a problem in the restaurant industry. The restaurant industry is very fickle and staff members change jobs quickly even for a slightly higher salary. It is more expensive to hire and train a new staff member than to retain one, which is where most restaurants lose a lot of money. 

Solution:

With the right team, your restaurant can reach great heights. So it is crucial to hire right to build a team that is interested in the growth of the restaurant. Once you have hired them, make sure to invest in their training so they learn to perform well in their job. At the same time, it is important to treat your staff well and build connections with them to make them feel they are an important part of the team.

3. Thin profit margins

It’s no secret that the failure rate is high in the restaurant industry. This can be directly linked to low profits. Most restaurateurs don’t even know where their money disappears, while others just manage to break even. One of the most important things that eats up your profits is your restaurant food costs or COGS. Running a restaurant without a strong understanding of your food costs is like leaving money on the table.

Solution:

The best solution for this is digitizing your recipes and taking daily stock. This will allow you to track daily consumption and wastage, which in turn allows you to order supplies more smartly. All of these give you a clear overview of what’s working for you, and what’s not. With this understanding, you can not only reduce your food costs but also remove non-profitable items from your menu.

4. Inventory management

One of the toughest aspects of running a restaurant is managing inventory, especially for a restaurant chain. It can get really challenging to keep a check on supplies on a daily basis, which often leads to stocks getting wasted, under-utilized, or going unreported. Internal thefts can slowly but surely take your restaurant to an early grave.

Solution:

Automating inventory management removes inconsistencies and reduces chances of theft and pilferage. A good inventory management software will help you understand your expected (theoretical) consumption so you can order supplies accordingly. This saves you from last minute buying which is very expensive as well as from underconsumption.

5. Staying consistent

A lot of customers complain that their favourite restaurant no longer offers the same food quality, taste, and dining experience. During the initial few months or years, everything is perfect. But later on, they lose the magic touch. This often happens due to lack of management, especially BOH management. This can help other restaurants steal your customers.

Solution:

Start by investing in a restaurant management system with a strong focus on BOH operations. This will make it easy to streamline restaurant processes and keep your staff organized. It will also allow you to quickly spot issues and resolve them. Moreover, track customer reactions by interacting with them and identifying the items they usually order. Seeking feedback on whether or not they enjoy it will guide you in making the necessary changes.

6. Standing out from the crowd

Thousands of restaurants open each year, and then merge in the crowd soon enough. This happens because they have no USP that differentiates them from other industry players. It is not easy to meet expectations for creativity when the market is flooded with several restaurants of the same type.

Solution:

Yes, good customer service is a must. But you need to offer innovation when it comes to your restaurant concept and food. Give your customers a unique concept that will make them excited about visiting your restaurant. Take Gospel Of Taste (GOT) for instance. They have a Game Of Thrones (GOT) inspired interior with every little detail from the series. To add to that, they have their menu items named after all the famous characters from the TV series. 

7. Food contamination:

There is a high prevalence of food contamination in restaurants, making it a major reason for  concern for restaurateurs. It is either due to the low quality of raw materials, poor temperature control, lack of awareness of quality control procedures, or mishandling during the production cycle. All of these can make the food misfit for consumption. Serving such food can cause a restaurant thousands of dollars in lawsuits if a customer falls ill due to its consumption.

Solution:

The first and foremost thing to resolve this issue is to educate your staff about the importance of proper storage conditions. Keep check of ingredient expiration dates at the central kitchen to avoid using spoilt/stale ingredients. Instate strict rules regarding sanitation and personal hygiene to keep the kitchen germ free. Lastly, work with suppliers who not just offer high-quality ingredients but also ensure their safe transportation.

8. Creating a profitable menu

Lots of restaurant owners struggle to understand which menu pricing methods are ideal for their type of restaurant. A common practice is pricing based on how your competitors have priced their menu items. You can undercut a competitor by doing that, but it may not justify your food costs and other overheads. This often leads to restaurants running out of business in their very first year.

Solution:

While many still consider menu engineering just a fancy word, it is actually a very essential step to increasing your profits. Optimize your menu by first understanding your food costs. It’s okay to have a menu with limited items but make sure they have high-contribution margins. If you have an extensive menu, create a menu design layout that encourages them to order the items that bring you the highest profit.

9. Lack of automation:

There are so many restaurants that still rely on manual ordering systems. This often leads to errors and negatively influences the customer’s experience of dining at a restaurant. At the end of the day, getting an accurate account of the sales and expenses can also become very challenging. All of this becomes even more complex when a restaurant decides to scale.

Solution:

Switch to online ordering by investing in a POS system. This is the need of the hour when it comes to contactless ordering and payments. Moreover, it makes it very easy to keep track of everything which enhances your operational efficiency. It will also ensure speedy delivery of orders both in-premises and for home delivery which enhances the overall experience of a customer.

Conclusion

Every successful restaurant has faced challenges to reach where they are today. Even though your restaurant may be struggling today, it is possible to turn things around with the right knowledge. Be it lack of cash flow, staffing shortage, food security issues, or conflicts due to poor restaurant management, implementing the right strategies early can help you nip these issues in the bud. 

At the same time, it is vital to leverage technology to your benefit. If you’re looking for a one-stop solution for all your restaurant management needs, we’ve got you covered. Reach out to us to understand how our software helps you overcome these common restaurant challenges and improves your bottom line.

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