With the rise in daily expenses comes a decreasing number of people willing to eat out and an increase in the number of your employees requesting pay raises. It’s a vicious cycle of your restaurant earning less income while having to pay your employees more or risk losing them to better-paying jobs.
With declining demand and rising costs, it’s no surprise some businesses have been forced to reduce their staff numbers or close permanently due to all the financial pressure. Fortunately, there are ways in which you get through the cost of living crisis by adapting to the market.
As such, here are a few strategies your restaurant can implement to re-establish itself in the business and adapt to the rising cost and market pressures.
Expand Your Customer Base
You can counteract your current customer base’s decreased spending by marketing to a larger audience and growing your clientele.
One of the ways you can do this is by utilising your social media platforms to reach out to newer audiences. Platforms such as Instagram or TikTok are great places for advertising unique dishes or special discounts to current or new customers.
In addition, you can also expand your area of service. For restaurants, this means reaching out to a broader area via your delivery service or utilising the help of a POS system with a food delivery service partner.
Optimise Your Menu
Menu optimisation is an excellent way to increase your margins and cover any additional operating costs caused by inflation.
You can quickly determine your best-selling dishes and which high-profit items perform well with customers by analysing data from your iPad POS. Once you have this information, you can start optimising your in-store and online delivery menus to see how you can drive more revenue.
For example, you can optimise the menu to highlight high-profit dishes while removing some lower-performing ones. You can also remove certain dishes based on prep time to improve kitchen efficiency and customer satisfaction.
Technology can be a valuable asset to small business owners during a crisis. Small businesses can streamline their operations and reduce costs associated with manual labour by utilising technology such as cloud-based software and automation tools.
For restaurants, a robust POS System and other digital devices, such as Kitchen Display Screens and Self-Ordering Tablets/Kiosks, can be extremely useful in maximising operational efficiency while reducing the need for a sizeable front-of-house staff.
Consider Raising Menu Prices
While raising your menu prices as the cost of running your business rises may be tempting, it can be challenging to strike a balance between making a profit and not upsetting your customers.
On the one hand, if you decide to absorb the costs and not pass them down to your customers, you may find it increasingly difficult to balance your books, mainly if your restaurant is already operating on a razor-thin profit margin. On the other hand, raising the prices too much may deter current and potential customers from visiting due to the additional cost.
Given the different circumstances that each business faces, there’s no right or wrong answer when raising your menu prices; It is entirely up to you and how you believe it will benefit your business, customers, and bottom line.
Stay Up To Date On Market Factors
Aside from the changes and decisions you can make directly to your business, you should also keep an eye on any external market factors (such as general inflation to supply chain disruptions) that can affect your business in the short and long term.
If you’re aware that your future operating costs may be higher than you can afford or that a specific item’s price will increase, you have plenty of time to shift gears and make the necessary changes to keep your business afloat.
Whether you’re looking to cut costs, raise your menu prices or invest in a POS system, it’s critical to understand how the market is evolving so you can make an informed decision for the good of your business.
Review Your Finances
Having your finances in order is more important than ever during a cost-of-living crisis.
Examine your most recent profit and loss statements, particularly your outgoing costs, to determine whether your expenses align with current inflation or if you have to make some changes to your spending.
Reviewing your financial records will also allow you to identify any specific areas that may be costing you more, such as a particular ingredient or an excess of staff, giving you the option to minimise the loss where possible.
Getting Your Restaurant Through The Crisis, One Step At A Time
Rising costs and business uncertainty have always been difficult in the hospitality industry, but knowing what you can do to mitigate the effects of the cost-of-living crisis on your business will undoubtedly be helpful.
If you need assistance determining whether investing in a POS system could help alleviate some of the effects of the cost-of-living crisis, contact a trusted POS system provider for more information.