Updated: Nov 20, 2020
We all hear what uncertainty means in everyday conversations. In some ways, the use of the word in economics is not that different. Uncertainty is a part of life and it can’t be avoided. The best way to deal with it is to learn techniques that help you live with the situations. Everything is connected to something else. Uncertainty can happen anywhere and at any time from the raise of unemployment rates, massive layoffs, economic recession, a person's health to the unexpected and the unfortunately events. Life is full of uncertainty, we’ve just got to learn to live with it. The true is, if you're well prepared and aware then there isn't much to panic about.
However, here are some tips to help you recession proof your restaurant business.
1. Know Your Number
As a business owner, you have to know your numbers. Manage overhead costs is essentially necessity. Business overhead costs are expenses that are related to the day-to-day running of a business. Reducing overhead costs is important in a business downturn. When business is slow, cutting overhead costs is normally one of the easiest ways to minimize losses and return your business to normality and ultimately profitability.
Business overheads which usually include
Your rental space, insurance and contracts.
Your utilities, maintenance, repairs and misc. expenses.
Your sales and marketing, inventory, product ordering, vendors, payroll down to your revenue streams.
Your restaurant revenues are usually coming from these areas:
Your daily revenue, and sales per table revenue.
Your bar/alcohol sales.
Your to-go sales, deliver services and referrals.
Your ability to upsells, restaurant special promotions, offers and giveaways.
Your online orders, reservations, walk-ins, to various traffic leads.
Again you have to know your numbers especially the different between cash inflows and cash outflows. The rule is when your restaurant's cash inflows exceed your outflows, you get positive cash flow. And certainly, this increases your business's cash account and provides money to grow your business.
A man travels the world over in search of what he needs and returns home to find it.”– George Moore
2. Start Boosting Your Cash Flow
Can your business survive a cash crunch? In addition to monitoring your restaurant’s cash flow from week to week is necessity, but also having a Basic Fundamental Understanding of Your Cash Flow Activities is a good way to start.
Understand this, there are two main types of cash flows - cash inflows and cash outflows. However, first of all, let's simplify this cash flow concept. Your restaurant’s cash inflows usually include cash received from customers, money received from selling assets and cash obtained from financing sources. Your cash outflows for a restaurant usually consist of cash spent on operating costs, money used to buy assets and money paid to financing sources, such as dividends distributed to investors. The basic rule is when your cash inflows exceed your outflows, you get positive cash flow. And in terns, this increases your cash account and provides money to grow your business.
Monitoring your numbers. First, monitoring your cash flow allows you to see how your sales, and the corresponding cash flow, ebb and flow over time. At the same time, it also makes it easier to create an accurate forecast of your sales and cash flow projections. As a business owner, tracking your cash flow on a weekly can highly beneficial the foundation of your restaurant business. Understanding the fluidity of sales cycles is very necessity.
Monitoring your Budget. A budget is the cornerstone of any cash flow management plan. Knowing your numbers also including knowing where are you revenues are coming from, what sells most or to least favorite items. Learn to manage your budget. You must budget seasonally to be on top of things.
Knowing yourself is the beginning of all wisdom. – Aristotle
3. It's Time to Reevaluate Your Menu
Your Menu is one of the selling tools for your restaurant. In fact, it's so essential part of your point of sale. Update your menu seasonally. Keep track of what your customers order most and which menu items will generate the most profit for your bottom line and highlight those prominently. Keep the favorites and signature dishes on the menu as a focal point. For our menu, I put our big ticket items at the center area. This would be the first things they see when they pick up the menu. In addition, you should also use seasonal special items as a way of introducing new menu items to your customers. We like to periodically come up with different campaign through out the season for our table advertisement menu stance.
There is one important thing restaurant owners should understand is to avoid the trap of wanting to be all things to all people. It's because by trying to put too many items on the menu to please everyone, not only it's time consuming to look through your entire menu, this drive up food costs, but can also confuse customers. So learn to say no.
If you don’t know your worth, people will put a cheap price tag on you. – Matshona Dhliwayo
4. Always Pursue Alternative Revenue Option
Sometimes, to achieve the change or improvement your revenue streams, you have to think outside the box. In my experience, in boosting our revenue, we're determined to find another solution simply to increase positive cash flow. Collectively as a team, we have to brainstorm new sources of income.
New Services or products to boost upsells.
Promote special events, private dining, or special invitations weekly.
Create a new marketing strategy to increase customer traffic, repeat customers to membership program.
Lead generation, referral programs, to customer rewards.
5. Focus On Your Customers
It's a fact, brand trust is loyalty. In fact, some of the most successful brands are the most relevant brands. Brand relevance comes down to trust. It's not enough for a brand to just promise change, your brand must actively engage and drives change through brand consistency. Your loyal customers help boost your cash flows more than any other advertisement tactics.
As business owner, you should ask yourself "Is your brand story coming across in everything you do?" or "Is that story consistent across all marketing channels?" At the same time, you also need to understand how people are experiencing your brand every day? Remember, your brand consistency counts just as much as your brand promise. Collectively, there are ways your restaurant can help build your customer loyalty.
The most beautiful birds do not know how beautiful they are until they see their reflection in water. – Matshona Dhliwayo
Building customer royalty program is a great way to build cash flows safety nest. Remember loyal customers usually buy more and are often willing to pay more. They refer others to your establishment. At the same token, this saving you the marketing and advertising costs of acquiring customers significantly. By increasing customer retention can boost your bottom-line profit by 25% to 100%.
6. Be Proactive. Be Prepared But Not Panic
First and foremost, as a business leader, your responsibility is to ensure that everyone's core value in the team is aligned. I believe a well-structured, efficient team meetings help you ensure that all team members understand their role and the priorities they should be focusing on. By hosting regular team meetings, you’ll create a culture of shared values and open communication about your restaurant goals and mission.
Train your staff on the importance of such topics:
Your original restaurant brand core values, mission and business goals
Your unique selling propositions
Customer loyalty, customer retention and customer service
The art of selling
Using menu as a selling tools
Your brand reputation, customer feedback and overall reviews.
Life is full of uncertainty, we’ve just got to learn to live with it. But not everything about uncertainty is bad news; while it can make negative events worse, uncertainty also turns positive events more meaningful one. The true is, if you're well prepared and aware then there isn't much to panic about.
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