We live and work in interesting times, but the solutions to many of the restaurant industry challenges may be rooted in tried-and-true operation fundamentals — lowering food and labor costs and increasing sales by attracting new customers. Let’s take a look at a few tips for keeping your restaurant profitable in 2023 and beyond.

Focus on Food Cost

Given economic factors, expenses have resulted in higher menu prices. Research shows that nearly 90% of restaurants have raised prices in the past year. At some point, however, businesses will have to compete in terms of the value they offer. A few ways to build more value into your menu include;

  • Offering a smaller menu in which there are fewer options with flexibility to combine menu items to create combos, giving the customer some control while still managing costs.
  • Focusing on less expensive ingredients and re-use of ingredients throughout the menu.
  • Reducing food waste wherever possible, through efficient ordering, inventory management, and cross-utilization.

Lower Labor Costs

The general rule of thumb of an average 30% labor cost for restaurants is important to keep in mind as you schedule, train, and work to retain staff. Now more than ever, it’s essential to examine your labor costs each day and to focus on your weekly average so that you can schedule staff more efficiently.

Scheduling tools, like HotSchedules, can make this process easier for management by offering improved team communication tools and analytics-based forecasting of demand and labor. Fuego, a tool that allows employees early access to their earned wages can be extremely useful in attracting and retaining staff (and it’s free for Performance Foodservice customers)!

Turnover costs are also a huge factor. According to recent studies, it can cost between $3000 and $8000 to hire new restaurant employees. That means it’s essential to hire, train, and retain quality employees, and with the mindset shift brought on by the pandemic, restaurant operators may need to think creatively about how to do this. Some ideas to deal with this issue include:

  • Improving and streamlining your onboarding process.
  • Creating a solid training program with built-in incentives and advancement opportunities.
  • Implementing an employee referral program for existing employees and customers to help find the best employees out there.
  • Listening to existing employees and exiting staff to learn more about the pros and cons of working at your restaurant — and then using that feedback to improve culture.
  • Embrace technology such as self-order kiosks to alleviate the burden on staff while improving the guest experience.

Attract New Customers and Keep the Old

In order to combat costs, restaurants are on the lookout for new customers in 2023. But before you can begin attracting customers, it’s important to evaluate your target market. Your target market is the segment of the population that spends the most money the most often in your restaurant. Your long-term FOH staff may be able to provide good insight into who this customer is, and you probably already have some idea based on your business plan, branding, and location.

According to a recent article, your FOH employees are one key to driving customer loyalty, so it pays to retain those high-performing employees. Investing in them is literally investing in the health of your restaurant. Use a customer loyalty program like FanCONNECT to stay engaged with existing customers. Customer acquisition typically costs more than customer retention, so your existing customers are extremely valuable.

Use incentivized guest surveys to collect information about the values of your customers and use that information to improve your existing offerings to meet their needs. This audience will be the most helpful in spreading the word to new customers, based on their experiences.

For the past few years, social media has been an effective way to let people know about your restaurant, but the landscape of social media continues to shift, with an increasing value on video content. Embracing video in your social media content and encouraging guests to share their own experiences via video can be a great tool for spreading the word right now. Other tools for attracting new customers include:

  • Offering targeted LTO’s that appeal to your target audience.
  • Participating in community events with a wide impact.
  • Partnering with local businesses to meet their ongoing catering needs.
  • Offering specific incentives to first-time customers.

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