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Independent Operators Face Added Challenges In 2016

Posted by restrealty on December 29, 2015
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Increased labor, food, beverage and other supply costs as well as increased occupancy and utility expenses are forcing owners  to be more creative in how they operate their businesses.  These items coupled with competition from the chains and franchises purchasing power who minimize menu price increases and increase advertising to expand their customer base has further challenged the independent operator. Here are some suggestions that independent owner operators have implemented to deal with the challenges indicated above.

1. Owners shop themselves at wholesale outlets to reduce their product costs.

2.  Owners and in some cases their family members are working longer hours to displace employee labor costs.

3.  Some owners are eliminating tipping to give their customers a sense that the business has a better price value experience for their customers. However this practice is normally coupled with raising prices which in some cases has resulted in decreased customer counts and revenues.

4.  Some owners are increasing operating hours and the days they’re open to create more revenue to help amortize their fixed costs such as rent, insurance and other fixed costs.  Conversely some owners are reducing marginal operating hours which are not profitable.

5.  Some owners are focusing on increasing sales by minimizing raising their menu prices to give their customers a stronger price value experience and a portion of these increased sales flow to the bottom line.

6. Many operators are putting more emphasis on controlling their food and beverage costs by installing more stringent controls to improve their portion control and receiving procedures. Many operators have enhanced their security by installing security cameras throughout the restaurant and in many cases their security cameras are tied into their smart phones so they can view the restaurant when they are off the premises. Additionally the use of point of sales systems have helped operators monitor their product mix and control cash.

7. Many operators are using the internet and social media to reach new customers and are focusing on getting good reviews in online sites that provide food and service reviews such as Yelp, Zagat and Trip Advisor. They are also using on line reservation systems such as Open Table where customers can accumulate points towards future food and beverage purchases. In addition many operators have developed websites to help promote their business.

Times are tough but there are remedies to today’s challenges.  If the challenges are too difficult to deal with Restaurant Realty is here to assist you in maximizing the value of your business.