The past few years have tested the will of many restaurant owners who managed to make it through the pandemic but have struggled with economic headwinds ever since. If you’re looking to sell your restaurant business, you’ll need to organize many of the same items mentioned above that can help you secure financing. But it’s also important to review the expenses you have accrued in the business and translate them into benefits that have value to a new owner. Robin Gagnon, cofounder and CEO of We Sell Restaurants, explained in a recent episode of the Restaurant Rockstars podcast that her role as a broker is basically the inverse of what a CPA does. Instead of looking for expenses to legally deduct, she’s identifying expenses that bring value to a restaurant business and can be added back in to boost the value of the operation to a buyer. While you might review your your tax returns and be disheartened if you see negative earnings, working with a broker can help you view that information through a different lens. By aggregating the seller’s discretionary earnings, or the amount of actual value you receive as an owner from such expenses as insurance, mobile phones, and employee bonuses and incentives, you can uncover the value that a buyer is gaining through the sale — value they might use themselves to free up cash and restructure the business. High food costs continue to impact restaurant operators’ bottom lines. Even though overall inflation has been easing and foods purchased in grocery stores have been costing less than those offered at restaurants, restaurant costs (and many operator expenses) remain high. As a result, consumers may be giving menu prices some extra scrutiny right now — or skipping restaurant meals altogether. In fact, a recent report from AlixPartners found that instead of trading down on restaurant food, consumers have been cutting it out in an effort to protect their budgets. So it’s important to ensure you’re reaping the most benefit from the items you offer. There are a number of actions you can take. You may already be reducing portions and shrinking your overall menu size, and while this is helpful for waste reduction and cost savings, it also leaves room for guests to add to their dish. Play on their desire for customization by offering a selection of ingredient add-ons and side dishes that guests can add to their meal that incrementally increase the price of a dish without giving people sticker shock. Make the most of the sales you get by engineering your menu so its layout naturally leads the guest’s eye to items that generate the most profit for you (and cost your menu so you are well aware of what those menu items are). Finally, lean on other streams of income. Retail items and licensing opportunities may help you generate sales in the background and allow you to smooth out dips in your sales of menu items. Let’s not sugarcoat it: Industries that demand long working hours and high quality from their employees can struggle with punishing cultures – and the restaurant industry is no exception. But in recent years, social justice movements have changed what kind of behavior employees will tolerate in their workplaces. Younger employees, often prime candidates for restaurant roles, are especially willing to demand that their employers provide a respectful culture – or they will leave for different jobs. At a time when employees have their choice of employers, it’s in the best interest of restaurants to take positive action with regard to culture – and not just because it’s the right thing to do. According to Gartner research cited in a report from US Foods, 75 percent of companies with inclusive cultures exceed their financial goals. Deloitte research found that 78 percent of workers believe that diversity and inclusion offer a competitive advantage. On the surface, it sounds like a no-brainer: Employees who feel included are happier in their jobs. They are more apt to reflect that positivity onto guests and stay in their roles for longer periods. Restaurants who employ people with diverse backgrounds and views are better able to understand the increasingly diverse population of guests they serve, which helps them forge better connections with (and sales from) their guests. But achieving a more sensitive culture requires a business to develop and follow clear policies about diversity and inclusion, as well as to commit to infusing the business with more inclusive values at every level. The US Foods report advises that operators start by ensuring they are complying with state and federal obligations to provide a workplace that’s free from harassment and hostility. Then consider how well the diversity of your staff relates to your guests and reflects their diversity. Ensure your policies are in writing and communicated through training so that people can be (and are) held accountable for poor behavior. Finally, conduct regular sensitivity checks to ensure you’re not missing tensions lurking under the surface. Give staff a safe space to voice concerns and then follow up to address them. You will set yourself on a course to build employee loyalty. At the time of this writing, it had just been announced that the U.S. inflation rate had dropped to 3 percent in June, a two-year low. It’s long-awaited good news for restaurant operators. To be sure, waning inflation could boost restaurant business indirectly because consumers are more optimistic about spending and less concerned about the prospects of recession. However, the news isn’t without some potential challenges. Restaurants continue to hike their prices faster than grocery stores, which a recent Restaurant Business report predicts could push lower-income consumers to shift their spending. Restaurants seem to be moving toward more moderate price increases, but it will continue to be important for operators to conduct ongoing analyses of their menu pricing, manage their inventory closely to stay ahead of supply chain snags, have back-up plans in place in case key ingredients aren’t available, and to price menu items in line with those trends. If you need assistance in managing these changes – or in finding ways to bring some stability to your costs and continue to offer value to your guests in a shifting economy – contact Team Four/Value Four for help. Well before restaurants ever had employee referral programs in place, talented staff members have been powerful sources of other valuable job candidates. So why not put some systems around this resource to ensure you are doing all you can to encourage staff to refer people to jobs with your restaurant – and then make it worth their while for them all to stay employed with you? You stand a better chance of creating a workforce of people who enjoy working with each other and limit the amount of turnover you have. Of course, there can be drawbacks to hiring employee referrals – potentially less diversity of backgrounds and skills, for example. To get what you desire from your program, Toast advises that you focus your program on a goal: Perhaps that’s decreasing your job ad spending by 40 percent or hiring people who are likely to stick around for more than a year. Be clear about who you’re looking for – share your job description and specific desired qualities of new staff members. If you hire a person referred to you by a current employee, tie rewards for both people to the new hire’s longevity. Perhaps there’s a reward after 100 days or 150 days – whatever amount of time you feel is short enough to feel attainable but also long enough for the new staffer to adjust to the job, learn your culture and make some contributions. You can also open your program up to the general public – maybe you have a valued customer who knows your brand so well that they would be a strong asset to you on staff. Finally, make it easy for people to not only refer a strong candidate but to be rewarded for the person’s hire. Use social media, a form on your website, and your restaurant’s tech tools to accept and track employee referrals and automatically issue rewards after the introductory period. Cash and gift cards are always good incentives for employee referrers, but rewards could be as simple as offering shift preferences. Acquiring new guests is five times as expensive as trying to change the behavior of your existing ones, according to research from Invesp. So how can you entice a happy-hour customer to stay for dinner, a morning-coffee lover to add a breakfast sandwich to their order, or a weeknight diner to return for lunch the next day? A recent report from Modern Restaurant Management advises operators to focus on guest segmentation and follow through with personalized messaging to nudge guests in a new direction (while ensuring you’re not swamping them with messages that don’t resonate). It helps to consider time and place when planning your outreach. For instance, a person who comes for Thursday happy hour is more apt to take you up on a weeknight appetizer or dinner offer if they receive your promotion at a time and place where they are able to take you up on it – not on a weekend, or after they are back at home for the evening after work. You can gain insights into guests’ preferences by mining your data – your loyalty program, online reservation records and even your WiFi hotspot can all inform you about when guests are visiting you and what their taste preferences are. From there, you can approach guests in a number of ways based on their behavior and when you’re trying to drive traffic. That could be sending a text when they are on premise to entice them to return the next day for a deal on an appetizer, reaching out to guests visiting during slow periods and offering loyalty reward points for return visits during those periods, or contacting them shortly after a visit to incentivize them to leave a review on social media platforms where you need a boost. There has been a lot of focus on restaurant culture in recent years – and restaurants are making changes so the industry feels like a good place to work and one that can provide flexibility and security if something goes wrong. One safety net for restaurant employees has recently expanded its scope and it’s worth having on your radar if, say, your restaurant experiences a natural disaster or one of your employees faces a medical issue or family loss and has difficulty paying household bills as a result. CORE, or Children of Restaurant Employees, is a nonprofit organization dedicated to helping families in the restaurant industry make it through a rough financial patch. As Restaurant Business reports, it can provide funds needed to pay essential bills like rent, utilities, mortgage fees, auto loan payments, or required medical equipment or pharmaceuticals. The money is a gift, not a loan, and is not taxed as income. CORE is not a new organization but its scope has expanded in recent years in the wake of the rising number of natural disasters that have impacted communities and restaurant businesses around the country. The cause could generate goodwill with staff, whether as a fundraising recipient or a potential source of funds for an employee in need. Lunchtime looks different in many cities right now. A recent report from Restaurant Business said that according to new data from tech supplier Toast, weekday lunch transactions in 19 of the country’s biggest metropolitan areas remained down considerably in the first quarter of 2023 compared to 2019. The numbers suggest that the shift in post-pandemic work habits is having a continued impact on lunch business. When Americans do have lunch out, they are spending more, which could be due to higher menu prices, or because people are dining out in larger groups and placing bigger orders. In any case, the lunch day part has potential to become more of an experience driver in the current environment – a time for events as opposed to casual meals in the middle of the work week. Consider the new working habits of the organizations with offices in your area – or the people who reside in your neighborhood. Have hybrid work arrangements become the norm? If so, employers are likely looking for opportunities to bring employees together in meaningful ways on the days they do come together – and catered food can play a big role in that. If people living near you are working from home, they still need to eat – and maybe you can provide a meal deal, salad kit or delivery promotion that can make at-home break times feel like something to look forward to. Inflation has made restaurant meals a tougher sell for consumers, so the experience of your restaurant carries more weight. In a recent webinar from Datassential, speakers referenced some very different examples that illustrate how restaurants are approaching this. For example, at the Mini Chef restaurant at the Lego House in Denmark, each guest is given a packet of 16 Legos. Each piece in the packet corresponds to a customizable ingredient listed on a simple menu. To submit their order, a guest must “build” their desired combination with their Lego pieces and submit it into a machine at their table that confirms their preferred ingredients. The novelty of the ordering system becomes entertainment – and as much of a focus as the food. But boosting your experience doesn’t require an operational overhaul. Consider one low-tech approach by a restaurant across from a children’s hospital: Guests can buy a beer for a parent or carer of a patient at the hospital and their purchase is marked with a sticker on a sign posted in the restaurant. The free beer can give recipients a brief respite from the stress of a hospital stay and help those buying it feel like they are doing a good deed for someone who needs a lift. When you take approaches like this that are special to your brand, you can get guests in the door. If you then combine them with guest personalization – by collecting data about what a guest has ordered in the past, what they like and dislike, and then making targeted recommendations they are more likely to enjoy – you have a formula to keep those guests coming back. Considering your own community, guests and brand, how might you adjust the experience you offer in ways that have a big impact? When you think back to how you set out to connect to potential customers during the pandemic, does it feel like anything has changed since then when it comes to both your marketing and interpersonal communication with guests? It wouldn’t be surprising if so. After all, restaurants hardly had a chance to recover from COVID lockdowns when they were suddenly thrust into managing rising inflation, supply chain snags and ongoing labor challenges, among other difficulties. Operators moved from one existential crisis to another, but the emotions these crises evoked have been very different. The pandemic brought out a softer, more emotional side to communication – something that may have been lost in the months since. It’s worth taking a look at how your efforts to connect with guests during the pandemic were effective then because they could be what solidifies guests’ loyalty to you now. How did you make people – guests and employees – feel supported? How did you share your restaurant’s story in different, human, surprising ways? A recent Modern Restaurant Management report about the importance of emotional intelligence in business communication shares some signs that your restaurant could be lacking it: A few examples include leaning on one message for all guests versus employing more personalized communication, providing inadequate responses to guest feedback, and emphasizing more on what you’re offering as opposed to how it benefits guests. Knowing this, could you make any improvements to how you’re connecting with the public? The past few years have been hard – but don’t let them harden the human approach that continues to win with consumers. |
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