The food service industry is one of the world's oldest services, with restaurants existing as far back as the Roman Empire. In today's world, restaurants are an essential part of life and are both a source of employment and income for individuals and countries.
As of 2022, the restaurant industry is on the path to recovery, having taken a hit during the 2020/21 COVID-19 pandemic that required quarantine and global mandatory lockdowns. As a result, restaurants were forced to shut down, lay off employees, and deal with supply chain problems.
The food service industry is forecast to reach $898 billion in sales, and the workforce is projected to grow by 400,000 jobs in 2022.
Despite these projections, 96% of restaurant owners still face the challenge of labor shortages and turnover, supply delays and food shortages, and rising food and occupancy costs.
In addition, restaurateurs face the challenge of meeting customer expectations and adapting menus, dining experience (in-house/takeout/delivery), and technology to meet their needs.
Running a restaurant is more challenging than other businesses because it is fast-paced and dynamic. Restaurant owners must manage employees (recruit and retain), the client experience, the procurement, supply chain, operational and food costs, and stay on top of food industry trends.
However, there are ways to meet and mitigate these challenges.
One of the most significant pain points in the restaurant industry is the turnover rate of employees, and the Great Resignation has not helped. The Great Resignation saw 44% of workers quit their jobs to seek opportunities in different industries more passionate about where they will receive higher pay and a working environment that accommodates their needs.
The food service industry saw about 6% of the workers (translated to 795,000 people) quit their positions, and despite hiring more workers, there is still a 10% labor gap.
Moreover, finding people to work at a restaurant is an ongoing challenge, as 7 out of 10 restaurateurs report not having enough employees to support customer demand.
Restaurant owners can find and hire their restaurant dream team in response to the Great Resignation by:
When done well, solutions like establishing an employee value proposition can decrease turnover rates by up to 70%, which helps set a stable and conducive work environment.
With a turnover rate of 6.6%, the accommodation and food services industries are struggling to keep great people. This shift has been attributed to the Great Resignation of workers seeking careers elsewhere to receive higher and more consistent pay and access to career growth.
Keeping great people in the current economic and job climate is challenging for restaurants, yet these employees are needed to keep it running. Therefore, restaurant owners must understand why employees are leaving, think outside the box, and invest in good HR practices that will retain these employees.
As a restaurant, hiring great employees is not enough—investment must be put into retaining these great hires. Keeping great employees can be achieved by:
Labor is one of the most significant expenses for a restaurant averaging 30% of the gross revenue depending on the type of restaurant. In addition, the complex nature of the restaurant employee eco-system makes it tough for restaurateurs to manage schedules, correctly run payroll and forecast labor needs.
Typically restaurant costs are broken down into three categories: labor, food, and operations costs. Lower costs by optimizing these areas. For example - optimizing labor costs can be achieved by Workforce Management software that integrates with the restaurant's POS systems and which will allow restaurant owners to:
The average restaurant wastes up to 75,000 pounds of food annually, with food being one of the highest variable costs in running a restaurant. The USDA reports that the restaurant industry loses $162 billion annually to wasted food due to overproduction, lack of awareness, unsuccessful employee training, improper food storage, and lack of access to composting facilities.
When food is wasted, the water and energy that was needed to produce it has been wasted too, compounding the expense. Furthermore, given the food insecurity faced and the gas emissions made to get this food, it is the duty of restaurants to manage these costs.
Food costs can be managed through:
Reports are valuable tools that restaurant owners can use to get an unbiased business overview. These reports are pulled from different sources and systems used by the restaurant to provide insights into the business's health. The insights gained from these reports are what restaurateurs use to make data-based decisions to streamline business operations.
Incorrect reporting can be detrimental to the business as it can provide inaccurate information, leading to decisions that can be costly to the restaurant. One example: an incorrect sale vs. labor report can make restaurant owners understaff a shift, leading to overtime and a less than stellar guest experience as the staff is overwhelmed.
Are you curious about how to run restaurant reports? The top priority should be using technology tools that allow you to run reports on different areas of the business. For example,
using restaurant technology that integrates easily with others provides a complete picture of the company.
Scheduling software integrated with a POS system creates schedule forecasts and sale vs. labor data, which can be used to optimize labor costs.
You can also used integrated technology to pull labor vs sales reports, clock hours reports, overtime reports, stat holiday reports, costs reports and more! Check out our article on restaurant reporting to learn more.
Operational costs are the costs incurred to ensure the daily running of the restaurant. They include:
This article has already discussed how to tackle food and labor costs. However, here are a few more ways that restaurants can manage their operational costs:
During the pandemic, restaurants invested in technology to meet the customers' takeout and delivery orders. With lockdown lifted and the world embracing the new normal, restaurants are opening up again and can use that technology to work smarter.
With the advancement of technology, restaurants have a variety of restaurant technology to use, ranging from reservations to scheduling to building a website that they can use to improve services and business processes.
With 90% of visitors researching a restaurant online before going and 64% of millennials saying that food delivery and takeout are 'essential to the way they live', technology is here to stay. So, leveraging it to improve processes and the client experience is a wise decision for any restaurant owner to consider.
For a restaurant to succeed, it needs these essential technologies:
An honorable mention is accounting software used by the finance team and third-party delivery services (3PDs) such as Uber Eats, DoorDash and Grubhub that restaurants sign up to.
By investing in the right technology stack, restaurant owners can take the restaurant's efficiency of business processes to the next level by reducing labor costs, making tasks more manageable, reducing food waste, cutting operational costs, and improving customer services—all of which help increase profit margins.
Most restaurateurs primarily face the challenge of managing costs and talent, which can be resolved by investing in Push.
Push has built restaurant technology that simplifies and handles employee management. For example, restaurant owners can use the Push platform to hire and onboard new employees, run the payroll on time and accurately, time track hours worked by employees, create employee schedules and receive scheduled and real-time reports and insights for the restaurant.
There are many more challenges that restaurant owners face when running a restaurant, but these 7 are the most common that can be resolved or mitigated. We hope this article helped you overcome some challenges you might face!
“In the labor numbers, we were reporting about a $300 to $400 difference than what we were getting through Push!”
-Tara Hardie, ZZA Hospitality Group, 16 locations
