How To Overcome The The Top 7 Challenges Restauranteurs Face

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Alexandra Olive
June 20, 2022
restaurant challenges

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 and supply chain, operational and food costs, and stay on top of food industry trends. 
However, there are ways to meet and mitigate these challenges. 


In this article, we will discuss the 7 top challenges restaurant owners face and how to overcome them.

  1. Finding great people 
  2. Keeping great people 
  3. Overcoming labor cost challenges 
  4. Managing food costs 
  5. Incorrect restaurant reporting 
  6. Managing operational costs 
  7. Making most of technology 


Let's dig into the details. 


1 - Finding great people.

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 voluntarily 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. 


How to overcome recruiting challenges

Restaurant owners can find and hire their dream team in response to the Great Resignation by:


  • Providing great employee benefits that differentiate them from other employers and show a good work environment. 
  • Establishing an employee value proposition (EVP) where employers make offerings through compensation, culture, benefits, work environment, and career progression in return for the employees' skills and expertise.  
  • Offering flexibility options by building flexible and smart schedules that allow employees to work or swap different shifts.  
  • Using an applicant tracking system (ATS) to automate the recruitment process by handling resume storage, tracking applications, and candidates' progress, saving the restaurant time and money. 
  • Hiring a talented and competent team that will work together to hire employees that are a good fit and will work to help the restaurant succeed. 


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. 


restaurant challenges


2 - Keeping great people. 

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, as well as 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.


How to keep great people at your restaurant?

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:


  • Having a sound onboarding system which has been linked to improving staff retention by helping new hires transition into their new roles easily and quickly. 
  • Using the KPI's tool to track and monitor employees' performance and using this as a mechanism to reward, promote and incentivize the team. 
  • Engaging with employees through conversation and feedback helps create employee satisfaction and ensures restaurant owners have a pulse check on their team. 
  • Providing learning programs helps set employees up for success in their roles so they can perform better. In addition, 94% of employees say that they would stay at a company longer if there is an investment in their learning and development.  



3 - Overcoming labor cost challenges. 

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. 


How to optimize labor costs.

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:

  • Schedule smarter through accurate labor vs. sales reports to forecast labor needs.   
  • Streamline and automate payroll to provide correct compensation and make statutory deductions. 
  • Pay only for worked hours through time tracking software to manage employees' clock-ins and hours.
  • Make data-driven labor decisions through access to reports and insights so the restaurants accurately decide on employee numbers. 
  • Properly train staff to improve employee efficiency. This can also include cross-training so that the employees can carry out different functions as needed so that the service still meets the required standard.


restaurant challenges

4 - Managing food costs. 

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. 


How to optimize managing food costs: 


Food costs can be managed through: 

  • Learning to use the inventory management system to track food, adjust stock/produce ordering and use data to improve on-demand forecasting. 
  • Training the team on how to measure and control portions accurately using tools to help them stay on track. 
  • Menu Engineering by creating menus that offer versatile dishes that reflect the current season—for example, using in-season fruits and vegetables. 
  • Building relationships and negotiating the best deals with suppliers to provide constant and needed supplies to cater to the restaurant's versatile menu and number of guests. 
  • Conducting a food waste audit and tracking pre- and post-consumer food waste and then using the data to design food waste procedures. 


5 - Incorrect restaurant reporting. 

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. 


How can restaurants properly report on data?

Proper reporting on data requires using restaurant technology that integrates easily with others to provide a complete picture of the business. 

Scheduling software integrated with a POS system creates schedule forecasts and sale vs. labor data, which can be used to optimize labor costs. 


restaurant challenges


6 - Managing operational costs. 

Operational costs are the costs incurred to ensure the daily running of the restaurant. They include:

  • Food cost (ingredients)
  • Utilities such as water, electricity, internet 
  • Overhead costs, e.g., rent 
  • Salaries
  • Software, e.g., POS, Workforce Management, Accounting 
  • Equipment
  • Maintenance and repairs 
  • Marketing 


How to manage restaurant costs.

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: 


  • Adjusting the rent and associated costs by renegotiating the rent lease with the landlord or renting out the space for events to cut costs. 
  • Reducing utility bills by using green initiatives like energy-saving lights, using QR codes over paper menus and renegotiating package deals with utility companies. 
  • Audit and improve business processes such as payroll and adapt technology to automate processes. 
  • Regular maintenance of kitchen equipment to keep it in good working condition and deal with necessary repairs.   


7 - Making the most of technology.

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.   


How to adapt to new technology. 

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. 


How to overcome the top restaurant challenges.

With the complex and dynamic nature of the restaurant industry, restaurateurs face particular challenges that require thinking outside the box and being open to adopting technologies and processes. 

As mentioned above, most restaurateurs primarily face the challenge of managing costs and talent, which can be resolved by investing in Push 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 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. 

Want to learn how to increase restaurant profits? Download our free guide below!

restaurant challenges


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