Once again we find ourselves mired in headlines of impending doom and gloom. Is the sky falling? Is there a silver lining to be found? I have some thoughts on what is upcoming and being prepared for economic downturn, and I think you’ll want to take note.
I’ve made accurate predictions in the past and what I can say is that 90 days ago, the labor market was an employee’s market. That may have already changed, and more quickly than I’ve ever seen. There is no telling what the next 90 days will bring.
We’ve been here before…
In 2008-2009 the restaurant business was hit hard but was able to navigate the downturn. We just weathered the COVID storm. What can you do to make sure you’re prepped this time around?
Labor costs: Flex your scheduling model
We’ve talked about this recently, but it bears repeating: understand your location as it pertains to traffic patterns. Schedule your team to maximize your service model during peak hours.
It may seem obvious but we regularly see a mismatch of resources to traffic patterns. Study the numbers. (And if you don’t have the tools to capture that data, we can help. Be prepared for economic downturn.)
Food costs: Trim the fat
Again, look at the data. What is selling? What isn’t? Keep the first. Ditch the second. Shrink the menu. This will boost your margins in food and labor by allowing the prep team to get more efficient by focusing on fewer items.
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Renegotiate prices with your suppliers by ordering more of a smaller number of products.
Real Estate expenses: Time to renegotiate?
No landlord wants vacant buildings going into an economic downturn. If renegotiating your lease for more favorable terms isn’t attainable, now could be a great time to negotiate an upgrade to the property.
Perhaps you can get a credit towards your rent by investing in an upgrade yourself?
Location, Location…..
Are you getting the most from your location? Make sure you don’t have a disconnect between your location and your business model. For example, it may not make sense to be open for lunch during the week if you are located in the suburbs. Or running a commissary kitchen for catering or delivery if you are in a high-traffic area. Look at the data, understand your location’s strengths and weaknesses, and align your business model.
BE CONFIDENT!
Yes, a downturn is likely coming. Yes, you need to prepare for it. But you made it through COVID-19. Many of you made it through 2009 better than anyone expected, and some of you thrived. There is nothing on the horizon that restaurants haven’t already seen. You have the tools available to weather any storm, and the experience to come out the other side stronger and more agile than ever before.
This is an opportunity. Seize it!
As always, if you would like to discuss your current approach to labor or food costs, or want to chat about your lease or anything else, please don’t hesitate to reach out.