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How to Grow Your Restaurant in a Slowing Economy

Coral Drake | June 23, 2023 |

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How to Grow Your Restaurant in a Slowing Economy

One of the most dreaded economic topics—recession—has been in the news lately. If you own a restaurant, you're probably feeling a little bit anxious. 

After all, economic slowdown tends to hit restaurants harder than most industries. Whether a recession is truly looming or not, all the talk about it may make customers a little more reluctant to spend on things they consider non-essential, like eating out. A restaurant in a slowing economy will see customer traffic lighten first. 

By preparing properly for a slowdown and thinking critically about how your restaurant functions, you can not only avoid recessionary pitfalls, but can even thrive during an economic slowdown.

Growth Tips for a Restaurant in a Slowing Economy

Control Payroll Intelligently

Payroll is one of the biggest expenditures for most restaurants. Most restaurants spend between 25% and 40% of sales on labor costs. However, it's also something you have total control over. Unlike costs for ingredients or supplies, which fluctuate along with the economy, you can always set your own payroll.

That said, controlling restaurant payroll is a delicate process. You want to keep your best talent happy and avoid losing them to better prospects. They’ll have to work harder to keep up with the work if you reduce staff. On the other hand, overstaffing is wasted money that you simply can't afford. Here's what you can do to cut payroll thoughtfully.

Part Ways With Under Performers

This is an important step to take regardless of economic slowdown. Take an objective stance and determine which of your employees offer the least to your restaurant. Who is generating the most customer complaints? Which shifts are bumpiest? Do those shifts correspond with a particular worker? Cutting costs without losing talent requires you to identify who’s got the talent… and who doesn’t. 

Leverage Additional Benefits to Pay

For some restaurants, it may be worth offering your most valued employees something besides a paycheck to motivate them to perform at their best. Here are a few ideas for other perks you could provide:

  • Offer top employees a share in the restaurant. 
  • Empower high performers to open new locations. 
  • Consider title bumps as rewards even if they don’t come with higher wages. 
  • Partner with educational programs to offer additional learning opportunities to employees. 

Talk to your employees about what matters to them. You may be surprised by the way you can supplement their salary during an economic slowdown

Provide Predictable Scheduling

When it comes to balancing work and free time, predictability is a major benefit. Most employees aren't fond of being canceled or called in with little notice, particularly when working low wage jobs at a restaurant in a slowing economy

Scheduling can be a great tactic for controlling restaurant payroll without firing employees, which benefits your entire team. 

Do your best to set schedules as far in advance as possible, while offering the options for some flexibility. Scheduling software—available through workforce management solutions like 7shifts, Deputy and Schedulefly, among others—can integrate directly with your POS. 

This makes it simpler than ever to spot patterns and opportunities in scheduling efficiency, while also offering your employees some autonomy in swapping or picking up shifts as they please. 

This flexibility can go a long way in cutting costs without losing talent

Automate Restaurant Functions To Operate Smoothly With Reduced Staff

Automation is becoming an essential component of just about every aspect of life, and the restaurant industry is certainly no exception. From burger-flipping robots to artificial intelligence customer service, automating restaurant functions can save a lot of manpower and money. 

You're probably pretty reluctant to make a huge investment right now, considering the state of the economy. But you don't have to invest in a huge machine to get the benefits of automation at your restaurant.

Something as simple as tablet or kiosk ordering can go a long way toward supplementing jobs and tasks at your restaurant. Hours spent double-checking inventory and logging ingredient usage can be eliminated by automating restaurant functions in this way. They’re inexpensive to implement too. 

Look Into Costs For Ingredients And Food Prep

Buy Ingredients More Thoughtfully

The vast majority of restaurants purchase ingredients in bulk from wholesale providers. This is convenient and often the most affordable way to do it.

Of course, just about every restaurant has had times when staff are running to the local grocery store to pick up ingredients when you unexpectedly run low. A POS system that tracks inventory can eliminate this unexpected waste of money. When you always know what you have and what you need, you won’t be stuck buying ingredients on a consumer level. 

However, it's also worth looking into the primary sourcing of food when facing an economic slowdown. By exploring local growers, you may be able to source ingredients unavailable for sale to the public because they are misshapen or need to be used very quickly. 

These ingredients can often be purchased at a significantly reduced rate, and allow you to advertise that your food is locally sourced, which is a great way to boost marketing for your restaurant in a failing economy

In some cases, you may find that the ingredients you're buying are simply too expensive for your budget. At this point, you may need to look into your menu and find places to cut menu items that just aren't making enough money.

Reduce Food Waste

All restaurants experience food waste. US restaurants create up to 33 billion pounds of food waste each year. Restaurant kitchens typically waste between 4% and 10% of the food they buy before it even gets to a customer. Needless to say, all of that wasted food is pretty frustrating to a restaurant in a slowing economy

While some food waste will always be a part of the restaurant business, there are things you can do to prevent food waste from cutting into your bottom line as much as it does for most restaurants.

Get an excellent inventory monitoring system that lets you know what you have, when you got it, and when it may be likely to go bad. Using food before it spoils is the most straightforward way to prevent money from being thrown away.

Create a menu that utilizes all of the ingredients you purchase. If you offer a Sunday bruschetta appetizer special, be sure to have plans to make a tomato sauce dish the next day. Offer steak and beef entrees? Have your chefs save all of the bones and trimmings so that you can make a bone broth that can be turned into a featured French onion soup. 

There are all kinds of ways to be creative about your menu to significantly reduce food waste in your kitchen. Getting your staff to propose new ways to use ingredients can be a great way to change up employee responsibilities, cutting costs without losing talent

Offer Your Customers More From Your Restaurant. 

How can a restaurant in a slowing economy thrive? Get customers to choose your business despite the state of their budget.

When the economy slows down, consumers get anxious and cut unnecessary spending, including spending on restaurant food, which is why restaurants often see such a sharp decline in revenue during an economic slowdown

However, if you put yourself in your customers' shoes, you may be able to find some opportunities for new revenue growth. Other than in 2020 (which was unique for obvious reasons) the restaurant industry has steadily increased economic output, and it’s expected to continue doing so in 2023. 

Recession or no, customers WILL keep going to their favorite restaurant in a slowing economy. The question is, will you be able to attract them to yours? 

Make sure customers know what you have to offer. There's no point in thinking critically and strategically about how a restaurant in a slowing economy can offer customers more if you don't tell your audience about it. 

Make sure your POS system integrates with third-party marketplaces for online ordering so customers can easily find you when they are looking for a new place to order. Keep track of your advertising efforts so that you know which ones are worth investing more in and which ones should be scrapped.

Obtain Success for Your Restaurant in a Failing Economy

Economic slowdowns are scary for any business, but restaurant owners have a special reason to worry when economic indicators start looking bad. Because eating out is considered a luxury to most people, restaurants have to work harder to get the diminishing dollars from consumers. 

However, by reducing your costs, streamlining your processes, and giving customers more from your restaurant than they can get somewhere else, you can not only survive but actually grow during a recession.