There is a long list of challenges that Restaurant Owners Face throughout their entire careers. It takes a lot of skill and dedication to run a business in this industry. Problems will arise along the way, so you have to solve them to the best of your abilities.
Restaurant ownership is more than just a career, it’s a way of life. It will require you to get used to something that you’re not used to doing. You’re not used to managing a group of people? Well, you have to now.
The flexibility and adaptability of restaurateurs are what make them one of the most prevalent types of entrepreneurs. Having to deal with the changing market and consumer behavior, as well as other external factors like the economic environment, will force one to come up with the best business ideas and decisions.
And all these challenges come as a surprise. It’s impossible to predict when, or if, you’ll face the same issue again. Also, there is no formula or specific solution to those problems. Advice is absolutely valuable, but taking action on your leads to learning.
In this case, you may consider this article as ‘valuable advice’. While we know that there’s no same business formula for every restaurant, we’ve collated the most common challenges you can face as a restaurant owner.
This article aims to help start-up restaurant owners, and even those who are currently operating, to familiarize themselves with these challenges. You will also find tips and solutions to help you through difficult times, should they occur.
Common Challenges In Restaurant Management
Since there are plenty of challenges that you may encounter as a restaurateur, we’ve decided to categorize it into two major points: before opening and during operations. It could be a bit intimidating and overwhelming for you, but with the right approach, it’s not impossible for you.
Again, there’s a small chance that you won’t encounter these problems. The purpose of this article is to help you prepare should you be in the same situation. This is also not a scare tactic to discourage you, and other restaurant owners, rather we’re here to show you that there can be a solution for everything.
But before we dig deeper into the challenges you face, let’s briefly examine the main areas of concern. They are the most common sources of conflict in a restaurant setting. You could take action immediately before the problem spirals out of control if you keep track of it properly.
Main Problem Areas in Restaurants
As a restaurant owner, there are things expected from you. You have to stay on top of everything. Your management, operations, staffing, finances, and the list goes on. And even if you have competent managers to help you deal with these, it seems impossible to handle everything.
Keep in mind that in this business, you’re investing more than just money. You have your time, energy, and other resources as well. It may be a bit of a downer, but we have great news for you: most of the challenges can be solved through strategic planning.
Contrary to the common belief where a business owner should invest more money to improve a department, that’s not entirely the case. With proper business health check-ups and proactive planning, you can promptly solve issues in your restaurant.
To help you, we’ve narrowed down the main problem areas you need to watch and monitor.
This will always be a huge dilemma for you. Your staff is like the cells of your business, they’re the building blocks that keep the operations going. One misjudgment could ruin the entire tempo of your team and could negatively impact your operations.
You also have to remember the high employee turnover rate of the foodservice industry. Make sure that you’ll invest with the proper employee. Review your hiring process to ensure that it will lead you to the right and qualified set of people.
Another area that you need to look out for is your customer service. How are you delivering it and does it satisfy the needs and demands of your customers? There’s no use claiming that your customer has different needs because once they’ve entered your establishment, all they will want is the service you can provide.
You need to establish a customer service that can address a wider scope of customer demands. Make sure that your team will be consistent in serving it as well. You may want to consider publishing an employee handbook to help you get your entire staff on the same page as you.
Restaurant marketing should stay at the top of your priorities. No matter how excellent your food quality and services are, there’s no use if your target audience will not try it out. You have to get the word out there and an effective marketing campaign is a solution for you.
And since there are lots of market changes in trends and marketing methods, you have to see to it that you’re using the best platform for you. Keep in mind that this industry remains one of the most competitive and saturated markets.
Brand awareness and retention get more challenging as the day goes by. And with other external elements such as an outbreak, it could even get worse for you. So, as a business owner, you have to build a well-researched marketing plan to help your business stay afloat.
As a business with food preparation playing the core of its operations, inventory is an important area that needs proper management. Keeping your inventory in its optimal condition should always be part of your daily, weekly, monthly, and annual goals.
We get that it’s not the most exciting part of the job, but it’s an integral part of your success. Failure to address the concerns and issues in this area could lead to serious damages not just for your operations that day, but for your entire brand.
Food cost and waste management also root from this area. In this industry where food waste amounts to about thirty-three billion pounds every year, you have to make sure that your business will not take a part in that. Just imagine the costs that you would suffer if you’re generating a significant amount of food waste.
While technology is seen as the knight-in-shining-armor for most restaurant owners, it can also play the evil villain that continues to milk the profit out in your business. With a great number of solutions and technology available for you, you have to make sure that you’re choosing the right one for your business.
The goal of tech developers is to give a helping hand to restaurant owners that are struggling in a single area. Failure to get the perfect for your operations could defeat that purpose and it could even be the main source of your dilemma.
Challenges – Before Opening A Restaurant
Here are the set of restaurant challenges that you might encounter during your early years of ownership. Knowing about them will enable you to set actions to overcome them.
If you don’t have adequate start-up capital, finding the right investors for your business could be tough. It is a must that you secure enough capital to open your business and sustain it until you have enough revenue to cover your initial investment and expenses.
This is a huge challenge for you, and every start-up owner since there’s no way you can say identify the exact time you can reach your break-even point. With restaurants being in a highly competitive market, relying on estimates and averages may not be your best option.
Solution: For start-ups, and even for existing establishments, you must always be careful when you’re doing projections. If you’re going to estimate the amount of money you’re going to need, take into consideration every factor that is essential for your restaurant.
Never underestimate. As inflation and other economic factors come into play, it is best to estimate a much higher budget than to suffer afterward. In addition, you must prepare a business plan to help you find investors and other funding sources.
Finding the best location is a huge challenge as there are major factors that you need to take into account. If you opt for an area around the city center or a tourist spot attraction, it means higher foot traffic. But it also means a higher rent or a higher selling price.
But if you try to move to a downtown area or a more rural location, while it will ask for lower rent or selling price, it also means lower foot traffic. You have to carefully weigh your options before you invest in a specific location.
Solution: Conduct research about the area you’re eyeing for. Check out if it has some history or even mystery surrounding it. Utilize what you can find and find a way to charm consumers into it.
If you can’t find one, then you should find one that has the most elements that you need: accessibility, competition, and safety. First, you must ensure that the location you’ll choose is accessible and has enough space to accommodate your target audience.
Second, as much as possible try to secure a location where you’ll be the pioneer of your cuisine. A little bit of competition may be healthy for you but, to keep it less complicated for your start-up business, it is best to avoid one.
Lastly, a safe environment appeals to consumers more than you think. If it’s a location where they can enjoy good food and have nothing to worry about their safety, then rest assured they’ll be coming back for more.
Creating a formula on how you will sell your food items to your customers is always a tough job. With all the trends showing up, it’s getting hard to build a menu that’s different from the rest. Trying to find or create a selling point on your menu can be dragging sometimes.
And it’s not just about your menu items, it’s also how you will present them to your customers. Is it best to create a short menu? How about trying out an online menu? What about the other trending formats?
Solution: Research about what are the trends in your target audience and try to incorporate them into your chosen cuisine. Talk to your kitchen staff, especially to your chef on how you can implement ‘Menu Engineering’ on your drafted menu.
And before finalizing everything, it is best that you also consider dietary restrictions and other food trends in the market. The more you show your customers that you care for them, the more they will be attracted to supporting your brand.
You may also want to try out contactless options such as launching your menu using QR codes. Being a pioneer on health and safety can be one of your selling points.
We have already said it, never underestimate it. Not only are we discussing your costs and expenses, but we are also discussing your competition. It might be worthwhile to consider pausing if you think an old family-owned pizza joint won’t pose a threat to your modern-style pizza place.
Solution: Learn why they are considered as your competitors. Browse into their websites and see what they’re offering to their customers. They might be utilizing certain tools that are working on their audiences, and then you may create a better way to do it.
For a start-up business, building a trusting and healthy working relationship with suppliers and vendors. You have to find the perfect partner for your business that will meet your standards and quality.
Solution: With plenty of vendors available in the market, don’t be afraid to talk to them. This is how you’ll know them better, therefore you’ll have an easier time choosing the best one for you. You may also ask for suggestions and referrals to narrow down your choices.
Just make sure that you’ll filter them according to their flexibility and reliability to meet your needs. If there’s room for extra chat, you may also want to check on how easy it is to negotiate with them. After all, you’re still trying to do business with them.
The right employees can sustain your business until whenever you want. They are your brand representatives, thus the importance of hiring the best fit for your business. The hiring process of every business is considered as one of the key components to successful operations.
Solution: Aside from fair and reasonable compensation, you must also nurture the skills of your staff. Strengthen their foundation by giving them training and refreshers now and then. Your goal is not just to develop competent staff, but to make sure that they will stay under your management.
Challenges – Ongoing Operations
Here are the most common restaurant owner challenges you can face during your operations.
With the pandemic taking place, it forced restaurants to reshape their dining set-up according to the needs of the customers while complying with the new health protocols. It’s not an easy task especially if you’re a business that’s relying heavily on the volume of orders.
The way that the consumers are dining has already changed. Sure, there might be vaccines and other ways that the government is doing to minimize the risk of virus transmission, but the presence of risk is always there; especially in the high-traffic areas.
You also have to take into account the changed behavior of diners towards the food they eat. Health-conscious lifestyles have now become the norm. If you’re used to serving burgers and pizza, then you might want to revisit your menu and look for ways to incorporate healthier methods.
Solution: Make sure you’ll stay updated about the different health protocols in your area. Be sure to implement it while still taking care of the comfort of your customers. Adopting contactless solutions for your business is a great option to try out.
Rewrite how you used to do things before because it does not apply to the current market situation now. Showing that you prioritize the safety and cleanliness of your operations should be your focus every day. Make an effort to establish that you’re taking extra steps in taking care of your customers.
For menu updates, you must consider it carefully. While it’s necessary, it’s also risky for businesses. Make sure that you’ll consider the supply and demand chain, the preparation time and process, and every element that could affect its success before you launch it to the crowd.
We’re not just talking about food supplies but cleaning supplies as well. Keep in mind that due to this pandemic the threat of lockdowns and strict restrictions are always present and instating fear in consumers.
Chances of hoarding leaving empty shelves are apparent which results in unbalanced supply in the market. And as a restaurant owner, overcoming restaurant challenges of this type is not easy since you’re in no control over the entire supply chain.
Solution: You may want to talk to your suppliers and vendors first. Ask them how you can arrange to ensure that there won’t be a shortage of your supplies. But be careful about hoarding too much as it could hurt your inventory and can cause more damage on your end.
If your suppliers can’t help you with this concern, then consider looking for backup plans. Consider looking for substitutes that will still deliver the quality of the products that you used to use.
Lesser services require lesser staff to support them. If you’re not allowed to operate indoor dining or any type of dining at all, then there’s no need to keep your wait staff and even your front-of-the-house team reporting for work.
While it’s not easy for you to let go of some staff, this pandemic outbreak forced you to do so. Providing them unemployment benefits also poses a challenge to your financial situation, therefore furloughing them may be the best option for you.
Solution: Talk to your staff and make them understand that you want to keep them as much as possible. And this is not just because of the training you’ve invested in them, but because they already know how you want your business to run.
Communicate security to them. In this time of uncertainty, words of assurance are still a great boost in morale. And with the economy slowly recovering from such a downfall, you won’t have a hard time looking for qualified staff because you’ll still have your team.