How to save your Restaurant in 2022

How to save your Restaurant in 2022

There ia a chance to save your restaurant business in 2022. A small chance, especially with the next wave of problems that are coming. In some ways, it’s already here. Today’s blog may seem gloomy, but it all depends on how you read it. If your honestly looking and listening to the truth, you may find this article helpful. Otherwise, just carry on carrying on…

Firstly. let me let you in the loop as to what you will be facing moving forward from 2021/22. Yelp research showed that 17% of all businesses that closed in March 2020 were restaurants; since then, more than half the restaurants have closed permanently. In June 2020, after restaurants sporadically re-opened across the country, Yelp claims its restaurant reservations were down 57% from the same period in 2019.

THE 6 BIGGEST PROBLEMS

  • Available labor; there is a shortage of entry level staffing
  • Skilled labor; As above, a shortage in professional staffing
  • Food Cost; inflation
  • Food supply; they are predicting serious food shortages in the new year.
  • New consumer consciousness; a customer more demanding of quality and value
  • Housing; In many popular tourist areas with high hospitality demands, there is no housing for staff.

A FEW SOLUTIONS

  • The simplest solution to the entry level staffing issue is to open jobs to immigration.
  • A return to classic/foundational cook training; formal apprenticeships to develop new skilled labor.
  • Buy local, seasonal food. This will lower the impact of inflation, and increase quality.
  • Most of the issues with food supply will be foreign products, see above.
  • Be more innovative with menu development, due to the pandemic and being home bound people have a higher understanding of food quality, and therefore a higher expectation.
  • Housing in tourist areas has always been a problem, but now housing in general is an epidemic.

HOW TO GET STARTED

I’ve covered this before in another post, but let’s review this again. It’s a basic solution that will go far to remedy some of my predictions. If you reduce your food cost, and increase your labor budget, it’s possible you can still make money and survive the next few years. Numbers don’t lie. Let’s look at a couple of scenarios for a business generating 1 million per year.

  • Current average food costs for mid scale dining; 35%
  • Current average labor costs; 30%
  • Current average operating costs; 30%

That leaves about 5% profit, a very slim margin in a perfect world, the more likely scenario is the above model is losing money.

  • Reduce food cost to 20-25% by increasing effective use of food, buying local and seasonal. Grow food, preserve food, carry less inventory, etc
  • Increase labor cost by 5%, that gives you $50,000 more to spend on qualified people
  • If you are following my math, you still have at least another $50,000 for yourself as operator or to use in other creative ways. Like incentive programs, educating staff or even subsidized housing for staff.

CONCLUSION

I’m saddened by what has happened to my industry, but at the same time feel it’s about time for a reset. I believe we have been mislead by multinational corporations to the point they have broken our economies and destroyed our businesses. This being said, some of us will prosper if we embrace change. It won’t be easy, it never is, to change. If you would like a little guidance beyond this little post, feel free to contact me. Many of the tools you need to get going are here on this website, consider becoming a member to access them! In closing here is a sample form you can put to work right away.

Cheers!



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