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How restaurants can stay healthy during cost volatility

Three tips for protecting your business from today’s unpredictable economy.

The restaurant business has always been fickle and in these past few years, the industry has seen its fair share of headlines ranging from record high inflation to store opening acceleration. As pandemic woes subside, the world continues to be impacted by its aftermath including labor shortages and supply chain disruptions, all contributing to the rise in costs we’ve seen recently. 

It’s crucial for restaurants to anticipate continued volatility and prioritize the necessary investments to prepare their businesses for potential prolonged uncertainty. We have seen that consumers still have a strong appetite for restaurant experiences, whether in-person or digitally, and in eating high-quality, delicious food despite higher prices. The right preparation and approach can equip businesses to reduce the impact of volatility and, with these strategic moves, potentially edge ahead of their competition.

Create nimble business models 

In the wake of the pandemic, restaurants were forced to be reactive with the sudden closure of dining rooms across the country. Without knowing when restaurants would be able to reopen at the time, many businesses that invested early in contactless delivery and off-premises dining capabilities for the safety, comfort, and convenience of their guests outpaced their peers. When essential workers, including restaurants, were allowed to return, many pivoted to focus on expanding their off-premises capabilities by migrating to a tech-enhanced and personalized experience. Now with restrictions lifted, dine-in traffic has returned, and guests are craving experiences in-restaurant as well. 

To stay on top of consumer minds, restaurants need to expand their offerings and find a way to meet guest expectations with a system that’s scalable. Debuting new menu innovations is a popular tactic to continuously provide guests with new menu items and experiences. Additionally, incorporating a feature like digital menuboards in-restaurant is an attractive and tech-savvy way for restaurant brands to increase speed to market. Digital boards give restaurateurs the ability to customize the guest experience by highlighting menu items that are popular to that restaurant's demographic, showcasing new menu innovation, and foregoing unnecessary menu space such as featuring kid's menu items in college town locations. 

Prioritize people first to drive revenue 

Across the restaurant industry, businesses continue to manage through labor shortages, high food costs, and supply chain issues. To overcome these obstacles, restaurants have reprioritized their “people first” values by building a better work culture. This starts with attracting and retaining high-performance employees through enticing benefits, optimizing back of house efficiencies for a seamless workflow, and promoting healthy relationships with vendors and franchisees by prioritizing quality face time with them. When team members love being at work and thrive in their role, and vendors pour their hearts into your company, the bottom line benefits. There is power in alignment and working towards the common goal of being a place where people love life and give back through their service. 

Invest in integrated restaurant technology

Technology has become a powerful tool in the restaurant industry, and having the right tech integrated can help brands navigate any turbulence that may come their way. Whether brands are looking to improve data accuracy and flow, reach more guests, or provide a better brand experience, there’s a suite of technology solutions available to enhance operations and keep systems running smoothly. With technology like self-service ordering, point-of-sales systems, touchless payments, and a loyalty program, restaurants can be more organized and efficient.

However, by integrating technology that analyzes the data among these platforms, brands can adopt an omnichannel approach. Restaurateurs can gain unprecedented access to the wisdom hidden in guest operations and marketing data, which can provide a more seamless, streamlined customer journey across all touch points. As we know, the end goal is to have guests feel taken care of and receive a consistent experience no matter how they interact with the restaurant so they come back time and time again. Despite ongoing market conditions, it will remain important for brands to continue delivering a positive customer experience every time to stay attractive to existing and potential guests.

To do so, an integrated solution such as a point-of-sales system with a Customer Relationship Management (CRM) database can be enabled to obtain guest data to understand and quickly adapt to the ever-changing consumer behavior and desires as they arise. With insight into what guests want, brands can create effective personalized promotions and announcements tailored to diner preferences. For instance, garnering data that identifies your restaurant’s most frequented guests as families will allow you to make strategic in-restaurant decisions to engage that audience, such as offering a weeknight family meal discount or adding a family bundle option to the menu. 

Restaurant franchises can apply these strategies too. Most brands were able to pivot successfully to the changes that rocked the restaurant industry just a few years ago, and for anyone looking for stability, safety, and protection, franchise brands may be the best option. Franchise brands provide comprehensive training, real estate support via site tours and demographic information, ongoing systems and operations support, and a community of like-minded franchisees to provide advice and key learnings along the journey. As a franchisee, you are part of a team. 

While the future is uncertain, these strategies are proven methods to modernize and innovate your restaurant business to create a healthy business model that can overcome any volatilities, like price, that arise. 

Carl_Lukach.pngAUTHOR BIO

Carl Lukach has served as Noodles & Company’s Chief Financial Officer since November 2020. Prior to joining Noodles, Carl spent four years as VP Finance at Equinox, the namesake brand within Equinox Group, a high-growth collective of the world’s most influential lifestyle and digital brands. He holds a bachelor’s degree in finance and psychology from Georgetown University.

TAGS: Operations
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