How Restaurants Can Survive (and Thrive) in Periods of Economic Turmoil
3 Min Read By Gianpierre Raicovi
With a recession on the horizon, recent data from the National Restaurant Association found that 43 percent of restaurant owners believe that economic conditions will decline in the next six months. While the current situation for restaurants is far from good and with the rising cost of food adding to the situation, it is no surprise that restaurateurs are stressed for what’s to come. While no one can predict the future, previous recessions can teach us a great deal about what restaurants can expect during a downturn as well as give us insight into the best methods for bouncing back.
Prior to the 2008 financial crisis, the restaurant industry was quite traditional. Very few restaurants used technology in a meaningful way beyond basic websites. It was only after the Great Recession that businesses began to uncover the power of technology by developing mobile apps, self-service kiosks, and more.
Consumer pressure will force brands to stay ahead of the game during this coming recession and will push restaurants to adopt more sophisticated technology. For example, Presto’s recent Pulse of the Industry survey showed that the majority of consumers are receptive to technology at the drive-through and at fast food restaurants if it promises faster and better service. This includes computerized voice assistance in drive-through lines, personalized menus based on order history and dietary preferences, as well as customized menu suggestions.
While entering a recession may be nerve-wracking for many restaurant owners, this could be an opportunity to spearhead technological advancements that may set yourself apart from the competition.
Rethink Your Menu
Moving forward, technology will be critical to the success of your restaurant, but so will cutting costs. During the COVID-19 pandemic, many restaurants reduced their hours and menu offerings and we may find that happening once again. According to a CBS article, back in 2008, McDonald’s replaced their double cheeseburger, which had two meat patties and two slices of cheese, with a new burger that only had a single slice of cheese.
Focusing on the quality of your menu and food will always help you stand out from the crowd. Continue to innovate your menu, even if it means sticking to the tried-and-true while offering creative "limited time offers." People are frequently looking for new and creative food options, whether we are in a recession or not.
Consider External Help
Traditional bank loans often have stringent requirements. Business owners with a three-year or longer business history and credit scores above 700 are most likely to qualify for one of these loans. Determining the best loan for your business depends on your return on investment, budget, timelines, and qualifications, but comparing and selecting the best small business loan is simpler than you think. There are free online services that assist restaurant owners in finding the best small business loans in minutes.
Restaurant owners can also consider a US Small Business Administration (SBA) loan that can help restaurants of all sizes cover costs throughout their business including construction, machinery, furniture and supplies to improve your restaurant. SBA loans offer great rates and terms for small businesses, however, it can be utilized by more established SMB’s, as well.
Other funding options, either from online lenders or a different type of funding, will be best for business owners with a shorter history or less time in business. A business credit card is also an option for newly established businesses. Simply pay it off each month to begin building your credit.
In order to thrive in 2022 and beyond, restaurant owners and brands will need to make quick, strategic decisions, but it's also important to look ahead. Take advantage of the opportunity to stay current and educate yourself on changes in the restaurant industry, as well as to re-evaluate your business plan. Technology, as well as menu innovation and cost-cutting measures, will be critical to your company's future success. Give your regular customers a reason to return, and new customers a reason to try you out.