Restaurants Sales: What to do when they go down?

Every entrepreneur has pondered over this ‘What If’ scenario more than any other. And this anxiety is amplified when you’re in the business of serving food.

Even the savviest executives find themselves plagued by the persistent, nagging feeling that comes with a dip in sales. In the F&B industry, that feeling is amplified. There are dozens of restaurant owners and operators who go to bed stressed out, worried about next week’s sales after yet another bad week. Some might console themselves with the thought that it’s not all bad and that the team did cut costs in some areas, or are almost maintaining target margins. That might offer some comfort but, as Einstein said, a problem can’t be solved with the same line of thinking that created it.

In the restaurant business, discouragement and disappointment are only natural; yet they need to addressed objectively. If you are looking to improve your restaurant’s bottom line, rather than just keep track of it, the most powerful tool at your disposal might just be YOU (although external help can be beneficial, that too depends on who you approach and how they revert).

Facing the facts of negative sales and critical thinking must be at the forefront of your execution plan to save the business. Here are a few steps that could help you mitigate your plan to save the sales from falling further:

Internal Introspection

Confronting harsh facts and the reality of a problem is perhaps the most pertinent aspect of critical thinking and problem-solving. If there’s a feeling of uncertainty about the counter-measures being deployed to reverse the decline in restaurant sales, it is in fact not without reason. Currently a staggering $4 trillion industry, the restaurant business is one of the most competitive and dynamic markets in the world. And many mature F&B markets are saturated, with growth only coming at someone else’s expense.

In every down cycle, though, there’s still someone who’s out-performing, out-maneuvering and out-competing. In other words: Someone who’s stealing the market share. The food-service industry is still growing as a whole. And, to be fair, plenty of foodservice businesses have seen the sales-curve bend and are in the same boat. But it’s still important to ask the tough questions: Could I have done more? Can I do more? How much of this could be a failure of leadership to confront the tough problems and innovate our way out of the downturns?

Starbucks South Africa

The case-study of Starbucks Coffee chains in South Africa reassures the fact that internal introspection and product analysis vis-a-vis market research is a very important process every entrepreneur must undertake. The first Starbucks in sub-Saharan Africa opened in 2016 through a partnership between South Africa’s Taste Holdings and Starbucks. They missed out on a crucial fact, that in geography where coffee culture has been prevalent for decades; a high-end coffee brand like Starbucks might face the brunt of a competitive market. The taste wasn’t able to sustain owing to the price that local coffee shops would offer. CNBC reported that in November 2018, after opening 12 stores, Taste paused the rollout of new Starbucks locations. It said Starbucks wasn’t making enough money to continue opening new locations.

In-Depth Analysis

Before determining how to get out of a financial mess, entrepreneurs must first identify why they got into it in the first place. Spending a considerable amount of time on the reason behind the problem.

In a complicated industry with many ramifications, restaurant management has to worry about gaining insight into the market and business. It is critical to closely study restaurant sales trends. Many chains think they already have analytics figured out when they really just have backward-facing P&Ls and forward-looking forecasts. In that case, streamlining your analytics and sales trends using an efficient PoS system becomes necessary. For many operators — particularly those in the saturated categories — there’s a sense of denial and a mentality that restaurants can hurl themselves out of a problem with tactical promotions.

Every now and then, restaurants seem to get cornered by stiff competition, erratic consumer behavior and purchasing patterns. As a result, they end up making the same marketing mistakes they’ve turned to time and again. The short-sighted quick-fixes can only lead to complacency and undermine the brand’s longevity. Marketing will always be a stimulating tool; an enhancer. It is not a long-term solution.

The intellectually rigorous analysis not contaminated by bias can help determine what’s truly causing the problem. Without good, solid and actionable intelligence, restaurant chains will find themselves lost in a sea of sorrys and wrongdoings. There are many instances where food entrepreneurs have had to dive into their failures to transform existing slumps or slowdowns. A study published by the Harvard Business Review has made a detailed study on Domino’s and how it bounced from it’s sale-dip.

Internal Or External Factors

We often read headlines declaring, “People are Going Out to Eat Less.” While that might be true for some categories and geographies, consumers are still going out to eat. The restaurants that find success in even the downturns have taken the time to look internally: at their people, products, processes, and physical environment — as well as externally, to their competitors.

New forms of dining are cropping up (food trucks, delivery, food ATMs), making quivering shifts in the industry, and siphoning off margins and mindshare from more traditional models. It’s important to take stock of the competition, and review what they’re doing — but not copy them. In fact, the key to salvation is often rooted in better differentiation, not frightened flock sensibilities.

Running a restaurant in the age of the fourth Industrial Revolution is not short on complications. Today’s successful chains and even independent outlets require a near-expert knowledge of globalization and localization (as well as mindfulness of the consequences of urbanization, mobile, digital, grocery, convenience, snacking occasion, shifting dayparts – the list goes on). The modern market complexities in what is already one of the most dynamic industries can quickly become overwhelming.

Develop a Phased Approach

Measure twice, cut once! It’s challenging to distinguish what generates the best (or worst) return on investment if there are no solid goals or strategic plans in place. Before making permanent changes, challenge old assumptions. Make new ones, then challenge those too, and refine them further. It’s easy to latch on to just a few disruptions in the industry that are making headlines. While delivery might be a hot topic right now (and it is changing the industry dramatically), that does not mean it is the right strategy for every restaurant chain to employ.

The Indian F&B industry saw an entirely new segment of online delivery taking over by early 2012-13. Amidst the digitization, the Indian QSR chain Faaso’s decided to change their dine-in + takeaway model and started operating as delivery intensive kitchens. This saved up a lot of maintenance costs and ensured efficient execution.

Employee Management

It is typical of businesses to lay-off a few employees in tough times. Employee management is often cited as one of the key factors holding up a business. In the food-service industry, however, reducing your staff may damage enterprise value in the longer term. Employee retention is crucial to sustain a restaurant experiencing a sales dip. Employee work perceptions affect company performance to a greater extent.

Positive work perception leads to better service which in turn leads to growth in customer loyalty. Everyone likes going to a place where they feel belonged. The customer experience entirely depends on how well your staff communicates and caters to your guests. Studies have shown that happy workers — those who feel recognized — are more likely to solve difficult problems faster.

To manage and better monitor your staff you need a dedicated smart-app that tracks employee performance and eases the order-taking process.

Strategic Measures

Undertaking short-term promotional measures instead of taking the time to strategize and dig deeper into what might be contributing to sales failures; is the equivalent of playing business checkers when the reality is a much more strategic and dynamic game of chess.

With a Petpooja’s Restaurant PoS and Management Platform, you will be able to track not only your sales data but also pin down specifics as to what items are popular among the customers and which factors are slowing down the business. Those who can face up to their problems and take measures to identify and address the root cause of their sales will be best-equipped to forge ahead. In certain cases, the answers are hidden in plain sight — though they might require a fresh set of eyes to see them.

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