How to Start Planning for a Recession in Your Restaurant Business
Let’s talk about the recession. Are you asking, “What recession?” The talking heads and our government officials are all saying we are in a state of high inflation, and we could go into recession soon. How bad a recession or how long or short lived, no one knows. While I am not an economist and am not qualified to make this statement, I am going to tell you we are in a recession. I’ve been through enough of these cycles to feel confident in that statement. In this episode of my podcast, The Restaurant Prosperity Formula, I am going to define the terms and indicators of a recession, and how the lessons of the past should be informing our future, including how we handle what comes next.
First, let’s look at how Google defines inflation: “Inflation is a general increase in prices and fall in the purchasing value of money.”
If we can’t agree we are already in a recession, I know we can agree that there is high inflation. I know not everyone in the restaurant industry now was in business during the Great Recession between December 2007–June 2009, but for those who were, you vividly remember the lessons learned. The restaurant industry took a beating. Fine dining restaurants lost 50% of their sales overnight. Customers started buying down and quick service restaurants excelled because back then their menu items were less expensive and customers didn’t have to tip.
With inflation in full effect and a recession imminent, here is what I’ve been preaching to restaurant owners that still matters:
- Become an employer of choice (listen to this podcast episode to learn more about this).
- Step up your marketing to not only attract new customers but retain existing ones.
- Create and use a budget, use systems to achieve your budget goals, put management in place to ensure the process is working and attack your menu to eliminate inefficiencies and drains on your profits.
Also covered in this episode of my podcast is a short list of the many things the restaurant owners in my premium restaurant coaching group are doing to shore up their businesses to ride out the inevitable fallout of inflation:
- Signed up for my coaching group, Restaurant Transformation Intensive
- Created recipe costing cards and keep them updated to keep menu cost in line
- Training employees on importance of service to make sure the guest is having a great dining experience
- Focusing on efficiencies
- Setting expectations for the team to make it through the busy season with joy
- Improving kitchen workflow
- Cross training team members, especially in the kitchen
- Improving the onboarding process to save time, money and reduce turnover
- Purchasing and implementing new equipment and software
- Taking advantage of lower advertising rates and bumping marketing efforts up without using devaluing promotions or stunts
- Ensuring specials are not for discounted prices, rather an opportunity to increase sales
- Stagger starting team members to lower labor costs and still have enough to handle the peak periods
- Identifying new revenue streams, such as adding day parts like breakfast, booking restaurant buyouts, popups and catering
- Putting a major effort into beefing up their loyalty programs
While I market myself as the restaurant expert, the creator of the Restaurant Prosperity Formula and the systems guy, there is nothing more powerful than restaurant owners masterminding together, sharing their success, helping each other with their challenges and being there to support each other.
And that’s what makes this podcast so special. I let you get a glimpse of how my members are gearing up for what could be a knockout punch to our industry and instead of feeling sorry for themselves, they are putting plans in place to not only survive the hit but to thrive.
If you would like to learn how you can add 13% to your bottom line and get 2 days off per week from your restaurant – guaranteed – click to watch a video training I put together for restaurant owners: https://dsp.coach/transformation.