8 Tips for Surviving the Coming Restaurant Apocalypse

Apocalyptic city scene
"Think they're open?" Image: Pavel Chagochkin / Shuterstock

Wait! Did that just say, “restaurant apocalypse”? Yes. The good days for restaurants have been very good for a long, long time.

In 2020, the good days are coming to an end.

If you haven’t seen the warning signs, take a look around. Restaurant chains are closing underperforming locations, restaurant groups are being purchased by venture capitalists, and hamburgers are being replaced by plantburgers!

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We asked industry leaders to weigh in on what metrics they were tracking to ensure proper cash flow, increased profit margins, and operations setup for future growth.

Armageddon is here, people!

Look at the rapid shift in guest dining trends as well. Third-party delivery is replacing dining at restaurants at an alarming rate. Ghost kitchens are now in every major market and that trend is just starting to ramp up. The days of restaurants as we now know them are limited and if you’re smart, you’ll adjust your business model sooner than later.

That being said, what can a restaurant do now to offset this impending doom? Here’s an eight-point survival guide that might just save your business.

1. Streamline your menu.

Time to get lean and mean with your menu offerings. Ditch the ego and give the people what they want! That entails reviewing your product mix report from your POS system and knowing the cost of every item on your menus. Yes, that includes your beverage menu! It’s sad that only five percent of restaurants and bars know the cost of everything on their menus.

Once you calm down from the shock of discovering the gap between your theoretical and actual food costs—the national average is a whopping nine percent—you’ll most likely be more motivated to redo your menu. This is the perfect time for a fresh menu design. There are probably a few items on the menu that need to quietly go away. You likely also have some menu items that are such a favorite that if you tried to take them off you would start getting death threats (I know). Take those favorites and market them as “classics.” Remember that a new menu will stimulate sales around two to five percent, while a properly engineered menu can increase profits 15 percent or more!

2. Replace low-performance team members.

Start looking at who you allow to stay on your team with a critical eye. As more restaurants start to close in 2020, more people will be looking for jobs. Now is the time to crank up your recruiting engine. That means updating your job descriptions so they sound more appealing than the generic crap others use, and scheduling time each week for recruiting.

Check this out: View from the Bar: Erick Castro Addresses Hiring Practices

To recruit properly you must be active in searching for people. Top talent doesn’t stay unemployed long in a fiercely competitive market, so you must always be on the lookout. Schedule a set day or two each week where you hold “open interviews” and market those days.

3. Become a better leader.

If you want to survive the restaurant apocalypse, you’ll need to up your game as a leader. People want to work for leaders. The days of being a manic boss who yells and screams are over, as is the day of the manager who likes to stir up drama with his staff.

It’s a simple equation: Great people are drawn to work with great people! You might think that doesn’t apply to you or your market—that would be a bad assumption on your end. Like it or not, the restaurant and bar industry is really the hospitality business, people-driven and people-focused.

Read a few books, listen to some podcasts, attend seminars, or even hire an executive coach! You’ll need to invest in yourself to improve as a leader. Sorry to break it to you but you can’t reach the next level of leadership with the skills you have currently. Every level requires a new you!

4. Out-market your market.

In your possession right now is the most powerful tool you can use to dominate your market: your mobile device, connected to the World Wide Web. The internet is the dragon slayer for independent brands that want to run with the big dogs. You don’t need a multi-million-dollar marketing budget to keep your brand top of mind among your guests. You just need to involve two modern laws of restaurant marketing: consistency and variety.

Whatever you’re posting currently probably isn’t getting the job done. The internet is so vast that it’s truly hard to comprehend just how big it is. You think it’s just a big lake of information—it’s more like all the oceans combined! Yeah, it’s enormous and your one to three posts a week aren’t doing shit.

You also need to break out of the boring, same-as-everyone-else posts that are just noise on social media. Yeah, really great picture of a slider and your signature Martini—there are thousands upon thousands more like that on social media feeds. If you don’t mix it up, you just blend in. There’s a difference between marketing and just making noise.

Check this out: Marketing on the Go with a 90-Day Plan

The vast majority of restaurants and bars just make noise, with nobody paying attention except their families, friends (who live a thousand miles away from the venue), and the staff (who want to keep their jobs). Don’t believe me? Just look at the percent of likes most restaurants get—the majority hover around one percent. That’s sad and pathetic.

5. Get on the data bandwagon.

Your POS system is the smartest thing working in your restaurant or bar, and yet most use it as a high-tech cash register. That thing can integrate with software that would make you the smartest operator in town if—and it’s a big if—you would start using it! Most restaurants that take reservations use an online platform like OpenTable. That software integrates with most POS systems to create a flawless connection.

So, Joe Smith and his lovely wife come in for dinner. They check in with the host who checks them in and the system (if integrated) automatically starts a ticket for them that the service team can review to get the scoop on Mr. and Mrs. Smith’s preferences, like favorite drinks and appetizers. If you use the system properly and not just as a reservation system, it becomes a true customer relationship management (CRM) tool. Now, the Smiths are greeted by their server at the table with a solid opening line: “Hello, and welcome back. Start you off with a Cosmopolitan, Mrs. Smith? A Manhattan for you, Mr. Smith?

With that kind of information, you’re sure to wow and impress your guests! Well, as long as the kitchen and service team don’t mess it up.

6. Have cash reserves.

Now this one might be tough, but it’s a good goal. Dig deep into you profit and loss statement (P&L) and look where you can start cutting back on expenses. When the bubble busts like it’s about to, those with extra cash will be able to take advantage of some bargain deals. Great used equipment and prime restaurant locations will flood the market as it implodes. It’s already starting in some markets, so now’s the time to get ready to take advantage of the opportunities that’ll start popping up in the coming year.

Check this out: 6 Ways to Offset Rising Labor Costs in the Restaurant Industry

The key is to act fast when these golden eggs appear to you. They won’t last long and those with the resources (cash) will be able score solid deals. Also, make sure you have your systems dialed in and a deep bench loaded with talent in place now. The worst thing I’ve seen is restaurants or bars trying to expand before they have their shit together. If you’re having a hard time running your restaurant or bar now, just imagine the double drama of having an evil twin location. Culture is that often-overlooked element that makes or breaks brands.

7. Get on the delivery train.

The biggest shift in the coming year will be how guests choose to dine. While older generations love getting out of the house, the younger generations seem to want to chill at home to stream and binge their favorite shows. You can be in denial and say it won’t impact your brand, or you can take steps now to be ready when they start demanding delivery from you. I’m a big believer in being ready before the storm comes!

Third-party delivery takes a big bite out of your bottom line. While there has been some legislation to combat this, it’s going to be a few years before we see any real impact. Until then, what can you do? Here are a few ideas:

  1. Design a special menu for delivery. Not everything on your menu will travel well in a to-go box, so make sure that the items you offer are good for a 30-minute trip.
  2. Increase the price of third-party delivery menus. Here’s the thing: The people ordering from apps know that there will be an expense. They don’t mind paying for the convenience of hanging at home, waiting in their pajamas for dinner to show up.
  3. Offer online ordering through your POS system and offer curbside or pickup options. This cuts out the third-party partners and is an alternative if you’re hesitant to jump all in with the third-party apps.
  4. Partner with just one third-party company. This works best if you have multiple locations and want to strike an exclusive deal with one company. I’ve seen better rates and increased profits when these deals are done intelligently. Just make sure the deal is win-win and don’t be afraid to walk away if they don’t hold up their end!

8. Get mental.

You’re going to have to amp up your mental game for what’s going to happen to the industry over the next couple of years. Don’t cling tight to outdated beliefs and mindsets. Of particular importance: drop the saying, “We’ve always done it that way.” With the seismic shifts coming, you’ll need to be open to new ideas, creative thinking, and an agile approach to adjusting operations as needed.

Check this out: These are the Bar & Restaurant Trends to Watch in 2020

Ego, pride and denial will be the major reasons most restaurants and bars won’t survive the impending restaurant apocalypse. The writing is on the wall (and this website) and warning signs are all around us. To take no action is an action—a stupid action. Don’t say you haven’t been warned!

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