The restaurant industry has always had its challenges, whether they be changing customer tastes, razor-thin profit margins or food cost concerns.
And while those challenges remain, the events of the past several years have magnified their impact, while at the same time introducing a number of new ones. The foodservice landscape has changed dramatically, and many of those changes are likely to be around for a while.
That doesn’t mean, though, that it’s no longer possible to run a successful restaurant. Restaurant entrepreneurship is at the heart of the foodservice industry, and there will always be demand for dining out at local restaurants that represent the culture of their communities. With a great product, the right equipment, and a bit of luck, the industry still offers tremendous growth potential.
Here are five of the biggest challenges in the restaurant business today, along with some tips on how to meet them head-on.
Anyone who’s been involved in the restaurant industry over the past few years is likely not surprised that labor is by far one of the biggest challenges facing operators today. According to the National Restaurant Association’s 2022 State of the Restaurant Industry report, 7 out of 10 operators say they don’t have enough staff to support demand at their restaurants, with most saying they don't expect the situation to improve any time soon. Results of the situation include slower service times and reduced hours.
2. Higher operating costs
One of the main ways operators are attempting to address the labor shortage is by paying higher wages. The federal minimum wage remains at $7.25/hr, where it’s been since 2009, although some states have enacted higher wage requirements. Still, it’s not uncommon to see restaurants offering wages as high as $20/hr or more, while still struggling to attract applicants.
It’s not just wages that are on the rise, either. Food prices are on the rise as well. The Producer Price Index for All Food increased 17.8% between April 2021 and April 2022. Despite the rise, menu prices haven’t kept pace. Average menu prices increased 7.2% between April 2021 and April 2022, according to the National Restaurant Association. That’s the largest 12-month gain since 1981, but still far behind the rise in food prices.
3. Supply chain disruptions
Supply chain issues and ongoing product shortages are impacting all aspects of the economy, and the problems are particularly significant in the restaurant industry. A shortage of chicken wings led some operators to switch to boneless-only offerings or promote thighs as a substitute. Poor growing conditions in California led to a shortage of lettuce. In addition to a shortage of many products, tight supplies and higher transportation costs are resulting in increased prices across the board.
4. Changing customer tastes
The pandemic led to an increase in comfort food, followed by re-emphasis on healthy living, and that led to changes in the types of foods consumers want to see on the menu of their favorite restaurants. Plant-based, air-fried, and vegan foods are all increasing in popularity along with ethnic foods and “farm-to-table,” locally-sourced offerings. Unfortunately, complicating these trends is the fact that many restaurants are struggling to adapt to them thanks to inexperienced staff.
5. Rising rents
The cost pressures restaurant owners are facing extend well beyond food and labor. The cost of leasing space to operate their businesses is increasing as well. A May 2022 report from the Alignable Research Center, which tracks the impact of the COVID-19 pandemic on small businesses, found that 52% of small business operators responding to Alignable’s survey say their rent has increased over the past six months. Nearly three out of four restaurant owners (72%) are worried that they might not be able to stay in business if current conditions continue.
Rethinking restaurant operations
Although the challenges facing operators today are significant, they aren’t insurmountable. Addressing them, though, will require a bit of rethinking when it comes to restaurant operations.
When it comes to staffing shortages, one of the most effective ways to deal with the challenge is by using equipment that requires minimal skilled labor to operate. Instead of having multiple pieces of equipment that require more employees with greater experience to operate, incorporating one that can perform multiple tasks with the push of a button may be the better option.
Alto-Shaam’s line of Multi-Cook Ovens with Structured Air Technology®, for example, incorporate up to four independent ovens in one, preparing a wide variety of food at their ideal cook settings in the same oven, at the same time with no flavor transfer. Thanks to the ChefLinc™ cloud-based remote oven management system, operators can push and pull recipes, view oven status, collect and store data, receive detailed service diagnostics, and more, while kitchen staff can prepare complicated dishes with the push of a button and with minimal training.
When addressing higher costs, it’s worthwhile to consider an old adage in the restaurant business: Sales increases help fix a variety of problems, especially with customer demand so high. The key, then, is to find ways to achieve higher sales in the same amount of time, without adding additional staff.
One way to increase sales is by establishing a grab-n-go program. Combine a Vector® Multi-Cook Oven with one of Alto-Shaam’s Food Merchandisers or Heated Display Cases to create a program that allows customers to quickly grab the items they want and be on their way. These versatile hot food display cases and commercial food warmers feature Halo Heat® Technology that provides better moisture retention and the longest holding life for displayed food. Not only can this help boost sales during lunch periods when people may be in a hurry to get back to work, but it can also simplify customer service during slow periods when staff may be limited.
The best option operators have when it comes to supply chain issues is to drop items from the menu whose ingredients are in short supply and replace them with items whose ingredients are plentiful. Thanks to the ChefLinc technology incorporated into many Alto-Shaam ovens, this can be easily accomplished. Operators of multiple locations can update the saved recipes in all their equipment in every location at once, all from the company headquarters.
And by replacing fryers and grills with one of Alto-Shaam’s Combitherm® Combi Ovens, operators can easily address customers’ desire for ethnic foods or better-for-you choices. These ovens combine multiple cooking functions into a single appliance, doing the work of a convection oven, kettle, steamer, fryer, smoker, and more in a fraction of the space required with traditional kitchen equipment. Substituting dishes cooked in oil for air-fried items, for example, can satisfy diners’ desire for lighter fare.
And finally, the compact size, stackability, and ventless operation of many Alto-Shaam ovens make it easy for operators to produce the same amount of food in a fraction of the space. When it comes time to scout new locations, outfitting them with Alto-Shaam ovens can go a long way toward minimizing space requirements, and in turn leasing costs.
Want to learn more about the ChefLinc remote oven management system? Click here for more information. To find out more about how Alto-Shaam can help you improve operations, contact us to speak with one of our experts.