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The Biggest Challenges Facing the Restaurant Industry

The Biggest Challenges Facing the Restaurant Industry

The restaurant industry is no stranger to struggle. As you might know, 59% of restaurants fail within the first 3 years. Due to tighter profit margins, lack of capital is an overarching problem that many restaurant owners face. Whether a business is struggling to discover what unique selling point sets it apart from the competition, sweating over increased labor costs, or wondering how to market effectively in a saturated market, it seems there is always another challenge around the corner for restaurant owners.

Creating a Unique Selling Point

As with any profitable business model, restaurants need something to make them stand out from the crowd. To begin trying to establish your unique selling point, make a list of your restaurant’s products and services. Are you a vegan restaurant who focuses on sustainability? Are you a burger joint with a passion for fun friendly service? Everything about your restaurant contributes to its unique selling point. In order to narrow down your list, you should focus on what you are doing every day that your competitors cannot.

Do a percentage of your profits go to a charity? Do you source only local ingredients? Do you have a cheese fountain (we’re hoping this exists, somewhere)? Bonus points if you offer a product or service that will connect with your customers on an emotional level, as many of the purchase decisions we make every day are emotional.

Once you’ve picked your selling point, it’s time to create a snappy slogan. Focus on the benefit your customers will get from your restaurant by answering the question they’re asking themselves: “What’s in it for me?” Domino’s promises that their customer’s pizza will arrive in 30 minutes or it’s free. Wendy’s guarantees always fresh, never frozen beef. And Burger King claims that you will need two hands to hold the Whopper, assuring that customers will never leave hungry.

The Cost of Increased Wages

After you’ve discovered what sets you apart from the competition, perhaps one of the biggest challenges still facing restaurants is the increasing cost of paying their staff. Thin profit margins for restaurants mean an increase in labor cost could be the final stroke for some quick-service and fast casual establishments. In order to survive, restaurants need to find ways to accommodate higher minimum wages, while still operating a successful business.

Besides more efficient labor scheduling, one of the most apparent ways to stay afloat is to raise menu prices; but this comes with some obvious problems. One of which is that higher menu prices actually make wage increases less effective, because it means everyone increases their prices at the same time, causing the extra dollar an hour to be worth far less. Perhaps the only surefire way to overcome the financial burden of higher wages is to increase the frequency of transactions with your customers. But don’t worry, there’s good news – we can help with that.

Increasing Frequency

One of the easiest ways to increase frequency of your customers is improving the quality and consistency of your food, and the service and atmosphere at your restaurant. While improving food quality can be a pricy endeavor, there are some cheap ways to make sure you’re serving up the best version of yourself. Smiles are free and contagious, and with 88% of customers considering good service to be an important attribute of a fast-casual establishment, training your staff to be peppy and upbeat is a great place to start when trying to improve restaurant atmosphere. In general try to treat everyone who walks through your doors like a regular.

An important thing to consider, however, is that if potential customers don’t know that your business exists, the great customer experience you offer won’t matter. This means – you guessed it – marketing matters. To market effectively, you need to choose media that customers will actually connect with. Throwing money at unproven apps and technology solutions won’t help you drive business, and can frustrate your customers.

Simple things like posting foodie photos on social media is a great way to drive sales, but your most powerful marketing tool could be word of mouth. SMS is already a proven channel for connecting with your customers, and getting them to refer their friends and family to your text club can be incredibly successful. Regardless of the channel you choose to connect with your customers, improving all aspects of your customer experience with a goal of increasing frequency is one of the best ways you can avoid the common challenges that restaurants are facing.


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