Restaurants must adapt to new normal in tough economic times
It’s a tough time to be in the restaurant business. The combination of persistent inflation, staffing shortages and overall economic uncertainty has made it difficult for restaurants — especially local mom and pops — to stay afloat.
The National Restaurant Association released a survey at the end of August that showed 46% of restaurant operators say business conditions are worse now than they were three months ago — and conditions weren’t exactly great then either.
According to the survey, restaurant costs are up, and nearly all have had to increase their menu prices to remain profitable. It’s no wonder there are stories almost every week about long-time local restaurants in communities across America shutting their doors permanently.
The past two years have been brutal for hospitality and service businesses. The COVID-19 pandemic and the Great Resignation delivered a double whammy to the industry. Many restaurants were starting to see signs of normalcy earlier this year when economic conditions began to teeter.
Heading into the summer, the industry was still down 750,000 jobs from pre-pandemic employment levels, according to the National Restaurant Association. Many in this industry are rightly asking, “How are we supposed to survive when we never have enough staff?”
There’s no question it’s hard out there right now for restaurants and other hospitality businesses. However, even in the middle of this environment, there are opportunities — things businesses can do to stand out, up their customer-service game and avoid going the route of closing their doors. For example, there are reports of more consumers “shopping down” by adjusting their eating out preferences and looking for cheaper places to eat. Applebee’s and IHOP both announced last month that their sales grew this summer among households earning over $75,000 a year. As customers in different income brackets respond to price increases and search for new dining options, it’s an opportunity for restaurants to pick up new customers.
While it’s challenging to do customer service well when you don’t have enough workers, there are tools that can help that don’t include putting a handwritten sign on the door saying you’re short-staffed. For starters, businesses must focus on the employees they have — even if it’s only a few — and take care of those who show up.
The restaurant and service industries, unfortunately, are notorious for pushing their people past their limits and expecting employees to work nonstop through their shifts. The industry’s reputation in this area certainly isn’t helping the labor shortage problem. Establishments that do things differently and create a culture of taking care of their employees will be ahead of most of their competitors and will find it much easier to hire and retain staff.
Being understaffed also requires an all-hands-on-deck attitude. Everyone from the restaurant owner on down has to be focused on serving customers. There are major brands we all know and love — think Disney or Ritz-Carlton — that seem to be almost recession-proof because they put the customer at the center of everything they do.
Automation, especially of low-value tasks, is another area where restaurants can make up for low staffing levels. There’s a reason why many McDonald’s stores and other fast-food chains have implemented touch-screen ordering systems. Today’s consumers are more adept at interacting with technology than ever, and while technology doesn’t have to be the entire customer service solution, it can help fill the gaps and allow restaurants to focus their people on higher-value tasks that can’t be done with a screen or an app.
No one knows when conditions will improve or when more workers will come back to the hospitality and service industries. But as economic cycles go, things will eventually change. Restaurants that survive today’s challenges will emerge stronger, more innovative and well-positioned to reap the benefits when the economy bounces back.