58% of Americans believe we’re already in a recession, and most restaurant and retail business owners would probably agree with the sentiment.
Supply chain issues have greatly impacted the restaurant industry, an industry that had already been pummeled by the COVID-19 pandemic.
2022 opened up with consumers adjusting to an increase in prices across the retail and restaurant industry related to supply chain issues and inflation. In a report from the U.S. Chamber of Commerce, in the first quarter of 2022, 67% of all businesses said they had to raise prices.
WITH CURRENT INFLATION AT A 40-YEAR HIGH OF 9.1%, AND ECONOMIC GROWTH SLOWING, ECONOMISTS ARE EXPECTING A RECESSION TO HAPPEN. FOOD AND COMMODITIES ARE ALREADY SOME OF THE HARDEST SECTORS HIT, AND RESTAURANTS NEED TO BE PREPARED FOR WHAT’S COMING.
Brandon Blanchard, CEO and founder of Blanchard Walsh Hospitality Consulting, has more than 30 years of experience in the restaurant and hospitality industry, including 18 years in direct leadership roles. Blanchard was in a leadership role for a large chain restaurant during the 2008 recession, and he offered tips to encourage current restaurant owners as they prepare for the current recession.
HERE ARE 5 WAYS TO PREPARE FOR A RECESSION IN THE RESTAURANT INDUSTRY
- Do more with less: Restaurants have been greatly affected by supply chain issues. It’s requiring them to look at ingredients that are more readily available and then get creative with menu offerings so that they can make do with what they do have and stretch that further.
- Plan for the short term to ensure long-term success: Re-evaluate your strategic plans to come up with ways to save in the short term. This could require you to look at current operating expenses and reduce expenses that aren’t essential. You can look to cut hours of operation, cut items from your menu, or increase prices on certain offerings in the short term.
- Set expectations for your employees: Your employees understand what’s going on. Each one of them is feeling the impact of this same recession, inflation, and the impact on wages they have earned. Set expectations for your employees by being upfront with them and communicating any changes you are making. Encourage members of your team from servers to line cooks to executive chefs to offer solutions that can help your restaurant become more efficient without compromising quality. This helps you save money and shows your employees how much they mean to you, which goes a long way.
- Re-invest in training and professional development: The cost of training an employee is about $1,071, according to Training Magazine’s 2021 Industry Report. Turnover costs the hospitality industry an average of $5,864 per employee. Cross-training your staff in leadership roles, as servers, or in the kitchen can help you save money from month to month that can go directly toward your bottom line.
- Become an employer of choice: An employer of choice is a company that candidates, by and large, want to work for. Some of the biggest benefits of becoming an employer of choice are that it makes hiring and retention easier, and it helps you compete on factors other than salary. How do you become one? By paying your workers fairly, showing them respect, providing opportunities for growth, and being transparent with them.
HOPE IS NOT A PLAN
Restaurant owners will not be able to muscle their way through a recession, and there’s no reason they should have to.
Take a look today at ways you can make simple changes to save money, invest in your current staff, and make sure that your business is prepared and has a plan for the near future to get through these uncertain economic times.
Restaurants need to be as adaptable as possible, and planning for the short term is crucial. These plans can be ever-changing because they are not tried and true, but it’s better than just sitting back and hoping for the best. Do what you can right now to make the right decisions so that you can win in this current environment.