Running Restaurants is Getting Harder – Part 1

If you are a restaurant manager responsible for one location or thousands of locations, then you need to keep reading.

Is running restaurants getting harder?

Profitability is being squeezed from every direction. From $15 hr minimum wages, increased competition, commodity prices, and technology to name a few.

When I came up in the industry in the 80’s and 90’s running restaurants was physically hard. You worked 80 hours a week, and you almost always worked on weekends and holidays. There were a lot of managers burning out.

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Now it seems like managing restaurants is still physically hard but it’s also mentally hard. You have to concern yourself with gas prices, be on the forefront of technology, and government affairs. You can’t just provide great food and service with a smile anymore and expect to cruise.

We have new $15 minimum wage laws being put into effect across the country, if it hasn’t hit your state yet, don’t worry it is coming. After $15 minimum wages, my bet will be more breaks and shorter shifts.

We have commodity prices being affected heavily by oil and corn prices making menu staples more expensive than they were just a few years ago. Because corn is no longer just corn it is an alternative fuel when oil prices go higher corn prices also rise making it more expensive to feed livestock, to transport food to market, etc.

We are still recovering from several years of drought that drove up feed prices and took their toll on cattle stocks; we should start to see more cattle supply in 2016 & 2017.

Commodity prices fluctuating means that you have to know your plate cost and adjust your menus more frequently or run the risk of running higher than budgeted food costs. Adjusting menus and reprinting carry their costs.

Technology has been a blessing and curse depending on where you sit. Technology is increasing competition in the restaurant industry in several ways.

It is cheaper to start restaurants today than it was in the past. It used to take years of work and lots of money to develop and implement restaurant management systems. Now POS and back office systems have come so far down in price that any restaurant can have a world-class inventory, register, checklist, and accounting system. At NRA this year there was a Free POS system as long as you used their credit card processing.

Before cloud based apps, if you wanted to have a system like OpsAnalitica you would have had to build it from scratch. Developing enterprise level software is incredibly cost prohibitive and in the past ensured that only the largest restaurant chains could afford to have advanced systems.

Our platform was originally conceived when I worked for a national sandwich franchisor with over 4,000 locations. The features in our platform were built to work in a system with a lot of locations and complexity. Now an individual restaurant owner can use the OpsAnalitica checklist and reporting platform for around $1 a day and have the same tools and advantages as their chain competitors.

Restaurant websites, a relatively new requirement in the industry, are getting easier to build and maintain. At NRA this year there was a vendor who had people building their websites on the floor of the show.

In our town, we have a local 4 location Italian chain. Their website and online ordering portal, in my opinion, are as good as Pizza Hut’s; I have used them both in the last couple of weeks. Before the internet, you would have to spend millions of dollars to compete with a Pizza Hut or Dominoes on an ordering system. Now you can get it for pennies on the dollar and as a template that you just plug your logo, menu, and photos into and play.

Technology has made it possible for single locations to reach outside of their normal trade area. Take GrubHub for example, a business that can handle a lot of sales volume can implement GrubHub and can have food delivery outsourced.

They can start impacting restaurants miles away that in the past would never have had to worry about their existence. You now have customers that are close to your location ordering from your competitor when in the past they would have been eating at your establishment.

To read part two click here

Check out this short video to learn more about OpsAnalitica

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Tommy Yionoulis

I've been in the restaurant industry for most of my adult life. I have a BSBA from University of Denver Hotel Restaurant school and an MBA from the same. When I wasn't working in restaurants I was either doing stand-up comedy, for 10 years, or large enterprise software consulting. I'm currently the Managing Director of OpsAnalitica and our Inspector platform was originally conceived when I worked for one of the largest sandwich franchisors in the country. You can reach out to me through LinkedIn.

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