The restaurant with no order wait staff – don’t be crazy!

THE BIGGEST RISK FOR THE RESTAURANT INDUSTRY IS RISING WAGES AND FOOD COSTS.



An American Express commercial once warned that 90% of restaurants failed in the first year. This is, to put it simply, bull!! Two economists decided to settle this using BLS data that covers 98% of U.S. businesses, the QCEW dataset. They tracked single-establishment restaurants from 1992 to 2011, and reality is only 17% of restaurants close in the first year. This is in fact a lower failure rate than other service providing businesses, where 19% fail in the first year.

But, success in the restaurant industry isn’t easy and whilst many pass their first year 80% close within five years and many restaurant owners working to a ‘different’ set of business rules – the ‘good enough’ rule.

Reality is that for many restaurateurs, as long as they’re making money, they’re doing “good enough.” It’s a passion and I have lost count of the number of owners who tell me they’re ‘head above water’, so all is well. It amazes me that so many astute business owners accept returns that no other business would tolerate, but, as it’s a restaurant and a passion, well that’s OK they tell me.

Stats support this, with the average profit margin for a restaurant, after removing all other costs being just 6.2 percent. With a profit margin this slim, insolvency is constant threat and owners are always looking over the precipice. One of the things that I have seen as a clear consequence of this ‘good enough’ approach is fear - downright ‘night tremor, will we be ok' type fear. And this fear stifles innovation; just keep doing what we are doing and all will be OK is the mantra!

Those that DO try to increase returns essentially have three options: sell more food, lower staff costs, or decrease ingredient costs. That’s it, those are the variables. According to an IBISWorld report on single location full-service restaurants in the U.S., 67 percent of a restaurant’s costs go directly to wages and purchase expenses. The biggest risk for the restaurant industry is rising wages and food costs and the number one challenge for ANY restaurant is staff; recruiting, managing…..and paying them.


Doing the math for many restaurants is painful

Technology has been the savior for many industries and has transformed cost structures and profits, but for restaurants it is same old same old. Where technology has influenced then it is external, for example...Tripadvisor, Open Table, Chope, Eatigo, POS systems and more recently the delivery boom giants with money to burn. But in the operation of their restaurant, little changes in terms of tech!

However, reality is that every restaurant now has a stunning once in a generation opportunity to embrace the new technology and to offer their guests a solution that can not only enhance service, but reduce those dreaded staff overhead costs. What if every restaurant could cut their staff costs by 25%, or even 50% - then overnight their business no longer limps through each week, but is transformed into a thriving and profitable success with security. And this can be done!

The answer is in persuading customers to order using their mobile phones – and turning staff into sales and service personal. If 50% of customers order via their mobile phone then the number of staff needed is reduced, and the good news is that a mobile phone never goes sick!!

Many ‘good enough’ restaurateurs tell me that this takes away the service side of the business. They say that customers want to be ’served’ but taking an order is a mechanical process, not a service and relationship process. Responding to questions, guiding on specials and offers, etc, and asking if they need anything, these are relationship processes.

But how can a restaurant persuade customers to order using their mobile, and the answer is a loyalty programme with integrated ordering. Give something to get something! If a restaurant offers guests a membership to a loyalty scheme with integrated cashback, then they have something that can induce and encourage not only customers to order via their mobile, but, to return more often as loyal customers. It is a double whammy benefit!

It is absurd to suggest that 100% of customers will order by mobile, but it is reasonable to aim for up to 50%. And if just half of customers do this, then any restaurant can have a massive impact on their bottom line profits.

Menuvenu.com had pioneered a table ordering solution that not only integrates a loyalty programme, but also makes it easy to order on their mobile just by entering numbers into the app. Any technophobe foodie can use and enjoy. Add in the ability for customers order in their language, any of seven, and restaurateurs not only get increased order accuracy, they get a real affinity by customers, no matter where they come from.

Reality is that service is not about people waiting by the table with pen and paper in hand. Service is about giving customers the feeling of warmth and gratitude for the experience they have had. In an industry where wafer thin margins are so prevalent it is absurd that one of the biggest overhead costs is not being tackled head on using the very latest technology. Menuvenu.com is a platform and a solution that can not only bring new customers, keep them coming back, and increasing order size per customer, it can directly tackle one of the biggest issues for every restaurant – staff costs.

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