Benefits of Alternative Lending for Full-Service Restaurants
Full-service restaurants are very different from quick-service restaurants and fast-casual establishments. Full-service restaurants must make a larger commitment to customer service, cleanliness, and providing quality food and beverages. Since the standards are so much higher, full-service restaurants always need to be on top of their game in terms of gaining brand awareness, hiring reliable employees, and maintaining fully-stocked inventory at all times. These three necessities are the basic goals of every restaurant, but often require outside sources of capital to be achieved.
If your full-service restaurant has applied for a bank loan and been denied, you’re not alone. Historically, restaurants are considered one of the riskiest industries for entrepreneurs, and banks have long been reluctant to grant loans to owners. Fortunately, the economic landscape is changing, and restaurants may no longer have the reputation of being the “doomed-to-fail” enterprise. While the financial crisis of 2007-2008 created significant challenges for full-service restaurants, the situation is finally beginning to look more positive. Restaurants experienced an average annual growth rate of 2.6 percent from 2009 to 2014, with revenues reaching $141 billion.
Despite those encouraging numbers, banks are still not lending at the rates as they were pre-recession. In the wake of the financial crisis, government regulators came down hard on banks, forcing them to strengthen their lending standards. Now, many businesses in good standing still risk being denied a loan from a bank. Banks typically want to see a credit score of 700 or above, in addition to a legitimate form of collateral, before even considering a loan to a business.
Thankfully, alternative lending is a reliable option. Alternative lenders operate differently from a bank since their main goal is to grant loans as quickly as possible. Applications are very short—most can be filled out in minutes—and upon completion your restaurant can be approved for funding in as little as 60 seconds. Alternative lenders also use online applications—something that banks have been reluctant to do—which speed up the process. Additionally, alternative lenders generally only look for a credit score of 500 and above, and most do not ask for any collateral.
But what can you use alternative lending for? How does it benefit full-service restaurants?
1. Hiring reliable employees: High-quality customer service is paramount to running a successful restaurant. At a QSR or fast-casual restaurant, customers have very little interaction with employees. Usually, they just go up to the register, give their order and that’s it. But at a sit-down establishment, there is significantly more interaction among customers and the wait staff. Customer service doesn’t just start and end with servers, either. It’s essential that you have excellent cooks and hostesses because customers will remember everything—how they are treated when they’re waiting for a table, how their food is cooked, how long it takes for their food to arrive, and so on.
How alternative lending can help: An alternative lending program can provide your full-service restaurant with the money needed to hire legitimate employees who can make sure your customer service is on point. The last thing you want is a poor Yelp review hindering the success of your business.
2. Purchasing inventory: Fast-casuals and quick-service restaurants also offer an array of items, so when they run out of something, it’s usually not that big of a deal for a customer. But this doesn’t apply to a full-service restaurant. Over time, your restaurant will become known for certain appetizers and entrees; customers will literally go to your restaurant because they want something specific on your menu. Therefore, it’s in your best interest to always have an appropriate amount of inventory on hand. You never want to be in the position of running out of any meal or drink item that a customer craves. Aside from food, you also need to be stocked up on everyday supplies like plates and silverware, dishwashing materials, cooking utensils, and more.
How alternative lending can help: Alternative lending can provide you with the money needed to purchase additional inventory. When the demand arises to buy supplies, the financing will be there to help.
3. Menu expansion: A common trap restaurants fall into is menu expansion, or to be specific, a lack of updating and diversifying menu items on a consistent basis. Too many full-service restaurants keep the same exact menu for years. But why? It mostly has to do with available resources; restaurant owners don’t often have the money or the wherewithal to even consider menu expansion. A great deal of effort goes into hiring a menu consultant or a new chef. Thus, many owners simply choose to bypass menu expansion, much to their detriment.
How alternative lending can help: Alternative financing can give you the necessary resources to finally overhaul and revamp your menu. Customers are always looking for the latest and greatest drink or meal, and you’ll be doing your full-service restaurant a big service by adding some new flavor to your menu.
4. Brand recognition: It can’t be stressed enough how important brand recognition is to a restaurant. Many fast-casual and quick-service chains have extremely large brand recognition with a treasure trove of resources available for advertising and marketing campaigns. Independent restaurants obviously don’t have the same advantages of national chains, so they need to make up for it where they can. Aside from TV, print, and radio, you should also look into spreading your restaurant’s brand across social media channels including Facebook, Twitter, and Yelp.
How alternative lending can help: Advertising, whether it’s traditional or online, requires a significant amount of capital. An alternative lender can provide you with access to money for advertising, as well as hiring a digital agency to help with launching social media campaigns.
Remember—you’re in control of your future. Every decision you make, whether it has to do with the menu, an ad campaign, hiring employees, or financial responsibilities, is essential to gaining new customers and keeping current ones. By taking a full-service approach when it comes to managing your full-service restaurant, you can help expand your business today and for the future.
The opinions of contributors are their own. Publication of their writing does not imply endorsement by FSR magazine or Journalistic Inc.