5 Ways to Plan Ahead for Seasonal Ups and Downs
Restaurant owners know start-up costs are just the first of many expenses they will face. From hiring staff and rotating menus to renovating space and expanding inventory, the cost of doing business can be daunting. One way to ensure they have the necessary cash available to foot these and other bills is by obtaining financing from a source familiar with the unique ebbs and flows of the restaurant industry.
While access to capital is important, there are other ways restaurant owners can better set up their businesses for success, including investing in technology, increasing ticket amounts, improving marketing efforts, and attracting and retaining staff.
1. Invest in Digital Technology
From online ordering and loyalty apps to enhanced POS systems, technology is streamlining many aspects of the restaurant industry. Restaurateurs who want to keep pace with the competition must be willing to make the necessary investments to keep their operating systems up-to-date. They also need to weigh the importance of embracing relevant technology trends, such as digital loyalty programs.
“Trying to find an ‘all-in-one’ solution is often an elusive endeavor,” says Scott Phillip, owner of Hurricane Cafe in Juno Beach, Florida. “Restaurants really need to invest in the best consumer-facing technologies that will also manage things like labor hours, overtime, credit card processing, and gift card information.”
Digital loyalty programs are a technology solution that many restaurant owners are adopting in order to grow their customer base. By partnering with a national loyalty program, brands can attract new guests motivated to earn rewards and encourage them to make frequent purchases.
“The biggest reward for customers at Hurricane Cafe is our loyalty program, which incentivizes customers to prioritize our brand,” Phillip says. “Because our program works well and is easy for the customer to understand, it’s a winner, and has definitely proven to be our top technology investment.”
2. Train Staff to Upsell
Food and ingredient costs remain one of the biggest challenges for operators trying to stay competitive in the marketplace. Restaurants feel this pressure even more keenly during seasonal rush times, when managers must order larger than usual inventory supplies to offset expected increases in demand. This means investing upfront, and the same is true when launching seasonal limited time offers (LTOs).
To address this challenge, many restaurants have successfully adjusted their menus, including removing less profitable offerings and increasing prices by incremental margins. In addition, Phillip recommends incorporating various sales strategies, including upselling and the addition of alcohol—which has a more stable price—to menus.
“Trying to make money strictly from food is too difficult for most brands,” he says. “Sales and the volume of customers drive the bottom line, which in turn is determined by the quality of product and customer service. It is critical for staff to be trained on upselling and marketing techniques to drive consistent sales.”
Effective upselling might include suggesting menu items with higher profit margins and tactfully recommending items without coming across as pushy to customers. For instance, instead of saying “Can I interest you in dessert?” switch the script to “I’ve got a great apple pie tonight.”
3. Strategically Invest in Marketing
The primary objective for any restaurant marketing campaign is getting customers in the door. It is therefore critical that restaurateurs hold their marketing partners accountable by setting benchmarks for each campaign, and not pre-paying for unproven strategies.
With well-thought-out messaging operators can capitalize on local or seasonal events—such as sports, conventions, or tourism—and attract customers with LTOs, special offerings, or other promotions tied to the local community.
Some successful brands use coupons to engage customers and attract them during off-peak hours.
“But operators should be careful not to coupon too much, which cheapens a brand,” Phillip says. “I’ve seen restaurants which coupon so often that customers will only patronize the place if there’s a discount involved. There’s no sense investing in advertising during peak day parts or seasons.”
It’s important for restaurateurs not to rely on any one marketing strategy, but instead try multiple, trackable campaigns to see which efforts are the most effective at drawing new and repeat customers to their restaurant.
4. Attract and Retain Talent
One of the biggest costs for operators is the high staff turnover rate seen throughout the restaurant industry. By successfully retaining employees, operators can reduce their costs, a critical means of saving cash flow for other areas of the business. While fair wages and good working conditions are critical, Phillip says there are other considerations restaurant owners should keep in mind.
“Finding a good group of people who like working together and who take pride in their work is the most important thing,” he says.
Financing can also be useful during seasonal staff transitions, when operators may be trying to increase their employee headcount in preparation for a sports or tourism season, for example. At Hurricane Cafe, Phillip says he begins hiring for peak season a month before local resorts and country clubs do in order to ensure a larger pool of applicants, and to give new employees time to train effectively.
“The only issue is having staff on the schedule about a month before you really need them, but the flip side is if you don’t get your staff hired until peak season, you might not get anyone,” he says.
With financing, operators can mitigate these transition periods, ensuring cash flow to cover the costs of extra staff in preparation for seasonal periods of increased sales.
5. Finance Expansion and Growth
Expanding a business can ensure that a restaurant is catering to customer needs, especially during peak periods such as holidays. Growth is a good thing, and should be the objective of any successful business. But expansion itself requires investment, and figuring out how to fund renovations on an existing location or construction of additional stores requires significant investment.
“Banks are an option, of course,” Phillip says, “but they can be difficult to work with. One company that has worked well for Hurricane Cafe is Rewards Network, which actually provides marketing assistance to bring customers in the door, and only requires a percentage of those customers’ sales as payment.”
Managing seasonal, unforeseen, and ongoing costs are among the most complex tasks for a restaurant operator. Forecasting needs, developing strategies and partnerships, and arranging funding in advance can help mitigate these challenges.