TDn2K recently posted their third quarter of 2018 Restaurant Industry Snapshot. Being prone to a glass-half-full attitude, let’s first take a look at the good news.
The Best Same Store Sales Since Q3 2015
For four consecutive months, restaurants reported positive earnings—a statistic that has not been seen since the fourth quarter of 2015. Sales were up 1.2 percent, the highest since the third quarter of 2015. To top it off, these positive trends were seen across the country with 149 markets achieving positive same-store sales growth during the month of September. Not bad.
Restaurant Turnover Decreased
Though operators are still feeling the effects of a 3.7 percent unemployment rate, there was a silver lining as turnover for both hourly and salaried employees declined in recent months. While not sufficient enough to suggest managers or owners won’t find themselves behind the bar or at the prep station, seeing historically high turnover rates begin a small descent is promising.
That about covers the good news—now let’s look at the continuing pain points for restaurant operators.
Guest Erosion Continues
Traffic continues to be an issue with a 1.4 percent decline in September and a 1.3 percent overall decline for the 3rd quarter. Keep in mind that, even though still falling into negative territory, this is the best result for any quarter in the last three years.
Some restaurants are achieving their projected profit margins through an increase in guest’s checks—a strategy that may not be sustainable. As the uncertainty of a slightly unstable economy persists and wage growth flattens out, consumers discretionary income may start to diminish. On the bright side, newer generations are spending their money on experiences. Even better news, disposable income in the U.S. in August was $15,617.39 billion. There is definitely a share of that pie to be had.
To every problem, there is a solution.
Let’s look at two of the most significant challenges for the restaurant industry—labor and traffic—and see what successful entrepreneurs are doing to resolve these.
Getting guests through the doors has always been a restaurant’s number one driving force. With the advent of the digital age, many restaurant’s strategies changed dramatically as this type of marketing can come with a minimal investment. Through Facebook and other platforms, restaurants are able to market to a small geographical area through micro-targeted ads. You can even add demographics to really pinpoint a successful marketing campaign.
Frequent customers are generally within a 15-mile radius. Just what and who is in that 15-mile radius that you consider a solid potential customer? Determine your target consumer and then direct your advertisements and online presence accordingly. Facebook video ads are a growing avenue for restaurants looking for digital marketing ideas.
Maintaining Your Workforce
Want to hear a startling statistic? In 2016, the annual employee turnover rate in slaughterhouses was 100 percent. The fast-food industry’s turnover rate is 150 percent. Really? People would rather work on a killing floor than in a kitchen.
Salary and benefits are considered top contenders when it comes to keeping your labor pool steady. Delve into your competitor’s policies and make sure that you are, at the very least, comparable. According to a Glassdoor survey, the number one reason employees quit (45 percent) is due to wages. This is followed by advancement opportunities, benefits, and location.
We understand, not all businesses can offer top-dollar or even a competitive wage. There are other considerations, one of which is caring about your employees and ensuring they are living a well-balanced life. Staff that becomes like family members may very well bicker, but they are much slower to make a mad dash for the door.
The bottom line: Give your guests and staff an experience that they will never forget and then forget the statistics. There are restaurants that thrive even when the economy plunges.