What awaits the restaurant business in 2020
Problems of the restaurant business in 2019
As in any other business, there are key points due to which institutions are most often closed, and no matter, this is a small coffee shop or restaurant with 200 seats. From year to year, some reasons may change, but there are those that remain unchanged. Main problems:
Location. No matter how you praise your kitchen or concept with a perfect design, unfortunately, this does not guarantee good attendance. You need traffic that is highly dependent on location. In Ukraine and Russia, remote or suburban restaurants are still unpopular, so the key to success for most establishments is renting a room on the streets with good pedestrian and car traffic. Few people – no profit.
Rental price. Perhaps this reason in importance is equivalent to an unsuccessful location. By laying a fixed amount of rent in a business plan, beginning restaurateurs forget about the deadlines. And after the next rental rate increase, their establishment ceases to be profitable. Moving is also unprofitable, and in the end you have to close the cafe.
Lack of ideas. If we talk about cafes, restaurants of the middle and high price segment, then simply cooking deliciously will not be enough. Guests want something more than dishes, they come for an atmosphere, quality service, a pleasant and interesting interior, where they are comfortable to be. Also, the kitchen should “fall into” the concept in order to impress the potential customer and make him come to the restaurant again and again. When this is not in the institution, you can only rely on people who want to just have a bite to eat, and they don’t care where. But why then open a restaurant if regular fast food is enough for this?
Lack of marketing. Most hope and hope for everyone’s favorite word of mouth. Yes, this is undoubtedly an important factor, but reaching the payback point, counting only on it, can be done two times longer. Not everyone is ready to wait five or more years until their cafe pays off and begins to generate net income. Therefore, you need to engage in marketing constantly, and not only at the time of launch and before the appearance of the first loyal guests. Paid advertising in social networks, promotions in the menu, promotion campaigns and loyalty systems should work constantly. More details can be found in our article “How to advertise a restaurant on the Internet”.
Low quality of service. This is a fairly common problem, because of which even successful, at first glance, projects are being closed. Frequent staff changes and ongoing training of new employees negatively affects the level of service. Therefore, even large restaurants with their careful approach to staff selection and the level of qualification of employees suffer from staff turnover. Sometimes even an unfriendly attitude of waiters and bartenders towards guests is enough for all your efforts to develop the restaurant business to be destroyed in one moment.
The restaurant owner must monitor the selection and training of new employees and constantly check the old, and not completely “push” these responsibilities to the manager.
Below we will understand how to deal with these problems through emotional marketing.
Oddly enough, this is not alcohol and not delicacies, as many beginning restaurateurs think. Recently, we conducted a large analysis of anonymous sales statistics for various types of establishments, as a result of which we found out which menu items have the highest margin, where there are less food prices and which dishes can be considered the most profitable in 2019. Perhaps this will help to understand what it is worth focusing in the new season.
A more detailed review can be found in our separate article “How Restaurants Make Money”.
Calculation of profitability of a restaurant
After a novice entrepreneur finds out about a large margin in the restaurant business, he immediately wants to open an institution and start to “row” profit. Unfortunately, everything is not so rosy, and, if you look in more detail, the restaurant industry is far from the most marginal. And just because of this extra charge the restaurant can be made profitable given the many expense items. In Russia and Ukraine, the profitability of a restaurant and cafe usually does not exceed 30%, but even an institution with a profitability of 20% can be called a successful project.
We have compiled a profitability chart for you. Of course, these are average values, and the organization of the restaurant business depends on the format of the institution, its concept and marketing strategy.
In order to understand the approximate volume of investments, it is customary to consider the price of the area of a room in the restaurant sector. For example, for cafes and bars of the middle segment in cities with a population of over one million, it is higher – from $ 1000 per square meter. In regions, the price may be lower due to lower rental rates.
Trends and trends in the restaurant business in 2020
Now back to what awaits us in the coming year.