Restaurant Recession

Restuarnt Recession?

While having my cup of coffee, what caught my ear was the phrase “Restaurant Recession”


While having my cup of coffee, what caught my ear was the phrase “Restaurant Recession”

Restaurant Recession:

I caught the news this morning while having my cup of coffee. What caught my ear was the phrase “Restaurant Recession”. I know the economy has been tough for the past 10 years and I still see many empty retail windows. I also know restaurants are always on the lookout for more cash via a Merchant Cash Advance or a Hard Money Business Loan, and banks… they really are not interested in loaning anything less than $250,000 (side comment…sorry)

As a full service Point of Sale integrator for restaurants, I pay attention to the restaurant space, such as newly opened and closed restaurants. It is a very well-known statistic roughly 60% of new restaurants fail within their first year and only 20% make it past their 5th year in business. This reminds me of Sea Turtles success rates; 1 in 100 make it to maturity. (Quick Google on Sea Turtles stats here )

The pundits mentioned how badly Independent Operators and now Chains in the Restaurant Industry are trying to come to grips with this recession; and determine the cause.

They posited a few ideas:

1. Market Saturation – There are just about 630,000 restaurants in the USA as confirmed by Statista.

2. Ready-made meals delivered to your home – (Googled here)

3. Diet meals delivered to your home (Googled here)

In addition, the big one, Obama Care or the ACA / Affordable Care Act, is potentially crushing the restaurant industry (Googled here). If you as a citizen and do not have health care coverage you are facing fines (Googled here) and when you do get health care – it is costing you waaay more than you thought it would, as the pundit cited. Then he surmised this is where people are spending their money and it is having an effect on the economy as a whole, because they are not showing up at restaurants.

With the economic crush, loss of customers due to their expendable income being sucked up by the (un)Afordable Care Act (Google here ), as the pundit surmised and with a potential $15 an hour minimum wage coming down the pike, what… is a Restauranteur to do?

This leads me to the prediction I had quite some time ago and a significant shift in the hospitality industry… restaurant marketing (Googled here ). Like SEO for websites, restaurant marketing will and is currently running rampant across the Restaurant Industry. Independents and Chains alike are looking for the “Silver Bullet” to keep customers coming back.

My predictions on restaurant marketing:

1. Marketing takes administrative time, a lot of time. You have to plan; I mean really plan your programs and no one, let me say that again
for effect… NO ONE knows the restaurant offerings like the owner(s).

2. Marketing takes “Talent.” Like the art kind of talent, color combinations, fonts, drop shadow, stroke, font family and font family combinations, texture looks and feels, background colors etc., etc. This is no joke (examples here).

3. My guess – 99% of restaurants do not have the internal administrative time or talent they need to fully place in “effect” the monthly “do it yourself” marketing program they just purchased at a monthly fee of … let’s say $199.

4. There will be companies showing up to “take over” your DIY marketing programs for the same or higher fee.

5. There will be a rise in companies that provide higher cost “restaurant specific” marketing programs and schedule the entire year in advance.

6. The price for the DIY marketing model will drop… like dramatically… why… over saturation of the market place. The market will dictate the price the customer is willing to pay.

(Side comment) Marketing companies – know how much time talent and effort is involved in production – save for templates and even those need to be customized.

Marketing company’s sole focus is on profit – just like the restaurants they service and they want to spend as little time “customizing” as possible – because time in customization = man hours = labor cost = lower profits. I am not saying they don’t care about their customers; they are just as aware of overhead as their customers are. This is why many of the marketing programs are, and will be DIY.

Anybody in business knows there really is not a “Silver Bullet.” In the restaurant world food quality, customer service (Google here) and ambiance Googlehere ) are king.


Restaurant Gift Card Program

CPOS Alpha Restaurant Gift Cards

Why should I be offering Restaurant Gift Cards?


Benefits of offering Restaurant Gift Cards

Restaurant Gift Card Programs:

Why should I offer Gift Cards?

If you are not offering Gift Cards you should really start thinking about it, and here are a number of benefits why.

1. They will boost sales; on average gift card holders will spend MORE than the value of the card they hold i.e. $20 the gift card holder will spend an additional $6 - $15 more than the value on the card.

2. Gif Cards integrate; gift cards integrate into your Restaurant Point of Sale system eliminating the need for paper certificates. Your Gift Cards are now trackable for reports and you now know how many are out there.

3. Cash in hand; the purchase of Restaurant Gift Cards puts cash in your hand now! The average “sweet spot” of Restaurant Gift Cards purchased according to First Data is $20 - $50 range. And remember this is CASH in your hand now in preparation for future sales.

4. Customer come back; on average customers will redeem your Restaurant Branded Gift Cards within 3 months of purchase, which increases foot traffic to your restaurant location, big win for you!

5. Gift cards get lost; between 20% – 30% of consumers will misplace their Restaurant Gift Card creating a cash flow positive reason to further offer Restaurant Gift Cards for your restaurant.

6. Employee rewards; many Restauranteurs offer gift cards as an internal reward mechanism for their employees. The benefits for this “self reward” are almost undeniable; your own staff will come back to your restaurant or give the gift card to a friend, or family member brining more foot traffic to your restaurant location. This in my book is an AWESOME way to reward your staff and yourself by making people happy and making money at the same time.