3 Restaurant Business Planning Factors You Can’t Overlook
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Supply chains remain in flux(1). Inflation is growing(2). Labor shortage and wage demands are strengthening(3). It felt like the industry was booming back at the start of summer, but now the COVID-19 Delta variant has us all on edge(4).
All these unknowns make it more important than ever to hone your strategies and create a restaurant business plan that accounts for risks and fosters intentionality—be it longevity, rapid growth, or something else.
Here are three often-overlooked factors to help you keep the big picture in mind with your restaurant business planning. These factors remain relevant whether you’re a new operator creating a plan from scratch or an existing restaurant business owner looking to make adjustments.
Three factors to consider for restaurant business planning
1. What’s your endgame?
COVID and subsequent lockdowns have caused restaurant operators to think more about their ideal endgame, or lack thereof.
Most endgames involve an exit strategy from the business entirely, such as:
- Selling your business to investors or other operators
- Passing the business to your children or other family members
Your endgame could see you retaining the business but stepping away from the day-to-day. Or maybe you want Michelin Stars, culinary notoriety, and other such prestige.
Regardless of what it is, it’s critical that you define your endgame so that you can use it as an internal compass—it can help guide you and enable more decisive decision making.
While it shouldn’t change often, you may be forced to adjust your endgame from time to time—such as when a global pandemic hits 😑
This is still the reality for many affected by COVID and the lockdowns as they decide between selling, winding down, filing for bankruptcy, riding it out, or closing temporarily and permanently.
Each of these situations requires an entirely different approach. The most important thing you can do right now is be more intentional about having an endgame and operating today with an exit strategy in mind somewhere on the horizon.
And keep in mind, other operations’ endgames and exit strategies could be your entrance to that next location.
2. Is your business able to scale or shrink depending on needs?
In the wake of 2020, restaurant business planning must be more dynamic to allow for pivoting whenever needed.
We need to be ready to scale up in times of high demand and scale back to cut costs and survive. This means that menu concepts, service types, and sales channels need to be dynamic enough to mitigate risks, such as future lockdowns, climate disasters, and other supply chain interruptions.
When it comes to scaling or shrinking operations, restaurants should also consider cash flows. You need to know benchmarks for growth plans, breaking even, and downsizing.
Labor is crucial in this conversation. How do you look after employees during challenging times and maintain wages and salaries if revenue is scarce? How will you scale staff as COVID restrictions lift and cities open while coping with rising labor costs and shortages?
There’s no perfect restaurant business plan that accounts for all of this, but the act of trying to surface these risks and concerns is a great step in the right direction.
3. Do you have room for financial and operational optimizations?
There will always be room for greater efficiency, but COVID has demanded restaurant operators to step up their game and find efficiencies everywhere. Are you able to cut back on resources when needed and then add to them as business ramps up?
The ability to cut back and scale up requires accurate restaurant insights across your operation. What’s your biggest food cost driver? How bare bones can your kitchen staff get while still turning out your menu? What menu items put the most money in your pocket?
The answers to these questions focus on areas that are prime candidates for optimizations. Here are the tools that can enable such optimizations:
Invoice processing & AP automation
Operators and/or kitchen managers often spend time they don’t have with cumbersome invoice data inputs. If that sounds like you, then you’ll benefit from Restaurant AP automation solutions that digitize your invoice processing.
AP automation software takes the pain out of inputting invoices. And xtraCHEF goes a step further by automatically applying general ledger codes to invoice line-items, keeping your ledger organized and audit-ready while ingesting line-item details into our inventory and recipe systems for precise food costing.
Food cost management
Constant supply chain disruptions and inflation mean that calculating and tracking food costs between locations and over time is a must if you want accurate costs and pricing.
Food cost management software helps you catch price fluctuations and monitor changing costs over time with cost trend reports, so you’re always ahead of the game.
Recipe cost management
Costing recipes is tricky enough as is. You have to list and cost ingredients, account for unit conversions, density, yield, and waste, and make sure you regularly repeat this process to account for the fluctuating price of ingredients. That’s why so many restaurants don’t monitor recipe costs.
Recipe management software optimizes your recipe management process by pulling individual ingredient price from invoice digitization, factoring for various units of measure. From there, it’s as simple as dragging and dropping ingredients as you build out your recipes.
Managing inventory using Excel doesn’t really work. The process involves counting stock and transferring counts to a spreadsheet for further cost calculations. If you’ve ever taken or still stake inventory this way, you know how time-consuming it can be, that it often leads to human error, and that maintaining lean inventory can be challenging.
Inventory management software enables you to achieve and go well beyond baseline counts and par leveling. xtraCHEF’s analytics go in-depth into the value of your inventory overtime and within any particular moment, showing you true COGS, ingredient-level costs over time, and more.
Rethink your restaurant business planning today
These times remain an operational and financial challenge for most restaurant operators. It’s a situation that demands a change in approach. Operators must adapt and rethink their business strategies to survive.
This means that you need a more robust business plan—one that not only accounts for any eventuality and alleviates risks but one that is forward-thinking, factors in longevity, and has these three crucial factors baked in:
- End game considerations
- Ability to scale up or down
- Financial and operational optimizations that minimize costs and maximize revenue
xtraCHEF here to help. You don’t have to go at it alone any more. Our feature set and integrations can put time back in your day, keep you and staff on task, and give you the insights you need to stay on course toward your endgame, optimizing all along the way as you scale with the times.