The increasingly bleak economic outlook is causing restaurant owners to brace themselves for a challenging year ahead.
While there's no magic formula for success, you can shore up your business against a slow economy by assessing your weaknesses, therefore the slowing economy makes them painfully obvious to you.
Keeping with industry trends is one way to help keep your business on track through good times and bad. Take a look at the restaurant trends we pulled together for OPENForum.com, an online resource designed to help small business owners better manage their businesses: Business entertaining and corporate parties will continue to be pulled back.
Many restaurants rely on corporate party business, especially around the holidays. Given economic uncertainty in key industries, restaurant owners can expect to see significantly less holiday business. Industry experts report bookings are down about 15% for the 2008 holiday season as compared to the same period last year.
Instead, companies have decided to scale back their holiday celebrations to small cocktail parties or are cancelling them altogether. In order to attract corporate party business, offer a prix fixe menu of three or more courses. You will maintain this portion of your business while offering a budget-friendly party option to your customers. Menu prices will increase.
Menu prices increased 4.3% in 2008. With food costs expected to increase by 7 - 9% in 2009, restaurant owners may pass along costs to diners to maintain margins. But some restaurateurs are keeping costs down for themselves as well by simply adjusting portion sizes.
Take note of customers?plates when they're finished dining to assess whether you're serving too much. Also be aware which menu items most often prompt take-home containers and adjust portions accordingly. The real estate market will offer relief.
The softening of real estate prices and decrease in demand for restaurant sites is benefiting strong restaurant companies. Developers are offering better deals, and while rents have not decreased yet, they are likely to soften in the next year.Prepare to negotiate lower rents when leases come up for renewal. Currency exchange will weigh on restaurateurs.
Many fine-dining restaurants, particularly those in major metropolitan areas, have benefited from foreign tourists taking advantage of the strength of the Euro and British Pound against the American dollar.
While this customer base was strong in 2008, many are concerned that as economic turmoil spreads to the rest of the world, fewer visitors will be coming to the U.S. in 2009. Keep an eye on the customers coming in and gauge how tourism compares in your region from the previous year.
As OPENForum.com culinary advisor, Dick Williams provides guidance and expertise to American Express OPEN, the small business division of American Express.
For more expert tips, including how to manage a resilient business in today's economy and effective marketing strategies for restaurant owners, log on to OPENForum at www.openforum.com/culinary