Revenue drives business practices. That never changes.
The future is unpredictable. The presence of COVID-19 and its variants these last couple of years has certainly shown us that. However, it is still key—perhaps even more essential than ever before due to economic uncertainty—for restaurants to establish new financial goals that can help carry them into a lucrative future.
It's time to take lessons learned from the past and apply actionable insights toward future goals. Here's why the modern economy mandates that you set new goals, as well as tips for how you can go about establishing them in your restaurant.
Why now is the time to set new financial goals
The changes wrought by the COVID-19 pandemic on the restaurant industry were monumental. No one could have predicted the massive wave of layoffs, resignations, and closed businesses that followed on the heels of the global virus. Now, even though the economy is turning around, it's important to assess these damages and how they've altered the landscape.
Let's start with some astounding statistics showing us what happened across 2020 and into 2021:
- Sales were $240 billion below pre-pandemic estimates.
- 110,000 restaurants closed at least temporarily, some for good.
- 40 percent of operators added tech to business practices.
- Staffing levels are reported to be 20 percent below normal.
- Employment across the industry fell by 2.5 million jobs.
Facing an environment like this, restaurateurs have pivoted in their operations, menus, and organizational structure. We’ve seen a mass transition to tech-supported, delivery and quick-service models. Restaurants have had to support both their customers and a workforce that now operates on the frontlines of a public health crisis. Guaranteeing food and worker safety in such an environment while balancing the books requires that you implement practical and reasonable goals.
But how do you know what these goals should be?
How to establish new goals for your restaurant
Every restaurant’s business model, resources, and owner aspirations will differ. In one way, however, just about every restaurant is the same: revenue drives business practices. In a pandemic economy, though, this doesn’t mean what it used to mean. Demand is down even if the desire is there. People just don’t want to take the risk of going out as much anymore, not when health and financial security is on the line.
So what does healthy business growth look like in this environment? And how can you establish goals that make sense for you?
The following are strategies for measuring and striving for ideal growth in a pandemic economy:
Align innovation with your aspirations.
First, you’ll want to approach your financial goals in terms of what you want your restaurant to be. What do you want it to mean for your customers? What kind of services do you want to offer?
If bringing your customers convenience is important to you, then you’ll want to align investment budgeting with integrating new methods for service. This could mean integrating a new mobile app or delivery service. Alternatively, making changes to your dining area to support social distancing could come with its own costs but might align better with the experience you want to offer.
Determine what your ideal situation is, understand necessary compromises, then align your aspirations with your investment strategy. Your return on investment (ROI) will depend on the nature of the innovation. A marketing investment, for instance, should net you a 5:1 revenue-to-cost ratio if handled well.
Analyze customer feedback and data.
The next best method for establishing new financial goals is to analyze your customer data and feedback and let it inform what you want from your restaurant. Growth is only possible from this kind of analysis, allowing you to assess your strengths and weaknesses and more on with actionable ways to improve.
Use all the digital platforms at your disposal—from social media to reservation apps—to better understand your customer base, their wants, and the messaging they respond to. In fact, consistent growth and revenue are entirely dependent on your ability to communicate with and cater to your audience, so start by revamping your customer service approach.
Look for new revenue streams.
In the course of your analysis, you’ll undoubtedly run into interesting data involving niche markets, unexpected growth categories, customer behavior trends, and more. In the midst of all this, you can look for new ways you might be able to bring in money for your business.
Popeyes is one example of a restaurant chain that leveraged good marketing, a niche menu item, and customer behavior to draw out $400,000 in added sales per restaurant. You, too, can leverage insights like these to build new revenue streams. From there, you can set goals for breaking into new markets.
Use the SMART method.
When setting any kind of financial goal, the SMART method is useful. SMART represents a goal that is:
All these descriptors should apply to the goals you establish for your restaurant. For example, a goal of more revenue is not measurable or specific, even if it is attainable. A goal of at least 4% higher gross revenue in 2022, however, is all of the above.
Set SMART goals that provide a clear framework for gauging success through specificity.
Consult a financial professional.
Finally, setting effective financial goals for your restaurant will take a consultation with financial professionals. You can’t expect to manage all your data and investment decisions on your own, and experts are out there to help you set clear and attainable thresholds for your restaurant budget.
Explore the range of experts open to you. Accountants, for instance, can help you bookkeep and audit to produce a set of realistic business goals. Meanwhile, a finance expert assists companies in navigating cash flows. Consulting with these pros and assembling a team will help ensure you establish the right goals for your business.
Securing a financially successful future
By following these tips, any restaurateur can reevaluate what they want from their operation as they navigate it through the pandemic marketplace. Guest experiences and expectations aren’t quite the same as they were. To thrive in the new normal, apply data, feedback, expert help, and more as you establish goals for winning the future of dining.
Jori Hamilton is an experienced writer from the Northwestern U.S. She covers a wide range of topics and, because she spent over six years in the restaurant business before writing full-time, takes a particular interest in covering topics related to the food and beverage industry. To learn more about Jori, you can follow her on Twitter.