Threats To The Restaurant Industry

There can be no denying there are uncertainties and variables in the business world today and restaurants are not immune from those concerns. There have never been this many threats to the restaurant industry.

Threats to your livelihood in the food industry is a very real thing but surely forewarned is forearmed.

Whether starting up, or holding your established position in the market, it’s prudent that potential threats can be identified and dealt with in a positive and potentially even profitable way. Learning why restaurants fail in the first place can help ensure that your restaurant succeeds.

Restaurant Competition

There is always a risk to your viability as a restaurant if there is competition available that offers similar food types and service expectations in your area.

Large restaurant chains seem to strike fear in the hearts of those smaller family, or even niche restaurants, with the possibility over being literally overshadowed, rendering some jettisoned from the industry altogether.

Profit margins will almost always be thin on the ground, that’s a given, but hiding from the realities is no defence.

One thing, however, remains a constant, if something is successful there will be others waiting in the wings to have their chance at cashing in and riding on the slipstream of that success.

There is room for all if we are aware of what can lead us to fall, and together with industry leaders, the restaurant and food service industry in general, will survive through it all with its loyal customers intact.

Low Wage Argument

Standards of living for restaurants and food service workers is a concern once again, as the argument for raising the minimum wage rages on.

From the perspective of the wage earner, they see their skills as being more than worthy of a minimum wage increase and argue that increases across the board can only benefit not only the workers and their personal circumstances, but their town’s economy.

Workers would simply have more disposable income.

On the other side of the coin is how any mandatory wage increases may affect the restaurant trade owners.

Perception of how you treat your people is a reality out there. The need to remain competitive by continuously keeping wages lower can seriously affect how a restaurant is viewed by its existing and potential patrons.

The last thing restaurant owners want to face is a backlash from the public over an appearance that they are exploiting workers for their own gain.

As far as the effect on your staff, no matter how invested you and your employees are, wage rises will generally equate to fewer benefits offered to employees.

Some owners will have no option but to cut hours, put a hold on hiring, and they will in turn, expect much more from existing staff.

It’s really is a double edged sword for owners; keep costs down to ensure a value for money dining experience, or raise costs, employ less people or even begin to lay people off.

Ultimately, any cost increases must be mitigated to ensure a healthy bottom line for all business, and wages will continue to be a sticking point now and in the future.

restaurant competition problems

Rise in Food Prices

Price uncertainties affect everyone within the food industry from the supplier and producer right through to the restaurant owners and ultimately the customer.

Many things affect food prices, including those of an environmental nature.

Drought, floods, shortage of species due to over-fishing of our oceans can threaten (and are today) the bottom line of many establishments, as the diners cease purchases of what is considered overpriced dining.

Climate change can be looked at as one of the main contributors as the elements dictate the viability and ultimate availability of crops. This combined with a population increasing rapidly can be seen as a direct threat to the cost of basic food pricing worldwide.

Wouldn’t it be great if the customers understand the cause of meal price increase? Unfortunately, often it’s the owners who cop the full brunt of the consumer anger and retaliation.

It is interesting, though, to see how consumers are dealing with the rising cost of food.

The Economic Rollercoaster

It’s not surprising that the restaurant industry shines when the economy is buoyant and tends to react on the negative side when it is contracting.

The industry is more volatile and vulnerable to changes in economic variance simply because consumers begin to tighten their belts.

In times of recession and notable economic downturn, restaurants and bars will find deterioration more noticeable that other food industry related industries, such as grocery stores, due to restaurant patronage being possibly considered as a luxury item.

Customer Choice

Fast food chains, while remaining highly lucrative still basically offer the same standard of food choices as they have always done.

With the average person’s increased knowledge and self-education of what they are consuming, the tendency to steer away from the unhealthier types of restaurant food can and will have significant financial result for some establishments.

As a result, the customer’s demand for healthier menu items, and subsequent refusal to pander to the status quo of takeaway food has led to a market willing to go to great lengths to satisfy diners by diversification and transparency of ingredients.

Who would have thought the humble burger joint would be now offering fruit, salads and lowered fat and sodium foods as alternatives.

Clearly, the people have spoken.

Being smart about how restaurant owners deal with the threats, current or potential is the way to go.

threats to restaurant competition

You may choose to be upfront with your customers about the threats you face as a business, informing your diners about price increases because of a genuine interest in environment or because you are proud of your use of locally sourced, economy sustaining produce that cost a bit more.

Who knows? Your spin on price increases may be a great marketing tool.

It really is prudent to consider whether these things could be opportunities in disguise.

People eat out for a number of reasons, not just because they are hungry. Customers come to you because they couldn’t be bothered cooking, they need to relax and de-stress, or they may need to conduct business in a suitable environment.

Tap into this, and you are on your way to remaining viable no matter what the potential hazards for the industry may be.

You are the best one to determine whether your restaurant can successfully wade through all that is faced in this extremely cyclic and ever-changing industry.

Is your restaurant facing tough competition? Find out how to attract more customers to your restaurant.

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