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10 Challenges Restaurants Face and How To Solve Them
10 Challenges Restaurants Face and How To Solve Them
10 Challenges Restaurants Face and How To Solve Them
Shikha Samant
Table of Contents
In today's pandemic era, the survival of the restaurant industry is dependent on its digital advancements. Due to
Covid-19, people hardly come into restaurants, and most food is now delivery-based and app-based. For
restaurants to thrive digitally, a robust and integrated management system is a must.
Before we get into the details of an integrated management system such as Deskera, let us look into every
restaurant business owner's challenges daily.
Restaurants have multiple challenges that they face every day when they run a business. From demand
forecasting to inventory management, order management, to customer management, a restaurant has many
bases to cover. As demand increases and there are higher chances of scalability, the challenges increase. The
best way for restaurant owners to make their workflow easier would be to have an end-to-end management
system set up.
10 Challenges of a Restaurant Business
Other than demand and inventory-based challenges, owners need to go through the basic process of hiring the
right people with the right skills. They also need to look into labor and time management. As a restaurant
business owner, running a business becomes a full-time job and a lifestyle. It can quickly become
overwhelming to handle multiple challenges.
Let us look at some of the challenges faced by restaurant owners and how to manage these the best way
possible:
#1 Stock & Inventory Wastage
The biggest challenge for restaurant owners is uncontrolled stock wastage. A restaurant's inventory
management involves several moving pieces. There are always constant changes in inventory.
Ingredients and raw materials - significant expenses in the restaurant business - have a short shelf-life. Even the
smallest mismanagement can burn a hole in the owner's pocket. Ingredient costs are a restaurant's most
significant expenses, and managing inventory accurately can be difficult.
Without correct information, inventory management, location of goods, the expiration date of ingredients,
businesses, receiving date, etc. is hard to be tracked.
This lack of insights results in a lack of proper planning, ad hoc purchases, and a lot of kitchen wastage.
Because of manual data collection methods, there is a lot of misinformation, inventory loss, and manual
recounts, all of which are cost and time-intensive.
Hence, many restaurants use inventory management software, which covers the inventory process from end to
end, from counting and transferring to invoicing and ordering. Certain inventory parts can't be automated;
however, they can be streamlined through template inventory sheets. Many other time-consuming elements of
inventory can be automated, like tracking ingredient costs and creating journal entries.
Managing an accurate inventory is essential for a healthy bottom line. Tools based on inventory, like suggested
purchasing amounts, smart ordering or smart receiving, cost tracking of vendor ingredients, help maintain
the profit margin of individual menu items.
#2 Demand Forecasting
Partial or no record of accurate stock levels at the right time can cost the company and impact its revenue.
Accurate demand forecasts of raw materials and ingredients can save these businesses their input costs. Over-
ordering, over-portioning, and food waste not tracked during recipe creation and execution all contribute to loss
in revenue.
For example:
During festivals, restaurants and food outlets need to prepare for the surge in consumer demands. Many
restaurant owners feel the need for software or an application that can share an outlook on seasonal demand and
market trends, entailing timely notifications on low stock levels. Business owners can monitor and track the
most popular items and the least popular items across all menus. Understanding the relative popularity or
demand of menu items and plotting this against their profitability can reveal places where cost savings can be
made.
To better calculate a restaurant's purchasing needs, business owners need to deploy technology that tracks and
analyzes purchasing data in correlation with its sales. Equipped with these insights, restaurateurs can accurately
forecast a restaurant's stocking needs with a low percentage of error.
#3 Stock Theft
Stock theft is a harsh reality in the restaurant business. Employee theft accounts for billions of dollars in losses
for restaurant owners each year. That’s why it’s so important to make identifying and preventing internal theft a
priority in your business plan.
According to a survey by a restaurant association, internal employee theft is responsible for 75 percent of
inventory shortages and about 4 percent of restaurant sales.
No matter how well you think you know your employees, you need to be aware of how prevalent employee
theft is in restaurants. Recognizing the signs is important; having tools in place to prevent theft is even better.
#4 Managing Stock in Multiple Branches
Many franchise restaurants have outlets in different locations or can have multiple warehouses. Often, these
branches are not in sync with each other. It is easy to overlook issues arising at warehouses other than the
primary one you are focusing on or the nearest one.
For instance, there may be surplus milk in one branch while a shortage in another. Due to a lack of alignment
and coordination, one branch spends money buying the milk while the other branch wastes it. Non-
communication among each other affects the overall budget of the restaurants.
An easy way of staying on top of stock levels and ensuring multiple branches hold enough products to meet
restaurant demands is to keep readjusting your reorder points as frequently as possible. Issues are bound to
happen, and issues will arise at an exponential rate unless you have reliable multi-warehouse management
software.
#5 Supplier Management
The success of each and every restaurant depends on its ability to maintain a stable supply chain. Supplier
management is the process that makes sure that the maximum value is received for the money that your
restaurant pays to its product and ingredient suppliers. Since supplies play a part in the smooth running of your
restaurant business, it is important for both supplier and your business to engage properly and effectively.
Restaurants deal with multiple suppliers for kitchen items, utensils, furnishing materials like tablecloths,
napkins, and many more. Keeping a tab on reliable suppliers, the best pricing, and on-time delivery is a
cumbersome process. Keep track of your supplies using inventory management software.
#6 Calculating and Analyzing the Profitability of a Dish
Pricing a food item on a menu is a crucial step. It is a costly trial and error method. Without knowing the exact
amount of ingredients used and the demand of the dish, it is tough to calculate its profitability. Pre-costing the
menu means you determine the cost of producing every item on the menu under ideal conditions. The
assumption is that cooks will follow directions, the portions will be accurately measured, and all the portions
will be sold. The results are the optimum costs; in reality, costs could be higher.
Popular and profitable items are ones you want to maintain on your menu. Maintain the specifications of the
item rigidly. Do not change the quality of the product served. Feature the item in a prominent location on the
menu. You want to sell this item, so make sure that customers see it. If an item is popular but not profitable, you
want to see if you can increase the contribution margin without reducing its popularity.
#7 Employee Management
It is essential to hire people with the right skills for the job. It is also vital for you not to overlook soft skills that
translate into satisfying customer experiences. In the restaurant industry, employee management is quite a
complex task. Restaurant staff work in shifts.
If need be, they are also required to work overtime. Labor is the most valuable asset of a restaurant business
owners need to take care of their workforce. Labor shortage leads you to hold onto undependable staff rather
than firing them, or constantly over-schedule interviews to fill the minimum number of roles.
Many restaurant owners are beginning to focus on retention to address finding and training staff within a scarce
workforce.
Having an irregular and inappropriate staff shift may lead to under-utilization of the staff. When overworked,
employees may drain out all of their energies as well.
Employees work on a rotation basis, and most have a weekday off. Therefore, it is troublesome to track their
leaves, attendance, work hours, and overtime manually.Mismanagement ultimately reduces their overall
performance and hampers the restaurant's service. You can use an integrated software like Deskera People to
manage your employee.
#8 Payroll Management
As mentioned earlier, restaurant employees work in shifts. Most of them are contract employees.
On certain occasions like festivals, weekends, shortage of staff, they may have to work overtime. When
working manually, there are plenty of errors in such complex situations leading to employee dissatisfaction.
Using scheduling and people management software will make it easy for staff to customize their availability.
Using Deskera people software, employees can view their payroll, apply for time off, and file their claims and
expenses online. This will make sure that you don't stress out on managing your employees and focus instead on
training and retaining them.
#9 Bank Reconciliation
Restaurants and F&B outlets are dealing with hundreds of transactions each day. Therefore, real-time bank
reconciliations are crucial to identify any discrepancies. A restaurant accounting system that is integrated with
the POS system allows you to automate data entry in real-time. Financial transactions are automatically posted
in the sales journal, and labor data is aggregated in the system, facilitating data-driven scheduling.
It is impossible to catch fraud and cash manipulations if this integration is not done. Additionally, if this is not
done, it leaves you unaware of your actual cash flow, leading to bounced cheques and failed e-payments.
It can cost your business reputation, and you may face legal charges. Outcomes like these affect cash flow,
which can hurt the sustainability and future growth of the business.
#10 Customer Retention
The restaurant is a very competitive business, and retaining customers requires a lot of effort. To build lasting
relationships with customers, you need to be persistent in your approach. Giving a good and easy customer
experience is the first step. Next would be using social media to keep in touch and make them return to your
restaurant by keeping them informed of new dishes and celebrations. It is important to remember that returning
customers bring in a huge revenue to your business.
Without all the critical information of your customers, you cannot maintain regular touch with them. Using a
system integrated CRM software can help you keep in touch with your customers via emails. It can also help
you manage the booking and scheduling of your customers.
Integrated Restaurant Management Systems - The Solution To Your Problems
The solution to all these problems lies in the word digitization. Going digital can truly catalyze growth for the
restaurant business.
Adopting an integrated restaurant management system to digitize your entire process can be a game-changer in
your way of doing business.
So what is an integrated restaurant management system?
Integrated Restaurant Management system= Point of Sale (POS) software + Accounting, CRM & Employee
management
The good software management system is an integrated software suite that takes care of all your restaurant
business operations with ease right from the front end (POS) to your back end operations. An example of this
would be Deskera.
How Does the Restaurant Management System Function?
With an on-cloud integrated restaurant management system, you can automate and streamline your data and
centralize it.
Here, your POS system provides the relevant information such as sales, labor, and so on to your restaurant
management system.
The back-end restaurant management software uses this data to manage the inventory, menus, and other
operational and financial reporting.
To generate actionable insights for day-to-day operational decision-making, communication between your POS
system and restaurant management system must occur daily.
Here's how the digitization of processes with an all-in-one restaurant management system can catalyze the
growth of the restaurant business.