By Liz Teordini
If you are a professional in Canada’s restaurant and foodservice industry, chances are you’ve got a lot on your mind. While the myriad, everyday worries of running a restaurant are as diverse as the restaurateurs dealing with them, a recent study found that three concerns in particular, sustaining growth, maintaining cash flow and keeping up with technology, tend to be top-of-mind for almost everyone.
The study was commissioned by Canadian financial services company iCapital, which enlisted the services of Toronto-based Hop Skip Marketing and market survey company Asking Canadians. It targeted small business owners or operators and received 160 responses from across various industries and in every province except Quebec, with the majority of respondents from Ontario (50 per cent), British Columbia (22 per cent), and Alberta (12 per cent).
Challenge #1: Sustaining growth during long periods of low sales
Every industry has its ups and downs, and no business is immune to them, but restaurant owners operate in a notoriously fickle niche. Periods of low sales, especially long ones, can be extremely stressful and damaging for restaurant operators, with 41 per cent of respondents reporting it to be the largest challenge for their business.
You can’t eliminate the natural ebb and flow of sales, but there are steps you can take to even them out. Having a solid sales and marketing strategy is key. Unfortunately, 74 per cent of Canadian small businesses don’t have a dedicated sales employee, while 87 per cent don’t have a marketing employee. Even if you can’t justify full-time help in these areas, it pays to employ experts to create an effective digital presence. Restaurant owners can focus on improving their social media presence and online review management. It’s a lower-cost approach with instant, targeted reach, and it’s the very best way to attract Millennial and Gen Z consumers.
Challenge #2: Maintaining cash flow
Cash flow refers to the money coming in and going out of your business, and maintaining it is a major challenge for restaurant owners, with 29 per cent reporting cash flow management as their top challenge.
In 2019, menu prices are expected to rise as 3.1 per cent as owners seek to compensate for rising labour costs, staff recruitment, and retention expenditures. Menu innovation is also a priority for some restaurant owners. These expenses and more will all require access to capital.
Handling cash flow isn’t complicated but it can be time-consuming. In general, cash flow tasks fall into four categories: monitoring cash flow, generating income, cutting costs and planning ahead.
The first point should be self evident. You can’t manage your cash flow if you have no idea what your financial picture is. Use accounting software and set aside time regularly to check in on your accounts.
Generating income is more complicated. Think about all the ways you can bring money in — it doesn’t just have to be sale.. Keep your inventory low, sell off unused equipment and think about increasing your customer base. It may make sense to focus on younger demographics, for examples, and adventurous eaters looking for new foods from around the world. It’s also important to acknowledge and cater to the increasing number of “food tribes” like vegans, keto, flexitarians and others.
Every business has expenses but cutting costs can reduce stress and increase cash flow by making sure you’re only paying for what you need. Try cutting costs on bills or equipment and leasing equipment instead of buying it.
Planning ahead is critical and nuanced. Understand that there will be times when cash flow slows down and plan for it. Put away money for eventualities. Apply for a business line of credit and get a business credit card. Having these in hand gives you options when you need them.
Challenge #3: Keeping up with technology and innovation
Small business owners have so much to manage that new technologies and innovations tend to rest on the back-burner, despite the fact that slightly more than half of respondents have a concern about new tech and innovation.
For restaurant owners, new tech is a fact of life. Every aspect of the business has a tech component. Just think of online ordering, point-of-sale systems and online restaurant reviews. In the whirlwind of running a small business, it’s easy to let innovations pass you by, but that can only end one way: with you and your business behind the curve. If you’re going to remain competitive, you’ll have to stay up-to-date with technology and innovation in your sector. The good news is this can be as easy as joining relevant online groups or subscribing to newsletters, or you can get even more hands-on and attend industry events and conferences. Whatever you decide on, make sure you stay engaged.
Canadian restaurant owners have a lot to handle with sales, cash flow, and emerging tech and innovation topping the list. The good news in all these cases is that strategies exist. Whether you choose to take on these challenges yourself or hire help, there are ways to make sure your restaurant remains top-of-mind, relevant, and solvent.
Liz Teodorini is Marketing Director at iCapital, a financing program that funds hundreds of restaurants and other small businesses across Canada. The company is committed to being Canada’s most caring and responsive loan-alternative provider. They frequently publish articles relating to small business finance.