Last year, BDO launched a Restaurant Report based on a survey that examined many topics concerning restaurateurs including how owners can boost profitability, retain top talent, make bookkeeping more efficient, and improve the overall payroll process. We heard from restaurant owners that they face many challenges operating in such a low-margin business.
The latest statistics on household spending show that almost $2,600 are spent on food purchased from restaurants, which is an increase of more than 17% over four years. With more people eating out or ordering from restaurants, it seems that restaurants are doing well.
In reality, 2019 was a tough year for restaurants and we are seeing this trend continue into 2020. While the demand for meals prepared away from home increased, continued market pressures resulted in many restauranteurs struggling to operate with low food and beverage margins. Multiple factors influence profitability and operations: rising labour costs, increased competition, digital disruption, and evolving consumer trends.
- How does your restaurant compare with your competition or even within your own franchise or independent chain system?
- How is everyone faring concerning labour, financials, profitability and technological advancements?
- How is that affecting your operations and how do you compare to others?
Future Concerns and Trends
Rising labour costs could remain problematic for restaurant owners as the minimum wage is increasing again in some provinces. British Columbia and Nova Scotia are planning to raise the rate this year and next. Starting in 2020, the Ontario minimum wage rates may increase annually effective October 1 of each year. Other provinces plan to raise minimum wage rates as well.
Digital disruption will likely continue to be a hurdle. Food delivery apps such as Skip The Dishes, Uber Eats, DoorDash, and Foodora continue to grow in popularity. In response, restaurants have to devise strategies to meet both the online driven customer demands, while also maintaining first-class service for patrons who dine in. Then there are innovations in the overall restaurant experience such as in the way customers interact with service staff and submit their orders. Some restaurants have latched onto tablets, while across other touchscreens are being embedded into tables and booths.
Restaurant owners operate in an environment with many challenges including problems arising during day-to-day operations, delivering excellent guest experiences, attracting and retaining employees, managing cash flow, and staying on top of bookkeeping and payroll compliance. Restaurant owners have the same challenges, but also the added expense of franchise fees, royalties, and advertising fees. However, they often have the benefits of pre-existing brand recognition and an established customer base.
2020 Restaurant Report
We are excited to release the report again in 2020, but before that can happen we need to hear from restaurant owners and senior operators through our survey, which just launched. BDO wants to know more about restaurant owners’ primary concerns and issues affecting the industry. Are the past trends of digital disruption, shifting eating habits, and rising labour costs continuing to create hurdles?
Perhaps restauranteurs faced additional issues in 2019. We want to learn more about these issues and help devise solutions. It’s important for restauranteurs to be aware of current and emerging trends in order to stay ahead of the competition, but more importantly, to remain profitable.
While it is difficult to operate in an environment with razor-thin margins, there are approaches to improve operations and find efficiencies. Success is still possible for restaurant owners even if they’re struggling and BDO can help achieve it.
Through our survey, BDO can gather data on what is hampering restaurant owners and develop solutions to solve these problems.
Participate in our 2020 Restaurant Survey to share the top concerns facing restaurant owners.