Mitigating risk and surviving in the F&B industry can be challenging, especially in the current economic crisis. Many restaurant businesses are still trying to recover from the effects of the COVID-19 outbreak, and the ongoing Russo-Ukrainian War isn’t making it any easier.
But not all hope is lost yet. As an F&B organization, you still have a solid chance of skipping the economic disruptions by adapting your restaurant business to the current consumer needs, logistical and operational challenges, customer behavior trends, and increasing costs.
The Economic Challenges That Face the F&B Industry
Currently, two major economic obstacles affect the F&B sector:
The COVID-19 Pandemic
The global pandemic that hit the world in late 2019 wasn’t so kind to many industries, with the F&B industry being the most affected one.
From enforced closures and reduced opening hours to revenue loss and supply shortages, the COVID-19 outbreak resulted in complete business failure for thousands of companies in the F&B industry.
Based on a recent report, the pandemic set back restaurant sales by up to 6 years. Another report estimated that 57% of businesses in the F&B industry think the pandemic is the most significant risk to their supply chain.
Conversely, the pandemic has presented several opportunities for growth based on shifts in consumer behavior and preferences. For example, due to hygiene concerns, lots of consumers now prefer to order food online or use in-store pickup services.
The global health crisis has also resulted in various diet trends, such as plant-based, additive and preservative-free foods.
The Russo-Ukrainian War
The Russo-Ukrainian War caused major shortages. in essential goods such as wheat, sunflower seed oil, and corn, forcing businesses in the F&B industry to raise their prices and look for alternative ways to source their materials. It also increased food prices, affecting both businesses and consumers.
Top 11 Hacks to Survive the Economic Crisis That Hit the F&B Industry
If you’re having a hard time supporting your F&B business during the economic crisis, these tried and tested techniques should help you minimize your losses, maintain your customer base, and reach new audiences.
1. Increase Brand Awareness
Boosting brand awareness and building a relationship with your customers will remind them that you’re there during unusual events. The best approach here is to emphasize brand consolidation.
For example, during the pandemic, lots of restaurants combined their promotions with relevant pandemic messaging, like “I stay home”, while also focusing on providing high-quality at-home experiences for their customers.
2. Maintain a Cash Reserve and Reduce Your Debt
Settling your debt and maintaining a consistent cash reserve are key steps to surviving an economic crisis.
List down your current expenses and discuss the possibility of letting some of them go with your teams. Of course, you still need to maintain an exceptional customer experience, so only eliminate the expenses that won’t directly affect your customers.
Also, when revenue goes down, you’d want to use your cash reserve to cover your monthly expenses, not pay debt installments. The sooner you settle your debts, the stronger your position will be during a recession.
3. Minimize Waste and Excess Inventory
Unnecessarily stocking up on materials can severely hurt your F&B organization’s finances, and in an economic crisis, things get even worse. Ideally, you’d want to manage your inventory levels based on realistic, data-driven demand forecasts.
Optimizing your inventory will help you reduce waste, spend less on warehousing, and minimize the loss in unexpected situations.
4. Create Virtual Experiences for Your Customers
Developing virtual content for your customers can significantly compensate for the inaccessibility caused by the pandemic. Virtual events, cooking lessons, user-generated content, and tutorials are all great ways to engage your customers online during trying times.
5. Offer More Discounts and Promotions
Customers love discounts and promotions. A simple price cut can help you acquire more customers, even if it requires an initial investment. This is largely due to the economic crisis that caused a shift in consumer habits.
Since customers are leaning more towards saving and reducing consumption, discount codes can help you increase online sales. Couples, families, or even people that can’t have their meals without some ice cream or a soft drink would also appreciate promotions that provide more value.
6. Offload Your Expansion Strategy to a Cloud Kitchen Provider
Entering new markets during an economic crisis can be challenging and risky. From leasing commercial properties and resource planning to kitchen operations and sales reporting, growing your restaurant business can take a heavy toll on your finances.
Even if you manage to get things up and running, the future of your brand’s presence in the market is more uncertain than ever in the current economic disruptions.
The solution resides in two words: Cloud Kitchens. Cloud Kitchens (also called Ghost Kitchens) allow you to grow your business and expand into new markets, minus the overhead costs and the long time to launch. A Cloud Kitchen solution, like Brito, is an innovative shortcut that will help you reach new audiences quickly while keeping costs under control.
In scenarios such as pandemics, global recessions, political unrest, and natural disasters, your operation risk with a cloud kitchen is non-existent since you can simply put everything on hold without inflicting any overhead expenses.
7. Leverage Technology
Integrating cutting-edge technology into your existing systems can be a great way to make your F&B business stand out.
One way to increase sales in the post-pandemic era is to invest in self-service kiosks. These kiosks are fast and deliver a great customer experience. For example, BurgerFi has reported a whopping 18.5% increase in check size for orders processed through devices.
8. Provide an Efficient and Affordable Takeout Service
More and more people are downloading food delivery apps and shopping for food online. Customers who preferred dining in became more likely to opt for delivery or in-store pickup services to enjoy their favorite meal in the comfort of their homes.
You can optimize your customers’ digital food ordering experience by:
Offering high-quality in-store pickup and home delivery services
Creating menus focused on home eating experiences
Launching a dedicated takeout app
Using existing delivery apps to reach a wider audience
9. Communicate Your Hygiene and Safety Measures
The global pandemic of 2019 has made consumers more concerned about food safety and hygiene.
Implementing strict food safety and hygiene procedures can drastically increase customers’ trust in your brand. However, communicating these measures with your customers isn’t any less important.
10. Offer Plant-Based Food Options
The COVID-19 pandemic has triggered a shift in consumer eating preferences. Forced lockdowns and a decline in productivity allowed people to explore new foods, with plant-based alternatives taking the lead.
According to recent research, plant-based meat sales have increased by 23% in the U.S. The motives behind the increasing popularity of plant-based foods are health and taste. Other prominent factors include climate change, animal-based food and lactose intolerance, and animal abuse.
11. Localize Your Supply Chain
Many F&B organizations started looking for local ingredient alternatives to serve their kitchens amidst the supply chain disruptions caused by the Russo-Ukrainian War and the pandemic.
Localizing your supply chain, to some extent at least, is less risky and more cost-efficient than relying on overseas suppliers. Your restaurant operations are less likely to be affected due to supply chain issues if you focus on shifting to local suppliers.
Our Two Cents
To recap, cutting costs, digitizing your customer experience, and carefully expanding into new markets are great ways to get your restaurant business back on its feet in the economic crisis.
Many of the risks in the F&B industry can be minimized or even eliminated with cloud kitchen solutions. Opting for a cloud kitchen service is the fastest, cheapest, and least risky way to reach wider audiences in your target markets.
At Brito Cloud Kitchens, we take care of the whole life cycle of your restaurant business, from order processing orders, and kitchen operations, all the way to delivering them to your customers and analyzing your sales performance. Fill out this form now to let us know how we can help you!