Navigating the Labor & Supply Chain Shortage: How to Rethink Your Restaurant Franchise Operation
During the pandemic, restaurants did the proverbial “pivot” out of necessity to survive, from navigating lockdowns to implementing new health and safety protocols to following mask mandates. The constant disruption and current societal landscape has been difficult for restaurant leaders. Staff recruiting and retention challenges, coupled with supply chain issues that have made it problematic to receive materials and ingredients made restaurant operations even more challenging.
Before franchise restaurants race to change their brands to meet these growing needs, leaders should take pause to look at the franchise inside out, rethink all aspects of the model and make the necessary decisions to address labor and supply chain shortages – and, in doing so, improve efficiencies and simplify operations to strengthen unit economics.
Below are ways leaders can rethink the restaurant franchise model to help employees stay engaged, happy and thriving, and the front and back-end operations efficient for delivering the brand experience to customers without disruption – all with the goal of reflecting positive sales impact.
Focus on your profitable daypart and own it
Restaurant leaders should have an honest look at the franchise business model to scrub the profit and loss statement to determine which dayparts are driving revenue, and which are not. Be bold in a decision to eliminate poor-performing dayparts.
While this may seem drastic, having staff sitting around waiting for customers to walk through the doors is wasted overheard that can ultimately hurt the bottom line. It also creates an unattractive environment to potential employees seeking a thriving atmosphere full of energy that would make them feel happy and fulfilled.
For example, if breakfast is the most profitable daypart, ask yourself, “Is dinner moving the needle? Is it causing more stress on staff and operational costs than it’s worth?” After thinking that through, you might want to consider eliminating the evening daypart. Then, go all-in on breakfast and lunch with increased focus of menu and drink offerings, atmosphere and ambiance, staffing experience and profitability and ease of operations – make it an even more profitable daypart. Consider creating a “brain trust” comprised of leadership and longtime GMs, and together visualize a successful refocusing on the most profitable aspects of your brand.
Show staff value and give time
In today’s competitive employee marketplace, remaining competitive for talent has never been more vital to a restaurant’s survival. Use the pause to align the team, and build around your strongest staff leaders. Be a place for people to develop and become managers, and promote from within to show investment in staff development.
Find ways to constantly create value beyond enhancing employee benefits and competitive wages, such as offering programs to help meet your staff’s needs or adding sophisticated technology to make the guest experience frictionless while also supporting their job performance and responsibilities.
One “big” move to consider to improve employee morale and boost retention is to consider eliminating your least profitable day of the week. While this sounds like a drastic step, this can go a long way in employee satisfaction by removing the unpredictability of time-off in an industry with constantly changing schedules. A brand-wide locked-in day off allows your team to schedule appointments in advance, make plans with friends and family or simply have that time to recharge. Giving the time needed to plan for personal affairs would address feelings of being overstretched or overworked felt by staff in any workplace landscape. Prioritizing the staff’s work and life balance would be a unique, culture differentiator that would be attractive to new and current employees.
Refine menu and let local lead
Due to the pandemic, restaurants learned how to scale back items and be quick and agile to operate more efficiently. Now, with supply chain issues, restaurants are having to circle back and rely on that knowledge for how to operate their menus in a smaller capacity.
Start by re-evaluating the menu with a profitability lens and make decisions to cut it down accordingly. Shave off dishes that require the most extra steps and those with ingredients not applied across other menu items. Even consider eliminating unnecessary core ingredients – even if that means you have to tell guests you had to tweak the recipe of a favorite, core menu dish. In addition, now is not the time to source new ingredients or rollout seasonal or quarterly menus. The uncertainty of the availability of new ingredients may create unnecessary strain on front and back-end staff and overall restaurant operations – not to mention lead to guest frustration.
Rely on the flexibility, creativity and tenacity of local restaurant teams – provide confidence and direction to have them do what they have to do in order to continue delivering great guest experiences on a consistent basis. Whether that’s sourcing the bulk of kitchen food items from local suppliers or being resourceful with key ingredients that can be used for a number of specialty menu favorites, empower local teams to find solutions knowing each market is different and they know the resources available.
The reality is there doesn’t appear to be any indication that staff and supply chain shortages will end anytime soon. With that in mind, now is the time to take a step back to evaluate your dayparts to determine revenue impact on staff and operations, uncover new ways to provide value to staff and remain an employer of choice. It’s also an ideal time to refine your menu with the mutual support of your team to keep the guest dining experience as uninterrupted as possible. Restaurant leaders following these strategies can build stronger, longer-lasting teams and a nimbler organization able to deal with labor and supply limitations – with the end result of improved unit economics.
Bob Ray has been with Margaritas Mexican Restaurants since 1992. He progressed through multiple roles including Director of Food and Beverage, VP of New Restaurant openings, VP of operations and Director of Human Resources. In the spring of 2020, Mr. Ray became an owner and board member assuming the role of Chief Operating Officer.