The past 18 months have spurred unprecedented changes in how restaurant operators run their businesses, forcing many to rethink their long-established business models. Rising wages, worker shortages, product shortages and price hikes, and increasing demands for convenience are just a few of the changes that are likely to be permanent, or at least long lasting. The ‘new normal’ is a constantly moving target and running a group of restaurants will never be the same.
With the ability to increase menu prices limited by competition and customer sensitivities, and the difficulty of cutting costs without sacrificing quality and service, have left operators scrambling for answers. One of the only areas where more efficiencies may exist is how restaurant owners support their operations and managers.
Traditionally, restaurant group owners have established small offices once they grow to a few locations. Once the number of locations exceeds 10 restaurants, a more formal “support center” is often opened to house a few key accounting and ops support employees, almost always promoted from the ranks of their restaurant employees, with an HR, marketing or IT person eventually added to the mix. As chains grew, so did these support teams to the level where large chains might have 1,000 employees or more working from a single office building.
This approach is worth re-examining in today’s environment. If the pandemic taught us anything, it is that you can operate a business with employees working from home or remote locations. Meetings that leaders once were thought had to be in person now regularly take place on Zoom or other online platforms. The move to cloud technology coupled with other technological advances now allow us to securely conduct business from anywhere.
With margin pressures greater than ever, the back office may be the only area of the business where multi-unit restaurant organizations may find new efficiencies. At FTR Hospitality, we’ve facilitated this with several clients.
One of our first examples was in California, the state with the highest regulatory, labor and overall operating costs. Within the first year of our engagement, the client closed their support center completely, saving nearly $500,000 in annual rent, utility and tax costs related to the office space itself. Utilizing rented shared meeting space facilities and the restaurants themselves, they didn’t miss a beat when it came to training, manager, marketing and other group meetings. By turning management of its accounting and IT functions to FTR employees with greater expertise than their previous former restaurant employees, additional savings were realized through streamlined processes and IT enhancements. New sales opportunities were also captured now that the group had an experienced partner to help pinpoint and implement new software and technologies to support efficient delivery and takeout sales.
Every organization is different, and something certainly may be lost with less day-to-day interactions between support center team members. However, it is worth considering what may be gained in tapping greater expertise and taking better advantage of new technology. After all, a restaurant group’s true culture begins in each restaurant, not in an office, and engaging support employees who do not work directly in the restaurants does not require a physical space.
As the economy recovers and the impact of the pandemic, hopefully, wanes, restaurant owners will continue to face tough challenges in what has always been a demanding, low-margin business. Everything should be on the table as operators rethink the business model that will best allow them to adapt and grow.