Navigating the Storm: Strategies for Independent Restaurants Amidst Inflation and Labor Challenges

Today’s Restaurant Industry Landscape

After a difficult few years facing pandemic-related issues with restaurant labor costs, supply chains, inflation, and changing customer habits, many large restaurant chains, especially QSRs, have bounced back successfully. However, smaller independent restaurants in the full service sector are still facing a tough path forward. 

While the National Restaurant Association forecasts the US restaurant industry to hit a record $1.1 trillion in 2024, a recent Wall Street Journal article highlights that much of that increase is driven by large fast food and QSR chains, which grew at twice the rate of the full service sector from 2019-2023. 

There are a number of reasons for this lag in growth, but for one, after the pandemic forced many operations to cut back on labor, the full service sector has been slower to restaff compared to QSRs, while efforts to attract and retain employees are adding to overall labor costs. 

On top of that, general inflation of food costs and the added expense of to-go packaging as a result of the overall increase in takeout orders are bogging down restaurants. Many have been forced to raise their prices, reengineer their menus, and cut other costs wherever they can, which can unfortunately drive some customers away. 

Larger fast food and QSR chains, on the other hand, have filled positions back to pre-pandemic levels. Those brands are also able to make larger investments in tech and employee retention while taking advantage of economies of scale to negotiate volume food costs.

How Tech Can Help Weather the Storm 

That said, it’s not all doom and gloom for independent full service restaurants – with the right strategies and the power of technology, these establishments can not only survive but also thrive amidst the challenges outlined above. And in the ever-expanding restaurant tech space, there are now more options than ever to help streamline operations and set brands up for success. 

Order Technology:

Order technology, such as CardFree’s Ordering solutions, can significantly reduce restaurant labor costs associated with traditional order-taking processes. 

• Streamlined Order Ahead: By enabling customers to place orders in advance through mobile apps or web platforms, restaurants can minimize the need for additional staff to take orders over the phone or in person. This frees up existing staff to focus on other tasks, such as food preparation and customer service.
• Labor Savings with Self-Service Technology: Implementing self-service Order@Table technology eliminates the need for additional waitstaff to take orders manually. Customers can browse the menu, place their orders, and settle their bills directly from their phones. This effectively reduces reliance on traditional table service while minimizing labor costs associated with waitstaff. This not only streamlines operations and improves efficiency but also allows restaurants to reallocate staff to other areas of the business where their presence is needed most. Additionally, self-service technology empowers customers to control their dining experience, leading to higher satisfaction levels and increased loyalty.
• Reduced Wait Times: With online order technology, orders are transmitted directly to the kitchen or POS system, eliminating the need for manual order entry. This results in faster order processing and shorter wait times for customers, reducing the need for additional staff during peak hours.
• Optimized Staffing Levels: By analyzing order volume and patterns, restaurants can better forecast demand and adjust staffing levels accordingly. This prevents overstaffing during slow periods and understaffing during busy times, helping to minimize restaurant labor costs while ensuring optimal service levels.

Pay Technology:

Integrated pay technology, like CardFree’s Pay@Table solution, can help independent restaurants streamline payment processes and reduce reliance on staff for transaction processing. 

• Contactless Payments: Pay@Table technology enables customers to settle their bills directly from their phones or a tablet or EMV device dropped at the table, reducing the need for staff to handle cash or credit cards. Payments and bill splits can be completed in seconds, eliminating the song and dance where customers flag down a waiter, give them their card, and then wait for the transaction to be processed. Self-service pay not only speeds up the payment process but also minimizes the risk of errors and fraud associated with manual transaction processing. 
• Faster Table Turnover: With pay technology, customers can pay their bills quickly and conveniently, allowing restaurants to turn tables faster and serve more customers with the same staffing levels. This maximizes revenue potential during peak dining hours and reduces the need for additional staff to handle increased demand.
• Reduced Administrative Tasks: By automating payment processing and reconciliation tasks, mobile pay technology reduces the administrative burden on staff, freeing them up to focus on more value-added tasks.

Loyalty Technology:

Loyalty technology, although more traditionally associated with QSRs rather than FSRs, can help any type of restaurant attract and retain customers. 

• Automated Marketing Campaigns: Loyalty technology allows restaurants to automate marketing campaigns and communications, reducing the need for more hands-on marketing efforts. Automated emails, geolocation-enabled push notifications, and SMS messages can be sent to loyalty program members based on their preferences and purchase history, driving repeat business and customer engagement without requiring additional staff resources.
• Customer Insights and Personalization: By capturing and analyzing customer data, loyalty technology provides valuable insights into customer preferences, behavior, and spending patterns. This enables restaurants to personalize marketing efforts and promotions, increasing their effectiveness and reducing the need for broad-based, labor-intensive marketing campaigns.
• Enhanced Customer Engagement: To counteract drops in visit frequency, brands can use loyalty tech to engage more deeply with their best customers. By offering additional benefits like subscription programs (see Lazy Dog’s Beer Club), operations can foster more meaningful long-term relationships with customers, gleaning more lifetime value while reducing reliance on more labor-intensive customer acquisition strategies. 

Wrapping It Up:

In the face of daunting challenges such as rising labor costs, inflation, and shifting consumer habits, independent full-service restaurants have struggled to keep pace with their larger counterparts. However, with the right strategies and leveraging the power of technology, there is a path forward for these establishments to find success in today’s competitive landscape. 

By embracing order, pay, and loyalty technology solutions, independent restaurants can streamline operations, reduce restaurant labor costs, and enhance customer satisfaction. Implementing self-service order and pay at the table technology can also help restaurants minimize the need for additional staff, optimize table turnover, and empower customers to control their dining experience. Additionally, loyalty technology enables restaurants to automate marketing campaigns and foster long-term customer relationships. With these tools at their disposal, independent restaurants have the opportunity to overcome current challenges and emerge stronger than ever.