November 7, 2022

What can Restaurant Industry Professionals Expect during the Recession?

By TopUp Mama

The probability of a recession is undeniable now more than ever. Items cost way higher and stocks are dropping at a fast rate. What does this mean for businesses in the hospitality industry?

If the COVID pandemic showed us anything, it is that the opportunities for disruption present themselves at times when businesses are at their lowest. So many restaurants thrived during the pandemic, an indicator that the industry always finds a way to pull through even at the worst of times. Food and commodities prices are already being hit hard. Restaurants need to have real-time information on rising food costs and the implications on the restaurant’s bottom line at this crucial time. 

Pros of a Recession 

  1. As businesses focus on spending less cash, they rush to find cash-saving options, thus enforcing smart choices on purchases, management, and general operations decisions.
  2. With a recession comes layoffs owing to less job security as companies cut costs left right and center. This is a great time for hospitality businesses to scout the best talent in the market as there is a great supply of quality workers. 
  3. A recession encourages innovation. It breeds a necessity for change; thus business managers are expected to find disruptive initiatives that will keep them on top of the consumer’s mind. This includes but is not limited to opting for technology and systems, switching up menus, etc. 

Cons of a Recession 

When normal operations are disrupted, the organization is bound to be affected either by getting overwhelmed and underperforming or planning for more but only achieving little returns due to lower customer turnout thus leading to wastage 

  1. Changes in various supplier performance; either by the inability to fulfill demand due to item shortages or delayed deliveries. Sometimes suppliers are completely unable to fulfill orders. 
  2. While planning helps in advance, it isn’t accurate to plan for demand due to consumer uncertainty as the behavior doesn't always remain the same over time.

How can procurement managers stay ahead of the effects of the recession and ensure a stable business continues to thrive in difficult economic times? The biggest threat from the recession is the minimized cash flow leading to fluctuating prices for essential commodities. Below are the top three ways procurement professionals and business managers can help businesses manage costs and improve efficiency with fewer resources.

  1. Centralized purchasing. Making bulk purchases from one supplier is a brilliant way to save cost and time, build better relationships with your supplier and benefit from offers and discounts.  
  2. Investing in restaurant technology. Integrating technology and systems into their day-to-day operations makes work easier, and reduces the manual workload thus saving time and money.  
  3. Data-led Decision Making. Relying on data to inform your various business decisions sets your business up for success because you’re always prepared regardless of the situation. 

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