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How can your restaurant or restaurant group find ways to grow in 2024?
Even with rising costs of labor and ingredients, the majority (80%) of restaurant owners feel more optimistic about their business today compared to a year ago, according to Square data. For many restaurant owners, growth is a top priority. An impressive 91% of restaurant owners surveyed in the Square Future of Restaurants report plan to expand their business. While expansion and increased sales are usually clear growth indicators, improving how your restaurant operates can inspire growth in other ways and indirectly increase sales. For example, adopting flexible scheduling tools can increase staff contentment and reduce turnover, while refining your reservation system to reduce wait times can boost customer satisfaction and repeat business.
If you need ideas on how to grow your restaurant business in 2024 and beyond, here are nine strategies you can implement that can set you up to increase sales, save time on administrative tasks, and cut costs.
1. Create new income channels.
One of the main ways restaurant owners plan to grow is by exploring new revenue opportunities. Ninety percent of owners intend to start up new revenue streams outside their core offerings. This is a marked increase from the 65% of owners who reported similar plans last year, continuing the ongoing rise in multihyphenate brands. The good news is that consumers are on board with the idea — 40% of customers say they would love to try a new type of offering from a business known for something else.
New offerings can attract different customers with specific preferences. For example, introducing a line of vegan dishes might bring in more health-conscious diners. Beyond attracting new customers, introducing new products or services like private dining or retail merchandise can give existing customers a reason to come back and try something different. Overall, this helps to boost customer retention and frequency of visits.
Before you add a new offering to your menu, engage with your customers to understand their needs and wishes. It can be best to work with products and services that aren’t too far off from those your restaurant is already known for. It’s equally important to leverage your restaurant data when making decisions about what to sell.
2. Scale down your menu.
While adding new offerings is a great way to grow your restaurant, it’s worth noting that ingredient prices are on the rise. Average wholesale food prices were up by 3.2% this June compared to a year ago, according to data from the National Restaurant Association. And average food prices are up 29% compared to 2020.
One way to ease that pressure: Schedule regular menu audits and don’t be afraid to scale back on dishes that aren’t worth the ingredient or labor cost. By removing less profitable or high-cost items, you can focus on dishes that offer better margins. Check in with your regulars to see what they would miss the most, but also trust your team and your analytics. If a costly dish is taking up a lot of your prep time, it might be time to move on.
Some other solutions:
- Is your pastry program taking up a lot of cost and labor time? That could be a good place to scale back to a single item or outsource to a local partner.
- Open for lunch, brunch, and dinner? Consider which dishes make sense across all of your menus, as well as which components (sauces, garnishes, stocks) can be used across multiple dishes.
- Consider a push for private events and buyouts. These events usually have significantly higher margins with a better ability to control the ingredients you need to order. And once the event is over, you can use any extra ingredients for specials on your regular menu.
3. Set up online and contactless systems.
Last year, more than one-third of restaurateurs surveyed by Square said they have or are considering implementing tools such as online reservations, contactless ordering, and mobile or online ordering to combat staffing challenges. This year, all owners surveyed confirmed they use technology to fill critical staffing gaps. However, adopting online and contactless systems isn’t just a response to staffing issues. It can also be a strategic move towards sustainable business growth.
Online and mobile ordering platforms are key to starting up new revenue streams. For example, customers who may not have time to dine in can still order food for pickup or delivery, expanding your business’s reach and sales potential. Plus, digital tools provide valuable data on customer preferences and behavior. This information can be used to tailor marketing efforts, adjust menu offerings, and optimize pricing strategies, which can drive further growth.
If you’re concerned about how customers might react to these changes, Square Future of Commerce data should offer some reassurance. Seventy-six percent of customers prefer that their favorite restaurants use automation technology in at least one area to help enhance efficiency, including taking payments, making reservations, and tracking item availability.
4. Host events at your restaurant.
Events create buzz and can be an effective way to secure mentions in local media, social media posts, and word-of-mouth, all of which can attract more customers and enhance brand awareness. Events can be particularly beneficial for drawing in a younger demographic. According to Square data, 33% of Gen Z — soon to be the largest consumer group — say that activities like cooking classes, trivia nights, or karaoke would increase their interest in a new restaurant. Twenty-three percent also want to see more partnerships with local businesses.
Another perk of events is the opportunity to introduce guests to higher-margin items or new offerings. For example, you could showcase a premium wine collection at a wine-tasting event, encouraging attendees to purchase. Plus, if your restaurant is available for private parties and celebrations, attendees are more likely to consider your venue for their events, which can lead to more bookings and repeat business.
5. Start a loyalty program.
For many businesses, finding new customers seems like the fastest way to grow or increase sales. Rewarding existing customers and incentivizing them to buy more or return with their friends or family can be the path to more sustainable growth, especially with a well-planned loyalty program.
The Square Future of Restaurants survey shows 42% of restaurants offer a customer rewards program for its sales benefits. Customers enrolled in a Square Loyalty program spend 53% more and visit 40% more often than those who are not. Wondering how to increase restaurant sales with a loyalty program?
Here are quick tips to ensure your restaurant loyalty program takes off:
- Build rewards that customers value and want by referencing sales data.
- Make it easy for customers to sign up and earn rewards.
- Promote your loyalty program and build it into every aspect of your marketing.
- Improve your program based on customer feedback.
6. Use technology to make marketing more effective.
More than 70% of restaurant owners identified marketing as their second biggest hurdle when offering products outside their core services. Strategic and consistent marketing, whether for your core or new offerings, can help increase sales. And it doesn’t have to be difficult. Tools like Square Marketing allow you to automate outreach while ensuring that messages are personalized and tailored to specific customer segments.
CRM software like Square Customer Directory helps you manage interactions with current and potential customers by storing information such as customer contact details, purchase history, and communication records. You can use this data to tailor marketing messages, predict customer behavior, and personalize interactions, making your marketing efforts more targeted and efficient.
7. Embrace creative employee benefits to enhance growth.
Even if increased salaries aren’t currently an option given your margins and operating costs, consider what benefits you can add to retain and motivate your employees and recruit new ones. By fostering a stable, satisfied workforce, you ensure smooth operations and consistent service, which are crucial for sustaining growth and adapting to market changes. More than 40% of restaurateurs surveyed by Square said they are considering adopting improved safety protocols, discounted rates on meals, growth opportunities, and upward mobility, as well as paid time off.
These types of benefits resonate with employees. More than 50% of workers surveyed by Square said they put the highest importance on paid time off, non-wage compensation such as health benefits and 401(k) programs, and better safety protocols, so it can be wise to consider adding lesser-known employee benefits like these.
8. Transparently and consciously raise prices.
Sometimes the best way to sustain growth is to accept that you need to raise prices. Overall, 75% of consumers said they would continue buying from a restaurant if they raised their prices, and 88% agreed that given rising costs, they would understand a need to raise prices.
Here are some ways to effectively communicate price increases to your customers:
- Do your due diligence to know the numbers well.
- Notify customers immediately over social media or email, and explain why.
- Avoid sticker shock by raising prices incrementally.
- Don’t send conflicting messages by raising prices right before a sale.
9. Automate your scheduling and payroll.
While the restaurant worker shortage has stabilized, high turnover can continue to hinder your business growth.
Automated tools such as Square Shifts connect directly to your POS and your business analytics dashboard, meaning you can spend less time worrying about administrative tasks while optimizing your labor costs and simplifying the process for your employees.
Many restaurant owners still rely on manual schedules that need to be updated weekly or monthly. Square Shifts streamlines that process, simplifies paydays for employees, and allows for easier flex scheduling as well as time off requests, which can help you retain and attract top talent.
