5 Strategies To Keep Your Restaurant Profitable in an Economic Downturn

June 12, 2020

Written by

Multiply Team

To ensure the survival of your restaurant requires two things: a loyal following, and various sources of income. This post will share how you can do both.

Add a Takeout Model

The big three dominate the streets of Singapore: Grabfood, Foodpanda, Deliveroo. Consumers cooped up at home are looking for alternatives to cooking and ordering takeout themselves. Delivery apps offer consumers another avenue to buy and consume food. COVID-19 has only highlighted this fact, bringing food delivery to the spotlight as a profitable option for businesses, and a convenient option for consumers.

Consumers are willing to pay a premium if they can save time and effort to get something done. With the popularity of food delivery on a steady increase, joining one of these apps can help boost restaurant awareness and sales.

Taking consumer behaviour and the current economy into account, it is sensible for restaurants to consider and implement a takeout model.

Apart from offering an alternative for consumers to get their food, delivery apps entice consumers to order from them with marketing strategies and deals of their own. Joining a delivery app platform ensures greater exposure and a better chance of survival for restaurants in these trying times.

Sell gift cards and offer strategic discounts

Gift Cards

Communities cherish local businesses. These communities wish to help their favourite local businesses. By offering gift cards on sale, businesses are providing the community one way to help. If your restaurant offers gift cards, consumers can purchase one now (and increase company cash flow), and use it later once things are back to business.

This causes a ripple effect, as loyal customers will return and eventually tell their friends and family about it. Word of mouth is the best form of marketing, and this way, you get to raise brand awareness as well.

Gift cards can also help to increase upfront revenue, essentially saving a business, especially during this period. In all, selling gift cards is a great way to ensure steady cash flow and footfall once things are back to normal. Achieving gift card sales is also an indicator of how well-liked your restaurant is.

Strategic Discounts

While coupons and discounts are one way to encourage returning customers, it is vital to not be overdependent on them. Heavily utilising coupons can create a bad impression on people and worsen the restaurant’s reputation. Being the cheapest and most discounted option is not always the best outlook.

What one can do is use discounts and coupons as a tool to convert existing customers into return customers. For instance, through obtaining customer emails, you can send them occasional emails offering exclusive discounts. It is important not to overdo it; send enough to get them coming back, but not enough to ruin your reputation or create a situation where the consumer expects it.

Create a new menu based on comfort

Capitalising on your menu to draw customers, returning and new alike is one way you can boost sales, especially during a slow season or recession. Alter your menu so that it offers more appeal in a budget-conscious climate. Pivotal to menu composition is understanding consumer needs, behaviour and spending power.

Menu designing is equally important. Offer cheaper options in a prominent spot in your menu that is hard to miss. That way, customers with a lower budget are aware of their options offered by your restaurant and may be enticed to look at the rest of the menu.

Conducting a weekly inventory check is also essential. Monitoring food cost helps to manage cash flow most accurately and efficiently.

Advertise on social media

Consumers cannot desire what they cannot see. Advertising is doubly relevant in a recession, as consumers need to be reminded of your presence. Strategic advertising doesn’t have to be costly. One option for businesses is to increase paid social media and Google ads. These ads are targeted to potential customers based on their algorithm, bringing content they would appreciate to them.

Curate a social media presence by posting enticing, aesthetically pleasing photographs of your restaurant, food, and creative, easy-to-look at graphics to remind consumers of your restaurant’s existence.

Apart from curating a pretty feed, make use of the customer email addresses and phone numbers you’ve accumulated. This data can be used to reach out to them with special offers via email blasts and text messages. Remind them of the deals and food they are missing out on if they do not order from you. As for the type of food offered during promotions, focus on selling meals that are cheap to create with high-profit margins.

Create a Referral Program

Referral and affiliate programs encourage repeat customers, and much of the marketing is dependent on partners and customers. Both programs are beneficial to your business but serve different purposes.

Referral Programs

Referral programs work through the spread of word of mouth. For instance, you can offer existing or potential customers $10 off their meal when they refer a friend. This can be done through a landing page sent to your email subscribers. It can also be a way to collect emails if this offer is visible on your website.

Referral and loyalty programs work excellently at spreading local awareness, as customers will refer their friends and family. However, if you are looking to branch out to e-commerce, you could expand your reach with an affiliate program.

Affiliate Programs

Affiliate programs are usually utilised in online transactions. If you’re selling a product online, you could set up a system that offers anyone commission whenever they refer someone to buy your product on your website. The difference between affiliate and referral programs is the userbase.

The people who sign up for affiliate programs tend to market to an online audience. These people can be bloggers, YouTubers, or podcasters with an online presence that tell their viewers to use their affiliate links to buy your products.

This makes it attractive for influencers or publications, to work with you. Publications and micro-influencers will be more disposed to talk about your business if there is a monetary value attached to doing so.

Apply for Relief Financing

Another way to keep your business afloat is to take note of the government reliefs available for affected companies. Additional help is available for companies badly hit by the impacts of COVID-19, restaurants included. For instance, the Enhanced Job Support Schemes offers up to 75% wage offset for the first $4,600 of monthly salaries will be provided, for every local worker employed. Financing schemes have been further enhanced to help businesses with credit, and the government is also working on improving cash flow for businesses. More information on government help can be found here.

How Multiply can help

Inject cash by using Invoice financing

Invoice financing can help SMEs to manage cash flow and focus on growth. It is not a debt, and you will not be burdened with extra debt. Invoice financing helps to unlock payment for work already done, providing SMEs with steady cash flow. Find out more about it here.

Don't hesitate to reach out to our Sales team

Multiply offers simple and flexible financing for SMEs, from as low as $500 to $500,000.

Reach out to us at +65 8775 0069, or head over to our website to find out more here.

Multiply Team

Multiply brings a fresh perspective to financial services. We offer simple and flexible financing for smaller businesses.

Top articles to read next