Mar 1, 2023

Top 5 Challenges of Food and Beverage Industry and How to Overcome

We all know that running a catering business is not an easy task. The business owners need to face different challenges everyday. Although they have devoted all their efforts and resources to serve great food and make the restaurant as comfortable as possible, they are still unable to escape the never-ending challenge.

Here are some common challenges faced by the food and beverage industry and how they can overcome them.

1. Poor Demand Forecasting

Demand forecasting is critical to businesses in almost every industry, but it is even more critical for the F&B Industry with fresh food and perishables involved. Poor demand forecasting may lead to increased risks of food supply instability, higher food wastage rate, and finally, loss of revenue.

To improve the demand forecasting, an effective inventory management system becomes indispensable, as it can help you determine optimal stock levels of every single item and create a best-fit replenishment plan in a more efficient and systematic way.

With accurate demand forecasts, restaurant owners can achieve significant cost savings by keeping their inventory at a right level and reducing unnecessary food waste due to overstock and unnoticed expiry.

2. High Labor Cost

Labor cost is one of the 3 largest expense categories of a restaurant. The total labor costs not only include their salaries and MPF, but also those associated costs, like overtime, bonus, vacation pay, sick day pay and employee benefits.

Although cutting staff does mean cutting costs, it does not mean increasing profit, especially when your restaurant is highly dependent on manpower. Cutting staff may hurt customer service, and cause customer dissatisfaction and result in lower sales.

Therefore, before adjusting your workforce, you may need to figure out how to fill the staffing gaps. Actually, more and more functions that are carried out by humans can be done by technology, such as taking customer orders and receiving payment. You may consider to implement self-order kiosks or mobile ordering systems with electronic payment functions to reduce reliance on staff.

3. Lack of Automation

Common restaurant complaints include order mix-up, inaccurate invoice calculation and poor customer service. To solve these operational issues, some restaurants have started turning to automation.

Although full automation is still not popular in the F&B industry, more and more restaurant owners try to implement partial automation to perform the daily tasks. Self-service kiosks, mobile ordering systems, QR payment and robot waiters, all these technologies are welcomed by the restaurant owners as they truly can help them to cope with operational challenges.

4. Supply Chain Challenge

Supply chain is one of the key factors that determine if the restaurant can be successful, as it refers to the whole process from raw materials sourcing to suppliers to restaurant and finally, customer’s plates. Failure in any one step could break the chain and result in lost customers.

To minimize the impact caused by uncertainty in the supply chain, you should build a strong relationship with your suppliers, to make sure that they will support your business even in critical situations. Meanwhile, it’s necessary to get a contingency plan on hand just in case your regular partners are unable to fulfill their obligations.

5. Relationship Between Staff and Customer

Establishing good relationships between customer and staff is one of the ways to cultivate customer loyalty. If those relationships are consistent, customers will be more willing to come back, also more willing to recommend your restaurant to their friends, which means more customers.

To improve customer retention, you may consider to implement Customer Relationship Management System (CRM) and Customer Loyalty Programs.

CRM systems is software that helps restaurants to record the information and preference of customers for the purpose of providing personalized service and sending targeted marketing offers, while Customer Loyalty Programs are designed to reward customers for frequent visits and encourage them to spend more. Both are good tools to attract customers and retain loyalty.

How to Choose the Right Technology for Your Business?

Technology can make your catering business better, but not all technology fits your business. You should choose the right one for your business based on your budget and your actual needs.