It’s hard to imagine a time when food was just a survival necessity. The evolution of mankind, in general, has provided a platform for food to be presented as an amalgamation of art and science. What seems to be a naturally recession-proof business idea is lucrative to a lot of people who try to build an empire around life’s most basic necessity, food.
Major roadblocks for the restaurant business
The challenges faced by entrepreneurs in the food industry when expanding their business are paramount, given the cut-throat competition in the industry. Expanding a restaurant business can be a little tricky when it comes to gaining loyal customers.
A new restaurant, in the expansionary phase, is like starting a new venture altogether. And replicating the success of your previous restaurant in a new location with a different audience is paramount to maintaining the food brand that you’ve established.
Designing the right menu in line with your target audience is one of the key factors that determine the success of your business. Another vital area of consideration is that your human resource, staff training, and the recruitment process should be rigorous. The hospitality industry is all about delivering utmost respect to your customers, and being polite and courteous are the prerequisites.
Expansion is not just about opening a new outlet. It also includes renovating the existing one by addressing the needs and trends of the industry. The general scenarios wherein restaurants look to expand their business can be to increase their revenue source.
Another concern can be the high level of competition in a particular locality, which could be addressed by expanding in a different location, which might hedge the risk from the competition.
What matters to people most when visiting a restaurant, in addition to the quality of food, is the ambiance of the place. So, oftentimes, trying to fill this void in the infrastructure of the place, the business owners seek to expand their venture by revamping the restaurant with a stylish interior, to woo their customers.
Major financial challenges faced by the restaurant business during the expansion phase
Like any other business, a restaurant venture has its own share of challenges when it comes to expanding the business, managing the finances, etc. The restaurant business can be a low-profit margin venture if you don’t handle the operating costs wisely.
- The food industry is highly affected by the general inflation rates, so there is volatility in terms of changing food prices, which might affect your day to day expenses.
- To keep costs in check, inventory optimisation is key. You need to assess your future demand and the price hike that might affect your profits and store your inventory accordingly.
- The next major consideration, when it comes to expanding your restaurant and keeping your finances in check, is optimising your menu card. Optimising your menu is all about price optimisation, and keeping items that your audience are most likely to prefer is a good way to go about it.
- What’s even more important than your menu card is performance consistency. Think about this on a more grass-roots level. Why do you go to your favourite eatery? Only because of that unique taste, right? But what if you get a different taste every time you visit the restaurant? You will probably stop going there and pick a new favourite.
Alternative financing for restaurant expansion
Funding has been one of the major roadblocks for many entrepreneurial dreams. You have a great idea, but the cash crunch is giving you a hard time. So what’s the best course of action now? Well, the contemporary world is all about using creative approaches to problem-solving, meaning you have to look beyond the traditional methods when it comes to financing a business.
The evolution in the financial services industry has been beyond imagination. Financial innovations not only curb the challenges presented by traditional methods of financing, but they are also more customer-centric and highly personalised.
Let’s take a look into the business loan options, especially the unsecured ones, that might help overcome your financial challenges.
So why an unsecured business loan? Well, the best thing about an unsecured business loan is you don’t need to have any collateral, meaning the lending party is at more risk if things go haywire. Unsecured business loans for those with high credit score helps to get better terms.
The interest rates might be a bit higher than usual, but, given the seriousness of the risk the lender takes by not asking for collateral, the trade-off in net terms is hugely beneficial for the borrower. The tenure of repayment of an unsecured business loan is pretty flexible, and first-time business owners are sure to benefit from this. Other alternative financing methods include merchant cash advances and equipment finance loans.
How you can use an alternative financing option to grow your business?
To uncover the financial circumstances hampering your restaurant business growth, you can use alternative financing options. Here is how you use it:
Cover the overhead cost: You can use business loans from alternative lenders to cover overhead costs like rent, utility bills, internet costs etc.
Hiring new staffs: During the expansion phase of your restaurant business, you may require new staffs to improve the speed of service delivery to your customers. Alternative funding can help you to meet the ever-growing need for your restaurant business thus providing it with an edge in a competitive market space. You can use funds to hire new chefs, wait-staff, baristas which could help to enhance your service quality.
Launch marketing campaigns: Marketing is a key factor in the success of any business. Alternative financing provides adequate funding you need to launch marketing campaigns to boost your brand visibility. Business loans from alternative lenders can help you reach wider audiences by promoting the services offered by your restaurant through marketing campaigns.
Accessing the alternative financing option is one of the finest ways to keep your business running smoothly and helps you to stay ahead of major operating costs. They’re helping several small business owners worldwide with their funding assistance.
Hubbe is a business loans marketplace to help Australian SME’s grow by providing quick and simple access to flexible funding solutions.
Steve is an entrepreneur and investor with over 18 years of experience in commercial finance, equipment finance and leasing across New Zealand and Australia.