Since the Great Recession, we’ve seen over 10 years of economic expansion.
That means there are a lot of successful operators out there who have never known anything but good financial times.
But they’re like the doctors who graduate from medical school without a business course – they’re missing a big piece of what they need to know to be consistently successful.
They would be smart to learn from those of us who worked through the four economic cycles I have seen in my career.
QSR Magazine’s Kevin Hardy recently interviewed me on this subject for his new article “Is a Restaurant Recession Coming?” Read the complete article here.
You Can’t Mark Your Calendar
The short answer: It will come.
We just don’t know when – or how deep it will be.
If I could give you an exact date when the recession will hit, I would put down my keyboard, time the sale of my stock portfolio, and prepare for a personal windfall.
Instead, I continue to type.
We are not going to see another 2008 – what we expect looks to be much less severe, with a much faster recovery.
There are even people I respect who think we are recession proof.
Most Important Things to Handle
- Stay sharp under all conditions. If you are operating correctly, you have minimal worries about a downturn. What I have noticed in over three decades of advising successful independent owners of multi-unit restaurant companies: In good economic times some operators become lax on controlling their business. They lose their sharpness about fiscal strategy or budget discipline. When a downturn hits, they tighten everything up. Then, when times are good again, they forget what they learned.
- Know what to do in advance. Some of my clients already know how a downturn will benefit them. People don’t stop eating in a downturn; they trade down. So it would be smart to know about the people who will trade down to you and be ready to implement strategy accordingly. Forget about planning to cut quality. People who did that during the Great Recession never recovered.
- Connect to your guests. Do this through your offerings, culture, staff, and brand. Guest loyalty – one of those things some operators take for granted in good times – proves essential during a downturn. I work in the independent restaurant sector, where we know how to strongly connect to our guests in a way big companies can’t.
The best operators – the ones who have long memories or have done their research – know that you always operate with a mindset that you have to protect yourself from economic downturn, just like you protect yourself from competition.
Not everyone has that mindset, though. I know some younger operators who challenge me on their need for a budget.
Over to you. Are you sharply focused to operate professionally and smartly under all economic conditions?