The economy is bucking the current: Why are profitable restaurants closing?
In the context of the current economy, many restaurant owners choose to withdraw from the market at the most inopportune moment, which has caused widespread discussion and speculation.
Could it be that there is an unknown crisis behind these seemingly thriving restaurants?
First of all, although the paper revenue of some F&B outlets seems to be substantial, the operating costs and market changes behind it are often the tip of the iceberg that is difficult for outsiders to see.
For example, with the year-over-year increase in rents and the increase in employee salaries, the pressure of these fixed expenses is enough to keep any restaurateur awake at night.
In addition, fluctuations in the cost of ingredients are also a factor that cannot be ignored, especially in times of economic uncertainty, when the supply of raw materials can become unstable and prices can become more difficult to control.
These seemingly insignificant factors add up and can erode apparent profits.
In addition, for operators, choosing to close the door at a seemingly profitable moment may be a risk-averse strategy. They may anticipate adverse market trends in the future, or they may lack sufficient resources and strategies to respond to market changes.
Therefore, instead of waiting for losses to occur, it is better to exit early and preserve the funds in hand in case you need them. This kind of forward-looking decision-making, while seemingly puzzling in the short term, may actually be the wisest choice.
Behind this choice is the deep market sensitivity of the restaurant owners and the deep insight into the uncertain economic environment in the future. But are there other factors behind this that are influencing their decision-making?
In the following discussion, we will delve into the decision-making process of self-employed people in the face of market uncertainty, and uncover more of these decision-making factors that may go unnoticed. This is not only about the choice of business strategy, but also about the complex game of human psychology and emotion.
Breaking into the Kanto or defending the territory: the decision-making differences of the self-employed
In the tide of the market economy, the self-employed are faced with many choices. Some choose to step out of their comfort zone and pursue new market opportunities, while others choose to stay true and optimize their existing business.
This divergence of decision-making not only reflects the complexity of the market, but also reveals the different predictions and personalities of managers about the future.
First of all, let's take a look at the restaurant owners who choose to "break into the Kanto". In their view, the competition in the existing market is almost saturated, and staying in place will only fall into the quagmire of price war, which is unsustainable.
As a result, they are more inclined to explore new geographic markets or experiment with innovative food and beverage formats.
For example, some time-honored restaurants have begun to try online takeaway services, integrate the Internet+ strategy, or develop healthy and low-carbon dishes to cater to modern people's dietary preferences.
The key to the success of this strategy is the ability to quickly adapt to the new environment and changes in consumer demand, which requires strong market insight and innovation capabilities.
On the other hand, those operators who choose to "defend their territory" are more focused on deepening the existing market and enhancing customer loyalty by improving service quality and customer experience.
For example, some restaurants may choose to introduce a more sophisticated customer management system to provide personalized menu recommendations, or improve the restaurant's décor to increase customer comfort.
At the heart of this strategy is to maintain and increase the satisfaction and return rate of existing customers, reduce operating costs and enhance brand impact.
These two seemingly opposing strategies actually have their own merits.
Operators who choose to "break through the Kanto" may face greater market uncertainty and initial investment risks, but at the same time, they may also usher in greater growth space and profits.
Although the "well-defended" operators may not expand their market share quickly, they can stabilize the existing market and reduce risks by optimizing internal management and services.
Behind each choice is the operator's different interpretation and strategic layout of the market environment, its own resources and future trends.
In the next section, we will further explore how F&B owners can respond to the challenges of the market through specific measures under these two strategy options, as well as the results and problems of these strategies in practice.
This will provide us with more insight into how to make the most appropriate business decisions in an ever-changing market environment.
Leak or Trap: How to Tell the Real Opportunity in the Market?
In the restaurant industry, there are a myriad of risks that can lie behind every seemingly tempting opportunity.
Operators looking for opportunities to "pick up leaks" in the market often need to have keen insight and deep understanding of the industry, otherwise it is easy to fall into the trap set.
This judgment is not only about intuition, but also a science that requires accurate data and real-time market analysis.
First of all, when evaluating a potential market opportunity, operators need to consider multiple dimensions.
For example, when a restaurant is considering whether to introduce a new dish, it is important to consider not only the current trends of the dish, but also the preferences of the target customer group, the stability and cost of the supply of ingredients, and the operational complexity that may arise.
This comprehensive analysis can help F&B owners distinguish whether this is a real "slit-up" opportunity or a "trap" with disproportionate long-term investment.
In addition, opportunities in the market often come with competition. A seemingly favorable gap in the market may soon attract more competitors to enter.
Therefore, when operators seize the opportunity, they also need to act quickly and implement effectively.
For example, if a restaurant sees healthy food as a market trend, it may be able to get a head start on the market by quickly launching dishes that align with this trend and promoting them with the right marketing strategy.
However, if action is slow, or execution is not strong, the first market opportunity can turn into a bad investment.
Through continuous observation of market dynamics and accurate assessment of their own resources, F&B owners can better identify and grasp real market opportunities.
In this process, they need not only the courage to try, but also a deep and detailed understanding of the market.
Analysis of the manager's mentality: when to insist and when to let go?
In the fierce competition in the catering industry, the right mindset determines the long-term development of operators. Knowing when to stick to the direction of your business, when to adjust your strategy or even abandon certain plans is a difficult choice that operators have to face.
This kind of decision not only affects short-term profits, but also relates to the lasting vitality and market position of the brand.
For example, for F&B owners who are trying to "break into the Kanto" and expand into new markets, the initial stage may be met with various challenges, such as unstable customer sources, supply chain issues, or cultural adaptation issues in the local market.
In this case, persistence can mean constantly adjusting your strategy and improving your services until you find the right market positioning.
However, if the data and feedback are still not optimistic after a period of hard work, then it may be wiser to let go and reallocate resources to a more favorable business or market.
This decision requires sober analysis and courageous determination to avoid greater loss of money and time.
On the other hand, those operators who choose to "defend their territory" are faced with how to continuously improve the quality and efficiency of their existing business. When business plateaus, complacency or stagnation can occur.
This is where it is important to continuously optimize operational processes and improve the customer service experience. However, if the market environment changes, such as consumer demand, sticking to the old business model can become a burden.
At this point, it may even be necessary to fundamentally re-examine the brand positioning and business model to adapt to the new market demand.
Through these analyses, it can be seen that whether they choose to expand into new markets or deepen existing ones, operators must have the ability to flexibly adjust their strategies and be sensitive to market changes.