3 Food Business Models: Top Challenges and Best Solutions

By Barry Moltz

4 min read

My friend always wanted to start a restaurant. When I asked him why, he said, “because I love to eat at them.” While this remains a popular reason for why entrepreneurs get into the industry, this is not the motivation that typically leads to long-term success.

Food establishments have their own unexpected challenges, but technology solutions can help. Here are a few unique challenges restaurant entrepreneurs face and some tips on how to solve them.

The Food Truck

The mobile restaurant has become increasingly popular in recent years as local restrictions around serving food have eased.

Still, there is a lot of red tape for this type of business (and for the truck), including special seller’s permits, health department certifications, bathroom requirements, food safety training, liability insurance and other mobile vending laws. Food truck owners also need to know where they are allowed to park for business.

Additionally, there are outside factors that business owners can’t control but need to prepare for. Take, for example, the weather, which can have a large impact on daily demand. Truck repairs and necessary maintenance can also be disruptive to operations and sales, sometimes shutting down a food truck for an entire day or more.

Biggest challenge: Identifying and navigating local laws

Solution: There’s extensive legwork involved and really no way around it. Some cities don’t have any food truck regulations on the books, while others have very restrictive laws. Because laws differ from city to city, there’s no single go-to database for research. Your best bet is to talk to your local Chamber of Commerce, which can help you navigate the local laws for parking, permits and the certifications you’ll need.

The Quick-Serve Restaurant (QSR) or Coffee Shop

Coffee shops and local restaurants are becoming more and more difficult to start and be profitable. National chains like Chick-fil-A, Subway and Starbucks are dominating the market, and consumer habits are in constant flux.

To successfully compete, local restaurateurs must identify what makes their location and restaurant unique. Why will customers eat at their restaurant instead of at a better-known establishment?

These aren’t the only questions and obstacles. In a tight market, getting the right real estate location within budget is often a big hurdle. Ensuring that menu items are always in stock also becomes challenging since perishable goods are not kept in inventory very long.

Then there’s employee management. Keeping these businesses running, particularly if they’re open six or seven days a week, requires adequate staffing. If one or several employees are out sick, is there enough staff coverage to maintain service?

Biggest challenge: Keeping tabs on everything at once

Solution: Having the right point-of-sale (POS) system is critical to juggling the responsibilities involved in running a restaurant. Through powerful reporting capabilities, a POS can help you promote best-selling menu items, easily accommodate custom orders and support online ordering and delivery, which are great add-ons to any business.

The right POS system, however, goes beyond point-of-purchase functionality. Manage staff with integrated payroll and employee scheduling, and streamline back-office accounting by connecting to accounting software using solutions such as QuickBooks Point of Sale powered by Revel Systems. You can even record tax payments and filings as the POS tracks total sales tax collected in a given period.

The Bar

This is one business where the fantasy of owning it and the reality of running it can be drastically different. While bars have great profit margins on alcohol, there are a lot of regulations.

First, almost all cities require liquor licenses, which can take time to secure and can be fraught with politics. In many cities, owners can be held responsible if patrons get into accidents after leaving the establishment. A well-trained staff can help ensure all regulations related to daily operations are met, but keep in mind the industry has high employee turnover.

Since many of the transactions in this type of business are cash-related, another hurdle is effective money and inventory management. The right technology is critical to minimize losses.

Biggest challenge: Alcohol/liquor tracking and management

Solution: This business will not survive without having a robust inventory-tracking system in place. This is so important since bars generally sell portions of a bottle of alcohol as opposed to separate SKUs (Stock Keeping Units), which are easily tracked. To maintain profitability, inventory needs to be rigorously managed and maintained.

Ensure drinks are properly measured and that free and spilled drinks are also recorded. Accubar, a bar inventory-management software, uses barcode scanners to keep tabs on everything you have in stock from your phone or tablet.

For more help on improving inventory management, see this article.

With various new technologies, the small business owner can focus on the customer experience, as well as the love of food and drink that got them into the business in the first place. If you’re planning on opening a food-based business soon, check out our guide to a successful restaurant opening.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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