Restaurant Business Models: How to Succeed in 2023 | Epos Now
The restaurant industry has changed a great deal in recent years. Delivery, or "eating in", has turned into a significant part of "eating out".Order at table has become the norm. And finally, many international cuisines continue to grow in popularity.
Consequently, the restaurant owner's life now involves many more big decisions to ensure that even established restaurants stay in the green. Adapting your restaurant business model could be the difference between success and failure, profit and loss.
So what kinds of restaurants suit the food delivery option? How has the average marketing strategy changed? And what new changes can we expect to emerge in 2023? Read on to find out.
What are the standard restaurant business models?
A business model typically refers to the strategies and structure that a company uses to provide products and services and sell them at a profit. For a restaurant, this will reflect the type of restaurant you will be running. You further define your restaurant business model to express secondary revenue streams, how you attempt to win your target customers, and any other anticipated expenses (such as staff pay, supply chain, and operational costs).
How about an example? You might run a buffet restaurant or carvery whose target market is low-budget diners. With a self-serve setup, you might not opt to offer delivery. But you can offer takeaway boxes to your customers who would like to drop in and pick up a cheap dinner. Your buffet runs on low-profit margins, but you keep expenses low as you require fewer staff to maintain the service, and do well by serving a high volume of customers.
In the above example, the business model shows what service or product is being provided (buffet dinner), who this business model targets (low-budget diners), and how the restaurant makes profit from the enterprise.
Other examples of a restaurant model
A restaurant's business model is usually one of the first steps explained in a business plan. Few restaurant owners go into business before really knowing whether they plan to open a buffet restaurant or a ghost kitchen. However, there are many traditional model structures you might consider:
A fast-food restaurant: typically offers lower prices, takeaway, delivery, or eat-in. Produces large amounts of food cheaply.
A cafe-restaurant: sells mostly drinks, with lunch, snacks, possibly offering takeaway. Cheaper and up-market varieties. Makes more money on wet than dry sales.
Fine dining restaurant: sells top quality meals and drinks and a pleasant experience, rarely offering takeaway or delivery. Makes money with high-profit margins on well-made products, even with fewer sales.
Casual restaurant: sells affordable, good meals with drinks, might offer takeaway or delivery. Makes money with lower-profit margins than fine dining, but tends to make a larger number of sales.
Ghost kitchen: only offers takeaway and delivery, with no restaurant seating. Keeps expenses low and might offer fast food or specialist cuisine.
How to put together a successful restaurant business model for 2023
Many restaurants are founded through a passion for one kind of food or cuisine. You may therefore have always wanted to run one of the previously listed kinds of restaurants. To succeed, you'll need to piece together a business plan that forms the foundation of your operating model.
You may form a business plan around industry trends that you've learned about through experience and research. These trends exist because they have worked in the past. Despite the many changes to the entire hospitality industry in recent years, these often form a strong template for a new business.
Nevertheless, there's plenty of planning you'll need to complete. Whether you're opening a new business or planning for the next quarter or year, it’s important to update your business plan regularly.
Do it differently to create a special customer experience
Most diners will have tried Indian, Chinese, Japanese, Thai, European, and American cuisines and more. Finding ways to create something new is becoming increasingly difficult, but in difficult economic climates in saturated industries, that means that a special concept is worth its weight in gold.
While you may have committed to fast food, fine dining, or anywhere between, expanding on that model to incorporate a restaurant concept could be key to 2023 success. Virtual restaurants, dining-in-the-dark, or under-the-sea concepts are bringing diners back out to restaurants in big numbers and inspiring more businesses to get creative.
Vegetarianism and veganism are here to stay
Though meat lovers might shudder at the thought, as many as 27% of Brits and even 10% of Americans no longer describe themselves as meat eaters[1][2]. With so much of the population eschewing meat, having good alternatives on your menu is essential to cater to the growing number of vegetarian and vegan diners.
In recent years, meat substitutes have become healthier and tastier, and many non-vegetarians now also enjoy them on a regular basis. Celebrity chefs test them, cook them, and offer commentary on the best options, while other restaurants incorporate them onto the menu by offering to switch out the meat for a substitute for many of the main dishes on the menu.
But even without substitutes, protein-high ingredients such as beans and lentils offer excellent alternatives, and a substantial amount of food favorites can be made using these as the foundation of the dish.
Given their popularity, having a good number of non-meat options on your dish helps widen your potential customer base. Veggie options allow anyone and everyone to come to your restaurant without having to worry about whether the whole group will be able to eat.
Sustainability and transparency in your supply chain
Generation Z and Millenials, the two youngest demographics businesses need to cater to, make up many of the vegetarians and vegans mentioned above, and they also tend to favor sustainable and responsible businesses.
Your restaurant can achieve this in a number of ways, such as being selective with the suppliers you choose and opting for transparency on your menu. This might just mean including additional information about where your food is sourced from, but you could also cultivate closer relationships with your suppliers.
Shopping locally is one of the easiest ways to reduce your carbon footprint, with the food traveling a far shorter distance, and it also makes it easier to have a good relationship with the supplier. People across generations like to support local businesses, making this a multi-faceted way of improving your business model.
Restaurant essentials: open up new revenue streams
The modern consumer is used to being spoilt for choice. The average restaurant in 2023 has many ways of taking orders, and to appeal to the widest range of customers, your restaurant needs to offer the same choices.
This need not be limited to delivery and takeaway options, although these are crucial to many contemporary businesses. Post-covid consumers have become accustomed to ordering in on a regular basis. So offering food delivery opens up a revenue stream as well as access to the many customers that are no longer dining out as often as they might have several years ago.
Incorporating order at table or app-based dining options (as well as being a cost-efficient way of taking orders) brings convenience to diners, allowing them to order whenever they're ready. In short, having multiple ways of taking orders doesn't just open up new markets and new streams of revenue, but it shapes your services around the customers' preferences.
How to market your model
If you're having difficulty understanding your restaurant model, put yourself in a potential customer's shoes and try to see as they do. You can then ask yourself questions such as, "Why would I want to eat here?", "What kind of person would I have to be to enjoy the experience we offer?", and "What changes can I make to have a significant impact to make our restaurant more appealing?". This can tell you what works, who your target market is, and where your weak and sweet spot might be.
Ultimately, thinking like your customer can help you write your restaurant marketing materials and make your "pitch" to the customer. This part of your business model is known as the value proposition. A business's value proposition communicates to the customer what they stand to gain from purchasing from the business. You should reevaluate your value proposition regularly, to ensure you’re keeping up with your target market’s interests and preferences, so your business can stay on top.
How do you market this? For your restaurant, a strong slogan, with images of your most popular menu items and cheapest items, can make your restaurant seem appealing. Looking at the changing market of 2023, offering quality and value for money has become essential in this climate of hesitant spenders and competitive, creative markets. So be sure to highlight this in your communications - whether that be with punchy social media posts, regular email updates with your offers, or highlighting new items on your menu.
Use Epos Now for a model POS system perfect for restaurants
Epos Now's POS solution brings speed of service to your business alongside the flexibility, data collection, and omnichannel capabilities that any company needs to stay ahead of the game.
Epos Now technology can switch seamlessly between in-store, takeaway, and delivery options. You can integrate with a selection of top delivery platforms, websites, and the very best business software from an AppStore equipped to help you with even the most specialist software needs.
Epos Now customers can:
- Create bespoke hardware and software setups that suit the unique needs of your business. Incorporate new hardware into a system that expands as you grow.
- Sell safer at speed with the latest transaction software, with in-house and third-party payment processing services, and an easy-to-use system with new staff trained in as little as fifteen minutes.
- Manage your inventory simply with sophisticated stock control systems with single-source stock for ingredients used in multiple products.
- Manage your business stress-free with cloud technology that gives you instant access to the latest business data from anywhere in the world!
To find out more about an innovative hospitality POS or restaurant POS with every tool you need, submit your information below and speak to a member of our expert team.
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