Running a restaurant is not easy.
There are so many moving parts, and keeping them all in harmony can feel impossible.
From changing customer demand and staff shortages to rising food costs and ever-evolving technology, it's easy to feel overwhelmed.
But the good news is you're not alone.
Every restaurant owner faces similar obstacles. The key is to recognize those challenges, understand their impact, and find workarounds.
In this article, we're going to talk about six common challenges that can significantly impact restaurant operations.
We'll explore why they happen, what their consequences are, and, most importantly, offer some solutions to overcome them.
Let's get started!
One of the most frustrating challenges restaurant owners face is keeping their tables full.
Why?
Because no-shows and late cancellations come in their way.
To understand how big this problem is, let's look at some data.
In 2023, Barclays, a leading UK payments provider, did a survey on 2000 UK adults and 200 restaurant owners.
The results are shown below.
Illustration: Tablein / Data: HospitalityNet
As you can see, the majority of diners admit to canceling late, and a smaller percentage prefer not showing up at all when they can’t make it.
And for 23% of restaurateurs, these are the biggest challenges in the restaurant industry right now.
So, what's the solution?
Many are turning to no-show fees and deposits to protect their revenue.
Take the Michelin-starred Kaiseki Yu-zen Hashimoto, for example. They require a non-refundable $350 deposit per person.
Source: Kaiseki Yu-zen Hashimoto
Deposits are especially important in a fine-dining restaurant like this one.
These establishments often have limited seating and prepare ingredients in advance based on reservations.
So when a guest doesn't show up, it's not just a lost table—it's wasted food, time, and labor.
Plus, high-end restaurants often can't easily fill last-minute cancellations, making each no-show a significant hit to their bottom line.
If you're considering implementing a similar solution in your own business, having a restaurant reservation system like Tablein can be a game-changer.
With Tablein, you can easily set up and charge cancellation and no-show fees.
Source: Tablein
How does it work?
When booking, guests have to enter their credit card information.
And if they cancel after your set deadline or don’t show up, a fee is automatically charged to their card.
This ”set it and forget it” approach protects your revenue without requiring constant management.
Plus, it is a safety net, so even if guests don't show up, you're not left completely out of pocket.
While no-shows and late cancellations can be a tough challenge, deposits, no-show fees and late cancellation fees can greatly reduce their impact.
Now that you've got those tables full, you want to provide a top experience for your guests.
It's just about quality food and good service, right?
Well, while those are certainly key (and challenging enough on their own), today's diners have increasingly high expectations.
Consider just a few of the areas where guests might have specific preferences:
And the list goes on…
Guests want their dining experiences to be tailored to their tastes, needs, and values.
The challenge lies in juggling these expectations, which can feel overwhelming if you're not actively staying on top of evolving trends.
Let's take loyalty programs as an example.
Did you know there's research on what guests want from these programs?
SevenRooms data reveals some insights shown below.
Illustration: Tablein / Data: SevenRooms
If you've been struggling to figure out your customer's expectations in your own loyalty programs, using data like this can really help give you a starting direction.
It shows that different age groups value different perks, from free items to exclusive experiences.
Or consider this MadMobile blog that neatly summarizes some consumer preferences when it comes to restaurant menus.
As you can see from their preferences below, diners are more health-conscious than ever.
They want healthy, sustainable dishes and care about ingredient quality.
Illustration: Tablein / Data: MadMobile
But remember, while industry trends are valuable and show what customers want in general, it’s important to understand what your own guests expect.
So, regularly gather feedback through surveys, online reviews, and simple conversations with your diners.
By focusing on their specific needs, you'll stay ahead of the curve and keep your guests happy.
Let's face it: restaurants are only as good as their staff.
A friendly server, a skilled chef, and an efficient kitchen team are crucial ingredients for a successful dining experience.
However, the restaurant industry is notoriously challenging when it comes to finding and keeping talented employees.
According to Expert Market's 2024 industry report, which surveyed over 500 US restaurant owners and managers, labor shortages rank among their top concerns.
The following image highlights the issue.
Illustration: Tablein / Data: ExpertMarket
The overwhelming majority of restaurant businesses are actively hiring, pointing to a widespread struggle to find enough qualified staff.
Also, the fact that chefs are the most in-demand position is worrisome, as skilled culinary talent is the heart of any kitchen.
Jason Smith, executive chef and owner of 18 Restaurant Group, points out that this challenge is even more problematic for new establishments.
Illustration: Tablein / Data: RestaurantOwner
Opening a new business and fighting for profitability is already tough.
When you're also dealing with constant staff turnover and trying to form a well-functioning team, it can lead to inconsistent service, stressed-out employees, and, ultimately, negative guest experiences.
While there's no overnight solution to the staffing crisis, there are hiring and retention practices that can help.
Below are some of them:
Source: Tablein
Transparency during hiring and fair pay are a given.
But to truly curb turnover, you need to provide genuine support and value to your employees.
This might mean offering flexible scheduling, regular training to keep skills sharp and promote professional development, or even creating clear paths for career advancement within your restaurant.
In the end, addressing staff shortages requires building a supportive work environment that attracts and retains individuals who truly want to contribute to your restaurant's thriving culture.
Restaurants have never been known for having sky-high profit margins.
In fact, data from New York University shows that the net profit margin for their surveyed businesses is 10.66%.
Illustration: Tablein / Data: New York University
Data from Toast paints an even bleaker picture, revealing an average profit margin of just 3-5% for many restaurants.
This slim margin means that many establishments struggle to stay afloat or even turn a profit.
The reality of this is reflected in recent news stories like this one, revealing that nearly half of restaurants in Nova Scotia are struggling to make ends meet.
Source: Radio Canada
One major culprit behind this is rising food costs.
As the price of ingredients skyrockets, it puts even more pressure on already thin profit margins.
But it's not just about survival.
Even if you're managing to keep the restaurant doors open, food cost inflation stifles menu innovation, according to NRN’s The State Of Independent Restaurants report.
Illustration: Tablein / Data: NRN
When every penny counts, it's tough to experiment with new dishes or source those premium ingredients. This can lead to stagnant menus, making it harder to attract new diners or keep regulars excited.
One reaction to rising costs is often to raise menu prices.
But while this can provide short-term relief, it's not always a sustainable strategy.
With even fast-food prices soaring, many diners reconsider eating out altogether.
Source: LendingTree
So, while a price hike might be necessary at times, restaurateurs should seek innovative solutions to boost profitability.
This could mean finding ways to trim food and overhead costs without sacrificing quality, optimizing staff scheduling to match customer demand, or even implementing technology that maximizes table turnover.
There isn’t a single solution to this growing issue.
However, by staying agile and finding creative ways to cut costs, your restaurant can navigate these tough times and thrive in the long run.
While some profitability challenges are inherent in the restaurant business, many can be reduced by embracing restaurant technology.
Modern systems introduce greater efficiency, reduce errors, and improve overall operations, ultimately boosting your bottom line.
And there are many options available, including:
Unfortunately, adopting these tools can be a significant challenge in itself.
Why?
According to a recent TouchBistro report, high expenses is one reason.
With concerns about costs, roughly one-third of restaurateurs are actually cutting back on tech, while 37% of restaurateurs aren't even considering using automation and software solutions due to their upfront costs.
Illustration: Tablein / Data: TouchBistro
One solution here is exploring cloud-based systems that offer low monthly subscriptions instead of a large upfront investment.
These often come with flexible features and scaling options to fit your needs as your business grows.
Another issue with adopting restaurant technology is that restaurants aren't fully utilizing the tech they already have.
For example, something as simple as a POS system can be a powerhouse for efficiency—if it's used properly.
But, as Joe Costanzo, owner of RevoltTek, explains, many restaurants don't invest enough in training their staff on these tools:
Illustration: Tablein / Quote: National Restaurant Association
Naturally, when team members are hesitant or unsure about using new tech, its potential benefits are lost, and owners might even consider ditching the system altogether.
The takeaway is clear: thorough training and an exploration of what your software can do is essential.
When you and your team feel confident using technology to its fullest potential, you'll see greater efficiency and a healthier bottom line.
Standing out in a crowded market is every restaurant owner’s top of mind; no two ways about it.
But with so many restaurants competing for diners' attention, it really is a challenge to stand out.
That’s why it's crucial to have a solid plan for attracting guests and establishing your restaurant as a desirable destination.
That's where a well-crafted marketing strategy comes in.
Source: Tablein
One powerful way to stand out is to identify your restaurant's unique selling proposition (USP).
Or, in other words, find out what makes your place special.
Is it your stunning design, a hidden location, or an innovative cuisine?
Maybe it's the overall experience, like the welcoming atmosphere you've created.
For example, take a look at how Vegan Junk Food Bar describes their offering.
Source: VJFB
What was once a single restaurant in Amsterdam is now a chain of vegan fast-food restaurants across Europe with the concept of positively impacting animal, environmental, and human welfare.
A well-defined USP like theirs targets a specific audience and gives them a story to tell, which makes them more appealing to customers.
Then, when you know what sets you apart from the competition, you should leverage social media, email marketing, and even special events to promote it.
Source: VJFB on Instagram
Another crucial aspect of staying competitive is managing your online reputation.
Restaurant reviews can make or break your business, as diners often rely on them to guide their choices.
So, make sure you're actively managing your profiles on the top review sites, like Google, Facebook, and Yelp:
Illustration: Tablein / Data: BrightLocal
Responding to reviews, both positive and negative, is also important, as it shows you're engaged and value customer feedback.
It also builds trust and helps potential diners see you as a business that cares about what they have to say.
Overall, this challenge can be easily solved with a great marketing strategy.
By defining your USP, leveraging social media, and managing reviews, you'll attract new customers, keep regulars coming back, and thrive even in the most competitive market.
As you have just seen, restaurants deal with many challenges, from attracting guests and retaining top talent to navigating the ever-changing tech landscape.
Each of them affects restaurant operations differently.
Hopefully, this overview has armed you with a deeper understanding of these challenges and given you a toolbox full of solutions to tackle them.
Now that you have all this information, you can start making small changes that could have a big impact on your restaurant's operations and their success.
Every little improvement adds up, so don't be afraid to experiment and find what works best for your restaurant!