Like with any business, running a food service comes with its own risks that are unique to the industry. The pressure is rising in the restaurant sector every day, with the number of establishments falling into insolvency increasing by more than 60 per cent in 2022.
To ensure the survival and success of their food service, business owners have a responsibility to mitigate risks and protect the welfare of their employees and customers. From health and hygiene to safeguarding against economic downturns, here are the predominant risks and what you can do to limit their impact.
Food hygiene
When you’re handling food, hygiene is a priority as few things can damage business more than potential lawsuits from food poisoning. When setting up a food business, strategies should be introduced to maintain standards from the start. Staff should be trained in the four Cs of food hygiene – cleaning, cooking, chilling and cross-contamination – to prevent common safety issues.
Of course, sometimes foodborne illnesses and accidents are out of your control so having suitable restaurant insurance can help to provide cover in the event of illness or injury.
Financial risks
The economic shock of Covid-19 hit UK hospitality hard and highlighted an urgent need for safety nets for food services in the future. It is estimated that a tenth of Britain’s restaurants were lost during the pandemic and the majority of other establishments operated at a loss.
Since coming out of lockdown, businesses have also reported that the nature of their customers has changed and that operational changes have been necessary to continue trading. Adapting your business to incorporate takeaway or delivery services is a good option to safeguard against future financial risks.
Competitive risks
Competition is fierce in the food service industry. With 35,129 full-service restaurants operating in the UK as of 2022, food businesses need to focus on standing out from the crowd and making their brands as marketable as possible. Selling your USPs and adapting to shifting consumer trends can help maximise your profits and customer retention. This may call for rebranding or menu adjustments.
Other challenges are presented for new start-ups, including those to do with establishment location and larger costs. Initially, they will have lower market shares and revenue so prioritising marketing and knowing the competition will get you on the right foot from the start.
Supply chain risks
Ongoing international issues like the Russia-Ukraine conflict and the rising cost-of-living crisis have been contributing factors to supply chain problems. These effects are being felt across all industries but, for food service, it means food products may take longer to reach their intended destinations and there are higher operating costs.
Monitoring supplier relationships and developing alternative routes can help mitigate the costs associated with delays. Also, negotiating competitive prices with trusted suppliers can make it easier to respond to changing market trends.
Having and maintaining an awareness of risks associated with restaurant management is crucial for success. It enables proactive planning and risk mitigation, ensuring financial stability and reputation preservation. Understanding potential challenges like food safety, competition, and market fluctuations allows for informed decision making, improved operations, and better chances of long-term sustainability within a highly congested market.
