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Summary of the episode: How Restaurants and Cafes Can Survive Closure | Podcast Square

In this episode, Hatem Al-Najjar hosts Abdulaziz Al-Salama, who shares his experiences and insights in the restaurant and hospitality sector. The discussion covers various topics related to the failures and successes of restaurants and cafes, as Al-Salama highlights multiple reasons contributing to the failure of many projects, such as poor planning and mismanagement. He also talks about the importance of branding and its impact on continued success in this sector, noting that quality alone is not enough; it must be paired with a comprehensive customer experience.

Al-Salama also reviews the shifts in consumer behavior, pointing out that societies are increasingly leaning towards dining out due to modern lifestyles and work pressures. He touches on the concept of “Kaizen,” a Japanese principle that emphasizes continuous improvement and its application in daily and professional life.

At the end of the conversation, the guest discusses the challenges facing small and micro businesses in the Kingdom of Saudi Arabia, and how restaurant and cafe owners can leverage data and effective marketing to avoid failure. Al-Salama offers practical advice for aspiring entrepreneurs, encouraging them to learn and adapt to changes in the market to achieve sustainable success.

The Challenges of Success in Restaurants and Cafes

The restaurant and cafe industry is known for its attractiveness and diversity, but succeeding in it is not easy. Many business owners face various challenges that affect their sustainability, and one of the most significant challenges is the correct understanding of the market and consumer trends. The main reasons for restaurant failures include insufficient market research, overspending, and poor resource management. Additionally, choosing an unsuitable location can have a significant negative impact, as having a restaurant in a low-population area or far from commercial zones may limit the number of customers.

It is also crucial for restaurant owners to possess adequate experience in managing daily operations, such as inventory management and operating costs, as a lack of awareness regarding the numbers can lead to financial losses. Attention must also be paid to the quality of service provided, as customers expect a comprehensive experience that begins the moment they enter the restaurant until they leave. If the service is poor or the experience is unsatisfactory, the customer may not return.

A strong brand plays a pivotal role in the success of any restaurant. Having a robust brand can facilitate the process of attracting customers, as consumers seek trust in the products and services offered. Nowadays, many people lean towards unique experiences, looking for new foods or distinctive atmospheres. Therefore, restaurants must work to create a comprehensive experience for their customers that ensures their return.

Changes in Consumer Behavior

In recent years, consumer eating habits have undergone noticeable changes. The increasing burdens of life and longer work hours are among the main reasons for this shift. Today, many people tend to eat at restaurants rather than cooking at home, as dining out has become more of a social experience than merely a dietary necessity. Therefore, restaurants must adapt to these new behavioral patterns.

The new generations of consumers, such as Generation Z and Millennials, are seeking unique and distinctive experiences. This includes choosing restaurants that provide comfortable atmospheres, quick service, and innovative foods. Understanding these behavioral changes can help restaurant owners target a broader base of customers and deliver what meets their needs.

Moreover, consumers no longer rely solely on local restaurants. Online food ordering apps have become popular, allowing them to experience diverse foods without needing to leave their homes. Thus, restaurants should invest in their digital presence by providing online ordering options and developing efficient delivery services. This modern trend reflects how consumer behavior is shifting towards convenience and ease, requiring business owners to adapt to this new reality.

The Importance of

Quality Improvement and Marketing

Quality improvement is considered one of the essential factors for the success of any restaurant, in addition to effective marketing. Every restaurant should strive to offer the best possible quality in food and service. High quality means customer satisfaction, leading to repeat visits and thus achieving sustainable profits. Achieving quality requires continuous training for employees and adherence to strict standards in food preparation.

Marketing is a vital component in attracting new customers and retaining existing ones. Marketing should include multiple strategies that align with market trends, including social media marketing, advertising campaigns, and collaborations with influencers. Restaurant owners should think smartly and use data to understand consumer behavior and analyze marketing campaign performance. Providing engaging content and precisely targeted campaigns can increase brand awareness and drive visits to the restaurant.

Moreover, having a well-thought-out marketing plan that allocates a budget for marketing is crucial. The marketing budget should range from 6% to 10% of total revenues to ensure effective promotion of products and services. Marketing is not just a cost; it is an investment in the future. If planned well, it can lead to substantial sales increases and significantly enhance the brand.

Strategies for Sustainability and Growth in the Restaurant Sector

Sustaining restaurants in a competitive market requires many well-thought-out strategies. Restaurants should have a long-term vision and a clear developmental plan to face various challenges. An important strategy is to diversify the menu to meet changing customer needs. This menu should also include healthy options that cater to different tastes. Innovation is key to success in this sector, as adding new dishes or offering special promotions can attract new customers.

Building relationships with customers is also a fundamental element for continuity. Restaurant owners should strive to provide a personalized experience for customers through distinctive services that make them feel part of the brand. It is important to listen to customer feedback and make their adjustments as quickly as possible. This positive relationship will lead to customer loyalty, enhancing the chances of their return.

Furthermore, restaurants should invest in technology, such as inventory management systems and modern point-of-sale programs, to improve efficiency and increase productivity. Utilizing data will help improve daily operations and offer better customer experiences. There should be a focus on enhancing operational efficiency and reducing costs through effective resource management. All these strategies combined can ensure the sustainability and growth of restaurants in a competitive environment.

Challenges of Competition in the Market

Competition is one of the most significant elements faced by any institution or project, especially in light of the rapid transformations occurring in the market. Currently, customer requirements are becoming more complex and diverse, making it essential for companies to adapt to these changes. Today’s customers differ significantly from those in previous years, which requires entrepreneurs to understand new customer behaviors and changing expectations. Studies have shown that 84% of customers take pictures of food in restaurants, making the ability to present an aesthetically pleasing product vital for business success. For instance, restaurants should invest in offering dishes that can be photographed beautifully, as this contributes to product spread and increases brand awareness through social media.

Therefore, entrepreneurs must have a comprehensive understanding of their market data, including product costs and waste rates. If a business owner lacks accurate knowledge of this data, they may find themselves unable to make informed decisions that lead to performance improvement and increased sales. When competition is strong, it is easy for customers to lose interest and seek alternatives, making it essential for the brand to meet their needs effectively and promptly. Companies should also leverage modern technologies to collect and analyze data that help them better understand consumer behavior and offer tailored promotions.

Opportunities

Growth in Small Cities

The experience of many entrepreneurs shows that opening businesses in small cities can be more successful than opening them in large cities, where competition is less. In large cities, such as Riyadh, entrepreneurs find themselves facing strong competitors and diverse customer demands, making it challenging to compete for attracting customers. On the other hand, in small cities, opportunities may be greater due to the lack of a large number of competitors. For example, a restaurant owner can obtain significant advertising space in the streets of small cities for a small amount compared to what it requires in large cities.

There are many examples that indicate the success of projects in small cities. A case study of a restaurant opened in a small city showed that it achieved sales exceeding those of its branches in the capital. This reflects how meeting the needs of the local market can lead to great success. The increasing demand for unique and distinctive products in areas suffering from a lack of options can have a significant impact on the success of the project. These experiences have shown that entrepreneurs who choose to head towards small cities can achieve great success if they manage to offer a high-quality product and excellent service.

The Impact of COVID-19 on the Market

The COVID-19 pandemic had a tremendous impact on all sectors, especially the restaurant sector. At a time when many restaurants relied on indoor seating, there was an urgent need to adapt to new conditions. The pandemic positively affected some restaurants that had the capability to provide fast and efficient delivery services. These circumstances led to an increase in demand for delivery services, contributing to higher sales for restaurants that were ready to adapt to these changes.

On the other hand, restaurants that relied on the dining experience were negatively affected, as their sales significantly declined, leading to the layoff of many employees. Experiences showed that companies with clear marketing plans and the ability to adapt to new conditions were able to survive and even thrive in some cases. The shift towards online shopping and delivery applications has also become a prominent feature, as these applications now represent a significant portion of restaurant sales.

Development of Local Brands

Local brands in the Kingdom of Saudi Arabia are witnessing notable growth, as many entrepreneurs have proven their ability to create competitive brands. Despite the presence of global brands, many consumers have begun to prefer local products that reflect the country’s culture and better meet their needs. For example, “Al Baik” is one of the most prominent local brands that has achieved great success in the market, managing to maintain its quality and reasonable price.

There are also many emerging brands that have begun to establish themselves in the market, such as “Baitoti” and “Shawermer,” which offer diverse options that cater to local consumer needs. It is important for new entrepreneurs to realize that building a brand requires patience and effort, in addition to the ability to adapt to market demands. Providing a high-quality product and an outstanding user experience can significantly contribute to enhancing the brand and increasing customer loyalty.

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