Are you thinking about owning a restaurant? You are not alone if the thought of putting your name on a restaurant awning has crossed your mind. One of the most tempting forays into entrepreneurship is the restaurant business. How hard can it be – right? Well, you have all heard the statistics about success and failure when food and beverage are involved, so I won’t repeat them. Instead, let’s look at some of the common reasons why restaurants fail (this is only a sampling). If you were to address them all then maybe, just maybe, you can make it work.
[] ASSUMING THAT IT WILL BE EASIER AS AN OWNER
Spoiler alert – nothing could be further from the truth. As hard as you work right now, as many hours as you currently invest in a job, the level of stress that you feel, and the number of challenges that you have faced in the past will only pale in comparison to ownership.
[] NOT UNDERSTANDING HOW TO MEASURE AND COMPARE
It really isn’t hard to know what to do – it has all been done before. You need to lean on the mistakes and successes that others have under their belt and constantly compare where you are to them. There are plenty of organizations that can help, but one that always stands out is the National Restaurant Association. Tap into their resources for excellent benchmarks of performance.
[] WORKING WITHOUT A BUDGET
Seriously, why would you ever jump into the deep end unless you had a plan and real-life measurements that serve as a roadmap? The more often you budget and measure the better you will get at it. Again, turn to the National Restaurant Association for guidance.
[] PRICING YOUR MENU BY COMPARISON
What is always shocking to me is how many restaurateurs, intelligent people, determine their selling prices by looking at their competition and trying to replicate what they do, or underprice them thinking that this is the answer to growing a business. These are the restaurateurs who call me up and ask: “My dining room is full, why am I not making any money?”
[] NOT UNDERSTANDING HOW TO PLAN EFFECTIVE MENUS
More often than not – the success of your restaurant begins with effective menu planning, proper pricing, and consistent execution. Yep, it really is much easier than you think, yet………….
[] FAILING TO IMPLEMENT ESSENTIAL CONTROLS
Every business requires controls in pricing, consistency, quality, and cash handling. All of the tools are available for inventory control, purchasing systems, cash handling, costing templates, and quality assessment. Use them!
[] NOT ESTABLISHING STANDARDS
Develop your standards, teach your standards, execute your standards, measure your standards, and solicit feedback on how those standards sit with customers, vendors, and staff. Once established – do not sacrifice what you have invested the time in developing.
[] FAILING TO INVEST IN TRAINING
Training ALWAYS pays back in dividends. Train to your standards and be very clear. Every employee needs to be trained and most relish the opportunity to learn and get better at what they do. This is absolutely essential.
[] NOT HAVING A CLEAR CONCEPT
If you are not clear on what your restaurant is all about, how your menu works, and how you relay those messages then how could you expect anyone else to understand?
[] FAILING TO UNDERSTAND SOCIAL MEDIA
Plain and simple – social media IS YOUR MOST IMPORTANT PLATFORM FOR COMMUNICATION. This is what everyone pays attention to. Ads in your local newspaper are more about showing that you support that paper rather than a tremendously effective way of communicating with the public. Social media is very inexpensive, but someone needs to effectively manage it every day and every way. Your website, Facebook, Instagram, and Twitter accounts need to be up-to-date and fed constantly. In some cases, not just daily but multiple times during the day. Make sure your messaging is clear, photos are high quality, and ensure that they connect with your standards of excellence.
[] NOT EMPHASIZING THE BASICS
This has been the same since the first restaurant opened its door centuries ago: hot food hot, cold food cold; consistency is king; service with a smile; recover quickly from your mistakes; make sure the table is level; sparkling clean bathrooms; spotless glassware, china, and flatware; remember return customer names; etc.
[] TRUSTING BEFORE IT’S EARNED
This is business and in business trust must be earned. Don’t assume anything until your experience proves that it is warranted. Build those standards in so that your basis of trust is communicated very clearly to all involved and then measure trust based on how well everyone adheres to those standards.
[] NOT UNDERSTANDING THE ROLE OF PROFESSIONALISM
Regardless of your concept and your price point, professionalism should have a home in your restaurant. How everyone cares for their grooming, their uniform, their attitude, their hospitality persona; the way they treat each other and the respect they show for the ingredients they use; how honest they are and how they care for the space and equipment they use is all part of that professionalism package.
[] NOT KNOWING LABOR LAW
Oh boy, entrepreneurs that fail to understand the labor laws in their respective state are in for a big surprise. Rates of pay, overtime rules, payroll procedures, hostile work environments, equality in employment, and any form of discrimination will lead to real unpleasant and expensive outcomes.
[] FAILING TO MANAGE THE DOOR AND RESERVATIONS
“The kitchen is slow tonight”. “Tensions are high.” “Service is off.” “Everyone is in the weeds.” You know the drill; we have all been there before. There might be a multitude of reasons, but one that consistently stands out is poor door management. Letting too many guests in at once, flooding the dining room and over-taxing servers will quickly lead to the same challenge in the kitchen. This is when things start to fall apart. Pacing reservations and slowing down the seating of guests will keep the rhythm in order and leave everyone further away from the edge of the cliff. This is a front-of-the-house art – learn it!
[] NOT MANAGING CASH FLOW
Food, beverage, and labor cost percentages mean very little if money is going out faster than it is coming in. An astute accounting department is one that manages this flow to keep everything in balance.
[] NOT HAVING A HANDLE ON SOLID COMMUNICATION
Ask nearly any employee, in any business: “What is the biggest problem in the business where you work?” Chances are pretty good the answer will be: “Communication.” It’s either insufficient, inaccurate, poorly timed, or conflicting. Learn to be as transparent and timely with your communication and make sure that it is accurate and the same, no matter who is delivering the message.
[] NOT PARTNERING WITH THE DEPARTMENT OF HEALTH
You, of course want to make sure that your staff and customers are safe and that you are doing everything to protect their health. It is important to know that the Department of Health is there to help you do just that. Don’t wait for that annual surprise visit – engage them, respect them, communicate with them, ask them questions, and make them a partner in your standards.
[] NOT HAVING A NEST EGG TO FALL BACK ON
Guess what? Things will go sideways. The economy will dip at times. Weather is inconsistent and somewhat unpredictable. Employees will leave suddenly. A new restaurant will open up and lure your customers away. And there will be another pandemic at some point in time. If you are living from week to week, hoping that enough cash will flow through your operation to keep you afloat, then any one of those challenges will open the door to failure. Stash money for a rainy day. Save, save, save. Make sure your relationship with your bank is strong and arrange for a line of credit to fall back on when needed. Plan for challenges – it is critical.
[] NOT UNDERSTANDING THE ROLE OF HOSPITALITY
In the end, the quality of food you offer is important, the technical service you provide is essential, the prices you charge will attract or push certain customers away, but it is your sincere, friendly, warm hospitality that creates customer loyalty. It is your kindness, empathy, and positivity that attracts and retains good employees. Never lose sight of the importance of this.
PLAN BETTER – TRAIN HARDER
Harvest America Ventures, LLC
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