Running a successful restaurant has its particular challenges. That is why two thirds of new restaurants fail in the first year and why restaurant insolvencies have risen by 12% in the last 12 months when the general trend for business insolvencies has fallen by 4%. Or maybe that increase is because in this entrepreneurial age, so many people think they can run a restaurant because how difficult can it be if they can cook?
It’s a sector that is idealised and sentimentalised and it’s not just about cooking. I’ve seen many restaurants fail because the owner foolishly thought that business planning and day-to-day detailed knowledge based management was not important. If you once wrote your business plan on the back of a serviette and haven’t thought about it much since, read on!
So what are the particular challenges that restaurant businesses face?
Do you know your business?
Hiring a manager is fine - in some cases it is a necessity - but don’t ever trust anyone completely with your money or your business reputation. Remember that no one is going to care about your business the way you do.
An elegant atmosphere and award winning cuisine only go so far if financial duties are not completed or are done incorrectly.
The world’s best food cannot save a restaurant running at a loss. Poor management is probably the single biggest contributing factor to failure. You need to know what is happening day to day in every area of your business. For example, do you know how many covers there are each day and what the spend per head is? Do you know what your staff, property and food costs are? Is your chef on top of controlling wastage, portion control, food supply issues? Are you getting the best prices and quality from your suppliers?
Renowned chef and restaurant owner Gordon Ramsay has these wise words: "In my own business I'm very aware that you have to react instantly to changing trading conditions: cutting down on overheads, reducing costs, tapering menus, you have to react straightaway, not wait. In today's climate we're producing figures weekly, not monthly, you have to be on top of what's happening."
If your management is in place, then here are some other issues to tackle.
Is your location lacking?
It really is a case of location, location, location. A restaurant can’t rely on online business to supplement their footfall through the door. So picking a suitable location where competition is not too fierce and then deciding how you are going to compete with the other restaurants around you is vital.
And if you are trying to sell the fine dining experience when your customers want hearty and homely then you are on the road to ruin. You need to supply what your locals demand. Market research is the key. It doesn’t matter how good your chef is if no one comes in to eat his food!
Are your staff your best asset?
In the restaurant business more than any other, your staff are in the spotlight and can make or break your business.
Not only does your chef have to be a great cook, he/she also needs to be a team player, a motivator, a communicator and a stickler for detail; particularly in the areas of cleanliness and food management and hygiene.
In a sector where wages are low and turnover can be high, choosing the right front of house staff and then training and motivating them to consistently deliver the customer service that you require is another fundamental that should not be underestimated.
Are your procedures squeaky clean?
Effective procedures are paramount in the restaurant business. In the front of house you need proper procedures for handling and banking the cash. In the kitchen, rigorous food management procedures to comply with Health and Safety and Food Hygiene Regulations need to be clear and communicated. Effective cleaning procedures throughout your establishment also need to be in place. No-one wants to eat in a grubby restaurant.
Is your customer your critic?
In today’s world of social media, everyone is a food critic or blogger and a review of your restaurant can be instantaneous. This puts tremendous pressure on staff and the need for consistent quality and customer service is greater than ever if you want to succeed. Knowing about that bad review and dealing with it swiftly is hugely important.
In my experience, you have a better chance of survival if:
- You go in with your eyes wide open
- You continue to monitor the business and take swift corrective measures when necessary
- You take advice from a professional at an early stage if things begin to go wrong.
If you have concerns about your business, contact Mike Grieshaber on 0118 973 7776 for reliable, positive and impartial advice. An initial consultation is free of charge.