The other day I witnessed, once again, one of the most gut wrenching events that may go un-noticed to others. I watched as a restaurant closed its doors for the last time, the “for lease” sign take the place of open for business, and the desolation of an empty parking lot. I felt deeply for the operator who more than likely had visions of happy guests filling restaurant seats, plates of beautiful food leaving the kitchen, happy banter taking place among employees, a full parking lot and financial success. Now that investment of hard earned funds, passion, an idea that was felt to be spot on, and eager employees who shared in that hope was gone. It is one of the most painful things to watch and even more so to be a part of.
The question always is – was this outcome avoidable? Is it possible that given better planning and more astute operation – this restaurant could have risen to the top as another example of a great business? What happened, what were the signs, should the operator have turned right when he or she turned left?
There are many realities related to the operation of a restaurant that are far too often ignored or misunderstood and there are just as many fixes for those realities. Why then, when the pitfalls are well known, do restaurant owners and operators fail to prepare, adjust, and respond to the signs in front of them?
Take a look at this primer that might make a difference for many who have the best of intentions only to find their dreams dashed:
- PAUSE BEFORE YOU SIGN ON THE DOTTED LINE
Quite often – restaurants are doomed before they even start. Make sure that you do the research, run the realistic numbers, look at the competition, know the area and the market potential – make sure that the planets align before you pull out your pen.
- STEP BACK AND RESPOND TO THE NEED
Every operator, whether he or she is an accomplished cook or not, has a desire to build a menu based on what they believe will sell and represent them well. This is, of course, human nature, but the most successful restaurants build a menu based on what the community is interested in buying. Research the market first, talk to people, observe their eating habits, and find out what is missing in the area. At the very least – consider this info before the menu is in print.
- START WITH THE LOCATION AND THE LEASE
Location IS IMPORTANT! Sometimes a block in the wrong direction can lead to business doom while a block in the right direction can bear loads of fruit. Spend the time to analyze parking, traffic patterns, why people move the way they do in a neighborhood, and what other businesses are in place that attract patrons. Take a breath and take your time.
Once a site is identified make sure that you can afford it. The best rule of thumb for restaurants is that your lease, rent, or mortgage should never exceed 6% of your anticipated annual sales. REMEMBER THIS NUMBER and do not allow yourself to drift from this basic reality. If the lease proposed exceeds this percentage – be prepared to walk away.
- PUT ASIDE THE EMOTION AND THINK LIKE A BUSINESSPERSON
Going into business is very exciting. Emotions run high when a potential restaurateur looks at a building and the wheels begin to turn with thoughts of grand success. This must be a sound business decision – dot the “I’s” and cross the “T’s”.
- DEFINE WHAT YOU INTEND TO BE
A vision is important, but only viable when it is converted into action. Every successful restaurant has a fairly clear idea of how they want to be perceived by employees and guests.
- THE PRODUCT SETS THE STAGE
The product served is connected to everything else in the restaurant. The menu should connect to the aesthetics, type of staff, qualifications of the culinary team, pricing strategy, equipment, marketing plan, and the profile of guests to be served. Spend the time to make sure that these connections are in place and are based on solid research.
- IT’S ALL ABOUT THE STAFF – HIRE RIGHT, TRAIN WELL, AND LEAD
No matter the quality of product, the best location, the most attractive lease arrangement, the integrity of the marketing plan, and the cost controls in place – if you fail to hire the right staff, train them exceptionally well, and assess their performance – all is for naught. It’s all about your staff.
- FOOD BRINGS THEM IN – SERVICE BRINGS THEM BACK
Food and beverage is, of course, at the heart of any restaurant. You must ensure that this is well developed and in tune with what customers are willing and interested in buying, but it is the quality of service, the true hospitality, the connections that are made between staff members and the guest that bring people back and convert customers into friends and ambassadors. This can never be forgotten.
What ever you do – the restaurant product and service must exude TRUST. Guests want to trust that EVERY TIME they patronize your restaurant they can trust that the level of quality and attention to detail will be there.
- PROFIT IS MEASURED IN PENNIES
Everyone in your restaurant must understand that the restaurant business is a business of pennies. The smallest missteps equate to an erosion of profit. Portioning, controlling waste, eliminating the potential for theft, watching vendor pricing, and using established methods to determine accurate selling prices are critical pieces in the puzzle.
The other factor that drives nearly everything else is that “The Top Line Drives the Bottom Line.” Owners and operators must focus on driving sales, filling restaurant seats, and training staff members how to increase check averages. This must be assessed every day.
- SWEAT THE DETAILS
Everything is important! The cleanliness of the parking lot, the working order of signage, the current status and easy navigation of your website, the content of your social media, the spotless presentation of the restaurant dining room, the cleanliness of bathrooms, the attention to uniforms and grooming of staff, making sure tables are level, the condition of china and glassware, the friendliness of staff, the speed of service, the presentation of food, temperatures of food, temperatures of the dining room, the comfort of chairs, and so on are critical. Everything is a detail and everything is ultimately important.
- TAKE EVERY OPPORTUNITY TO MARKET
Every day for the owner/operator is an opportunity to get the message out. Your image is whatever you promote and if you fail to constantly present this image then you are conspicuous in your absence. Don’t create a marketing void.
- ENGAGE YOUR STAFF IN SOLUTIONS
Your staff members have much to gain and much to lose. Solicit their thoughts on business and engage them as problem solvers. Your staff members are much closer to the paying guest than you are.
- BUILD RELATIONSHIPS
Happy guests want to develop a strong connection with your restaurant – give them a chance. Solicit their thoughts, invite them to tastings, remember their names as well as their likes and dislikes, make them a part of your team – they are ready, willing, and able.
- ANALYZE, ANALYZE, ANALYZE – ACT
Finally, make sure that you understand what is going on. With contemporary point- of-sale systems and management applications you can and should know: check averages, what sells and what doesn’t sell, which servers are most effective at upselling, when you are busy and when you are slow, sales per seat and sales per square foot, profile characteristics of your guests, and the contribution to profit of each menu item. Failure to collect and use this data is a step in the wrong direction.
Operating restaurants is very difficult and even if you do everything right there are no guarantees. However, failure to do things right will certainly lead you down the wrong path. Don’t become the next restaurateur to place that out of business sign in the front window.
PLAN BETTER – TRAIN HARDER
Harvest America Ventures, LLC
Restaurant Consulting and Training