WHAT RESTAURANT OWNERS GET WRONG

me at dinner

I have the privilege of working with many different restaurants and food businesses. Some are very successful, while others are hanging by a thread. Some are owned by individuals who have the knowledge and the wisdom of seasoned business people, while others struggle to find a path to survival. Some have their feet planted firmly on the ground with a system that is time tested and solid, while others tend to drift in and out of consciousness. In all cases they begin with the same goals: prepare and serve great products that are consistent and offered with a smile, build success on a steady flow of sales and controlled profitability, and do all of this with pride. So why does it sometimes go wrong?

The following provides some “food for thought”, maybe even a “look in the mirror” checklist for those who are drifting away from those initial goals.

[]         THINKING THEY CAN MANAGE THROUGH OTHERS

Of course, the right approach is always to hire, train, and build up your employees until they can take on more responsibility and reach some level of fulfillment for themselves, but, when an owner of a small restaurant operation begins to think that he or she can operate at the same level and reach those somewhat baseline goals without being there, is when the business begins to show signs of wear and tear.

[]         LOSING SIGHT OF DEPENDABLE HOURS OF OPERATION

One of the most important goals of any restaurant is dependability and consistency. Even the most loyal guest will start to drift away if they can’t depend on the service, the product, or the hours of operation. Before you close and shift hours of operation think completely about the potential domino effect.

[]         NOT INVESTING IN COMPETENT EMPLOYEES

Even when the owner is present – he or she must depend on the consistent interactions between customers and the restaurant’s employees. Those employees must know their job, know the product, and have a welcoming personality that helps to create loyalty. Every restaurant must constantly invest in training.

[]         PUTTING ALL OF YOUR EGGS IN THE CHEFS BASKET

I am proud to be a chef and always will be, but a common mistake that restaurateurs make is to turn over the concept and the reputation of their business to that great chef that was just hired. Unless that chef is a partner there is a high probability that he or she will leave at some point and take the restaurants positive reputation along for the ride. Make sure that owners retain ample ownership of the concept, standardize as much as possible, and constantly train a strong bench of people who can step up to the plate if the chef departs.

[]         FAILING TO ASK THE CUSTOMER

We should never underestimate the importance of customer perceptions, expectations, and new ideas. Engage them and they will become your ambassadors. Ignore them and they will find someone else to pay attention.

[]         CONFUSING LEADERSHIP AND MANAGEMENT

You might and should train your staff to move into stronger management roles – this will keep them interested in remaining a part of your organization, but they should never take the place of your vision and inspiration as a leader. You can delegate management responsibilities, but it is rare to find a successful owner who delegates leadership.

[]         NOT SAVING FOR A RAINY DAY

When business is strong the tendency is to spend, to raise wages, remodel, buy that new piece of equipment, or add staff. The problem is that at some point business will soften, the economy may go south, inflation will settle in and impact on the customers ability to spend, or unforeseen repairs will come out of nowhere. The best restaurants keep tightening their belt until there are ample contingency funds that serve as a cushion for hard times. Far too often restaurants are swallowed up because they are cash flow poor.

[]         PAYING TOO MUCH FOR RENT

Use this simple rule: the cost of rent for your restaurant should not exceed 6% of your annual projected sales. When rent is too high then something will suffer: raising prices to the consumer driving them away, cutting necessary staff, lowering the quality of ingredients or cutting portion sizes, minimizing your contribution to marketing, or ignoring those equipment repairs that will eventually haunt you.

[]         NOT PAYING ATTENTION TO THE EXPERIENCE

As a full-time leader who is always present in the operation – your two primary goals are to set and enforce standards of excellence, and invest time in ensuring that the guest experience is comprehensive (product quality, ambience, service, value).

[]         GIVING THINGS AWAY

Restaurants always seem to be the first target for charities and fundraisers. Too many assume that restaurants are flush with profit when just the opposite is true. Restaurateurs are notoriously generous, sometimes to a fault. Don’t get caught in the trap of giving away the store. Budget cautiously for donations and stick to the budget. It is OK to say: “I’m sorry but we have already donated all that we can for this year – please feel free to contact us earlier next year.”

[]         NOT FOLLOWING THE UNIFORM SYSTEM OF RESTAURANT ACCOUNTING

Restaurateurs and chefs are not always the best bookkeepers. If you can’t find the funds for a full-time bookkeeper, then align with a CPA who can handle your deposits, taxes, payroll, accounts payable, and analytical data such as a P and L, balance sheet, income statement, and cash flow report. Many, many small restaurants fall victim to failure to pay sales tax, Department of Labor audits on payroll, or overdrawn accounts due to poor money management.

[]         NOT PAYING ATTENTION TO THE COMPETITION

No restaurant is an island. Every operation that serves prepared food is your competition. If customers are grabbing a pre-made sandwich at Starbucks, they are not making a reservation at your place. Watch what your competition is doing, analyze it, use their operation as part of a benchmark study, try their product and service and use it to see where you can improve, etc. Owners need to know exactly what is going on around them.

[]         BECOMING TOO COMFORTABLE WITH THE STATUS QUO

“It has worked for years, why would I ever change?” If this sounds familiar, just look around you at any other industry or type of business to find a clue as to why change is inevitable. How many storefront retail shops suddenly close their door because they ignored the convenience of on-line shopping? How many taxi companies turned their nose up to Uber until it was a company that had changed this industry forever? How many hotels never gave AirBnB a second thought, until it was too late? You get the picture.

[]         FAILURE TO COMMUNICATION USING TODAY’S MEDIUMS

Communication still ranks the biggest problem within organizations regardless of their size. Communication with customers and with employees is an essential part of leadership and management. You MUST become savvy at using social media, effective websites, YouTube, email blasts, and public forums to get everyone apprised of your intentions, challenges, and opportunities.

PLAN BETTER – TRAIN HARDER

Becoming Successful is the FIRST STEP – Staying Successful is HARD WORK.

Harvest America Ventures, LLC

www.harvestamericacues.com BLOG

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