Tag Archives: Restaurant failure

THE RESTAURANT ECO-SYSTEM NEEDS HELP

17 Thursday Dec 2020

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There are a number of reasons why restaurants fail – some are predictable and avoidable, while others can catch a business off guard.  None, however, are as devastatingly out of the operators control as this pandemic.  Even the best operators are at a loss for solutions.  There are short-term band aid solutions such as takeout, delivery, or even conversion into retail markets where wine inventories and local necessities take over space once occupied by diners, but they are not a replacement for a steady turn of tables.  Restaurants have been relegated to outside dining or limited indoor space with loads of protocol limitations (some that are even more stringent than what is expected of other businesses) – this doesn’t pay the bills or keep a staff employed.

The pandemic is an “all hands on deck” problem that can be somewhat contained through simple precautions, but until there is mass vaccination of a population – these precautions dig at the heart and soul of a business that is essential to our way of life, our psyche, and our social health and wellbeing. 

There have been well over 100,000 restaurants that have closed their doors permanently as a result of the pandemic.  Many of these restaurants have been around for decades or even generations.  They just can’t survive the pain of lost business for months on end.  Now, this alone might not keep the average consumer or politician up at night, but what they fail to understand is that restaurants are at the center of a broad eco-system of businesses that are inter-dependent.  When your favorite restaurant closes its doors it is disturbing and sad, but it is also part of a domino effect that can tumble out of control.

Here are some of the other businesses that suffer when a restaurant closes, sometimes they too cannot survive as a result:

[]         Regional Farmers:  A significant percentage of farm crops are dedicated to restaurants.  A reduction in restaurant business leads to crop waste, unplanted land, and serious cash flow problems for farmers.  Already living on the edge – smaller farms cannot withstand this loss of business volume.

[]         Fisherman:  The end consumer’s love of fish cannot sustain a fisherman’s need to catch and sell a quantity of product to offset their expenses.  Restaurants account for a large percentage of a fisherman’s direct or indirect business volume.

[]         Ranchers:  Have you noticed that the price of beef, pork, and chicken has increased significantly over the past few months?  Those processing plants need to cover their substantial operational costs now that restaurant business has all but disappeared.  If processing plants cannot find an outlet for their end product then this trickles down to the rancher who is saddled with cattle, pigs and chickens without a market.  The end result is reduced herds, increased cost of feed, land without sufficient grazing, etc., etc.

[]         Cheese Makers:  Cheese, although there are exceptions, is still a product with a shelf life.  When restaurants fail or reduce their product needs, then cheese makers must do the same.  Inventories wane, waste becomes a real concern, decreased cheese product means a reduced need for milk putting a strain on dairy farmers, and the lists goes on and on.

[]         Equipment Manufacturers:  Restaurant kitchens are home to some very expensive equipment – when sales volume evaporates then restaurants are faced with aging equipment that they cannot replace, and delays in opening new operations that require equipment purchases.   There is no other outlet for this specialized equipment.

[]         Breweries:  Sure, maybe consumers are directing their beer purchases to their local package store, but breweries know that this direct to consumer cycle is not sufficient to support their growing expenses.  It is the restaurant segment of their business that creates a steady flow of cash to support their endeavors. 

[]         Distilleries and wineries:  The same holds true for those who market distilled beverages, and of course the wine industry.  Restaurants are the mainstay of business for vintners both domestic and imported.

[]         Table Top Manufacturers:  Restaurants are constantly buying and replacing china, glassware, and flatware for their restaurants.  It is a business that is predictable and dependable – until purchases stop.  Every restaurant that tries to survive during these difficult times will commit to tightening their belts and deferring any purchases that are deemed non-essential.  Those companies focused on tabletop have found that their business has disintegrated.

[]         Local Musicians:  Musicians need to play.  That wonderful local talent that graced the stage in bars and restaurants, and at banquets and festivals no longer has an outlet.  There is literally no opportunity for them to play and earn a living.  The need to survive will have a long-term impact on the availability of live music for quite some time.  Musicians depend on the restaurant business.

[]         Florists:  Sure – florist shops do very well on Mother’s Day, Easter, and Valentine’s Day – but the rest of the year involves a full-time focus on weddings, banquets, reunions, anniversary parties, and daily restaurant floral displays.  When this business goes away (there are no conferences, large wedding receptions, business gatherings, or restaurant floral displays during the pandemic) then the florist is left with unsustainable cash flow.

[]         Linen Companies:  The vast majority of restaurants do not have laundries where tablecloths and napkins, and restaurant uniforms and side towels can be laundered, starched and ironed.  These restaurants rely on linen companies for this service as they rent all of the above.  When business dries up in restaurants – so does business disappear for linen companies.

[]         Wholesalers:  Those companies that collect, deliver, stock, and bill for essential ingredients in restaurants depend, almost exclusively, on restaurants for their business.  Unless they can change their business model and supply ingredients directly to consumers – then wholesalers are left with a greatly diminished amount of business volume.

[]         Clothing Stores and Uniform Companies:  Those local clothing stores take a direct and indirect hit from a faltering restaurant industry.  Directly – those clothing stores that have relied on providing restaurant uniforms have found that their business model is void of customers.  Indirectly, as fewer people take the risk of dining out and shelter at home during the pandemic, they also cut back on clothing purchases that they can display when enjoying a night at their local restaurant or bar.

[]         Coffee Growers and Roasters:  The direct to consumer market for coffee roasters is certainly important, and at some level the take out business and home brew option is still strong, but still a large section of their wholesale business has dried up as restaurants fail at an alarming rate while others have seen business volume decrease by 50% or more.

[]         Landlords:  Building owners have been a target during the pandemic as restaurants have found it impossible to meet the requirements of a lease.  In the end, the landlord also has to pay bills and when a restaurant defaults – they find themselves in a very difficult situation.  “Should we cancel a lease for non-payment and evict the tenant, or should we try to compromise?”

[]         Bakeries:  Most small to medium sized restaurants cannot afford the space or talent needed to produce their own breads and other baked goods.  So, they rely on local or regional bakeries for those goods.  Many bakeries have built their business model on this type of wholesale as their mainstay.  When restaurants fail – they take your local bakeries with them.

[]         Culinary and Restaurant Management Colleges:  With a decrease in the number of restaurants and significantly lower volume of business – there is far less need for those young, eager graduates.  Schools are experiencing dramatic declines in enrollment and challenges in job placement.  Every day brings another college program closing.

The list could go on and each of these listed businesses has their own eco-system of impacted operations.  The point is that that failing local restaurant is only part of the dilemma.  If we allow restaurants to fail, then we allow the entire ecosystem to fail as well.  If restaurants are financially healthy then the system works well.  Right now the restaurant industry needs help from the Federal government.  Without extended PPP benefits, bank loan deferrals, help for landlords, and business recovery training for small restaurants – this system will crumble.  Restaurants cannot wait until 70 or 80% of the population receives a vaccine.  Restaurants cannot survive until the fall of 2021, restaurants cannot continue to wonder from week to week whether they will be able to accept indoor customers or not and they cannot wait for politicians to find a way to talk respectfully to one another.  They need help now!  If this is not provided then an important part of our culture, a major employer of people, and the heart of the food ecosystem will not survive.   Write to your representative, speak your mind through the media, stand in support of your local businesses and do your part.  We have lost too much over the past 9-months; don’t add your local restaurants to the list.

PLAN BETTER – TRAIN HARDER

Harvest America Ventures, LLC

Restaurant Consulting

www.harvestamericacues.com  BLOG

CAFÉ Talks Podcast

https://cafetalks.libsyn.com/

CHEFS – FAILURE IS NOT INEVITABLE

20 Friday Nov 2020

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It seems that every time I check my email or flip through postings in social media – there is another restaurant, food business, or culinary school preparing to close their doors.  It is heartbreaking to read of life visions dashed and even long-standing, viable businesses choosing to throw in the towel.  I am writing this to tell you that, in most cases, this does not have to be the storyline.

There is no shortage of organizations established to support their segment of a far-reaching industry.  We have organizations for bakers, pastry chefs, savory chefs, executive chefs, corporate chefs, club chefs, restaurateurs, cooks dedicated to sustainability, whole food chefs, college food service directors, culinary educators, hoteliers, club managers, dietitians and nutritionists, vegetable farmers, dairy farmers, cheese makers, servers, bartenders, mixologists, grape growers, wine makers, and sommeliers.  Each has a focus on issues and opportunities for their particular group, but rarely do they talk effectively with one another.

I tend to try and separate cause and effect – knowing that nothing will truly change unless we identify cause and focus on that.  Restaurants, culinary schools, producers, and those in the beverage business are suffering because of the pandemic, but there were (and still are) plenty of other crisis situations facing these segments long before Covid-19.  Restaurant profits are too low, finding competent staff is far too difficult, prices of ingredients keep rising, rents are out of sight, culinary school enrollment continues to decline, competition is too expansive, cost of an education doesn’t match rates of pay, industry pay scales and benefit offerings are too low, and marketing is way too confusing in the era of technology and social media.  How many of these challenges might be addressed if all of these silo groups actually viewed themselves as part of the same business and worked together?

Here are some things that I know to be true:

[]         Restaurants Will Rise Up Again

When WWI and WWII ended – restaurants and bars were some of the first businesses to recover.  When the Great Depression came to an end – restaurants and bars positioned themselves to thrive.  As we rebuilt American pride after 9/11 – restaurants stood in position to greet a reinvigorated American spirit.  Following the economic devastation of 2008 – restaurants hunkered down for months and then came back refreshed and charged up.  And when we are able to bring the pandemic under control – the same recovery for restaurants will be the case.  Restaurants and bars will be different; their product, service, and method of operation will likely change – but they will rise up again.

[]         Culinary Schools Will Be In Demand Again

Those schools that self-evaluate and communicate effectively with the industry they serve will always be needed.  The question is – are they willing to change?  The purpose of colleges is to teach, prepare, train and connect students with the rest of their lives.  The purpose is not to generate degrees.  When they start to look at the relevance of products that they offer and diversify from the standard degree; and once they connect better with the industry that hires their graduates, they will stand tall and thrive.  Schools cannot continue to exist in their own bubble – creating content that fails to align with the industry they serve.  They cannot continue to create programs that place graduates in debt for 20-years following graduation and, they cannot remain effective unless they deliver an education model that takes advantage of industry partnerships.

[]         Bars Will Once Again Become a Preferred Meeting Place

People love to gather, to connect with friends and make new ones.  Restaurants and bars have always served that purpose and they will again once people are comfortable with being out in public.  In fact, I would dare to guess that bars, in particular, would find themselves busier than ever before.

[]         Smaller Farms Will Become Essential Once Again

One thing that has become very apparent during this pandemic is that our supply chain is far more fragile than we thought.  Compound this with the impact of climate change on centralized production and we have a real concern that reaches far beyond the altruistic and environmental reasons for connecting with local farms.  Although a very difficult business – the opportunities for smaller regional and local farms will only grow.  But, farmers and chefs must work together to create this model.  Neither can exist in a vacuum.  The farmer needs to grow what the chef is looking for and the chef must create more fluid menus that take advantage of growing cycles and the quality derived from peak crop maturity.

[]         Great Bread Will Be Even More Important to Restaurants in the Future

One thing that we have learned over the past two decades is that great bread is essential to a great restaurant experience.  We have also discovered that artisan style bread is preferred over the tasteless, poorly structured products that were prevalent in the American diet for decades.  For those who are willing to learn and invest the intense amount of effort – artisan bread will be in much higher demand – thus a business opportunity.

[]         Private Entrepreneurship Will Prevail in the American Restaurant Industry

Those who have been most impacted by the pandemic are the small, privately owned restaurants in America.  Tens of thousands will close their doors, yet the American dream of entrepreneurship will rise up from the ashes and restaurants that have always been, and will once again become – a first choice for those who want to leap into ownership.  If banks can become more “user friendly” for restaurants and landlords more reasonable with rent, then your neighborhood restaurant will return – maybe with new owners, certainly with new concepts, and a fresh way of serving the needs of a community.

[]         More and More People Will Seek to Eat Healthy as They Understand the Impact on Health and Wellbeing

It is inevitable that our obsession with healthcare will lead a larger percentage of the population to work on preventative issues such as obesity, diabetes, cancer, and heart issues – all are linked to the type of food, the method of cooking, and the amount that we eat.  Restaurants will need to respond, and they will.

[]         Profitability and Challenges with the Labor Market Will Eventually Find Common Ground

Restaurants are and always have been highly labor intensive while remaining very stingy with profit.  The answer has always been to skimp on rates of pay and benefits creating an ever-challenging swinging door of employees moving from operation to operation for a few pennies more in pay.  The likely answer is to change the way we look at production and service leading to more efficient operations requiring fewer employees that can be paid a fair wage with reasonable benefits.  Something has to give.

Now, if we can unify our efforts around these realities, if we can connect all of those silo driven organizations to work together for common solutions, then the business of food will thrive and become far more resilient before the next crisis strikes.

PLAN BETTER – TRAIN HARDER

Harvest America Ventures, LLC

Restaurant and Culinary School Consulting

www.harvestamericacues.com

CAFÉ Talks Podcast

https://cafetalks.libsyn.com/

ARE RESTAURANTS FACING EVOLUTION OR REVOLUTION?

25 Tuesday Feb 2020

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Is it just another one of those cycles with a few new challenges or is it something else? It seems to me, once you start to connect the dots, you will note that the times they are a changing, and the alarm bell is about to ring. I certainly don’t want to be reactionary, in fact, what I hope to be is something more in line with being an advocate for change before change happens without us.

I don’t have the answers – they need to come from a consortium of restaurant professionals representing operations, organizations, education, ownership, and customers. I can, however, sound the preliminary alarm by demonstrating and connecting those dots, so that the picture becomes clear and telling. Here are some of the indicators:

  • The rise in support for PLANT FORWARD styles of cooking that demonstrates a healthier approach towards diet is apparent. Plant forward includes vegetarian, vegan, and a commitment to increasing fresh fruits, vegetables, beans, nuts and seeds, and decreasing the amount of animal protein. To fail to recognize this and adapt menus to accommodate EXCITING versions of the above is a serious mistake.

 

  • Increased popularity of non-alcoholic cocktails is either an opportunity for restaurants or a real roadblock to continued success.

 

  • WINE SALES are decreasing worldwide. While a short-term blow to the wine industry and restaurants that are wine centric there are opportunities to build in craft beers and hard cider as well as increase a less contrived approach towards consumer wine education. Pretention is fading in popularity. Don’t forget that the restaurant industry has supported itself on the back of alcoholic beverage sales – this has been our model for decades. Do we need to re-evaluate?

 

  • We have predicted the demise of fine dining at least a dozen times in the past 25 years – is it really happening now? Americans are spending nearly 50% of their annual food budgets in restaurants and indications that this can continue to grow – is fine dining the right answer? If 3% or less of the restaurant industry is fine dining and this is the segment that receives the most attention – what about the other 97%?

 

  • Is BIGGER ALWAYS BETTER? Who benefits from over-sized and super sized portions? Obesity is an epidemic in the U.S., so, larger than necessary portions is harmful to consumer’s health. Large portions stretch a restaurant’s ability to convert sales into profit, and large portions do very little to demonstrate any level of finesse that a chef might try to muster up. Is it time to stop using massive portion sizes to falsely demonstrate value? Is it time to move past the 18 oz. strip steak, the triple-decker burger with bacon and cheese, and the tomahawk pork chop that makes the diner feel like he or she owes the world an apology after forcing that last bite?

 

  • When did it somehow become dangerous or negligent to drink real milk, consume that delicious cheese, or spread a little butter on your toast? Well, whether it is for health concerns or a new philosophical resistance to consuming anything that originates from an animal – this is the new reality. What are you doing to modify menus, reduce portions of dairy, and/or educate consumers about moderation?

 

  • The conscience of modern chefs has been leaning toward farm to table for more than two decades. Artisan farmers have gravitated to small rural communities and transitioned to decentralized, sometimes specialized, organic farming to help to feed this growing interest and define their concern over the quality of ingredients and their impact on sustainability. This is great, however, those small farmers are finding it increasingly difficult to generate enough sales to offset the significant costs associated with farming. Can they survive? How do we stay true to the concept of farm to table and help these artisans make a living?

 

  • Young cooks are less inclined to sacrifice balance in their lives for the demands of the kitchen. Fluid schedules, holidays, 12-hour shifts, and all of the physical and mental demands of the job are no longer part of a life that they choose. These employees may resist initially, but then simply choose to find another line of work. This, above all else, paints a grim picture for restaurants of today and tomorrow, unless we find a solution and accept the need to change.

 

  • Once an exciting career that young people and those reinventing themselves were clamoring towards – becoming a cook and eventually a chef has lost it’s sizzle. The reality of the work and the commitment has finally over-shadowed the glamor that is falsely depicted on television. Enrollment in culinary schools has plummeted, and every restaurant from coast-to-coast is struggling to find new employees and keep the ones they have. Growth means very little if you can’t find the right people to execute the vision of a restaurant.

 

  • The government crackdown on immigration may seem right to some, but to those of us in the restaurant business it means that many of our most dependable, hard-working employees are gone. A reasonable resolution to the country’s immigration policies is critical and essential for the food business from farm to table.

 

  • With an increase in the number of food recalls, and serious questions about the source and the process of bringing food to market, there is a growing mistrust in the integrity of the food supply. This can only lead to a subsequent mistrust of restaurants and what they offer.

 

  • When a presidential candidate states that “Anyone can be a farmer, it takes a lot more grey matter to be in the tech business”, we know that the food supply chain is losing its importance in the eyes of the U.S. government. This will likely backfire at some point soon.

 

  • After all of these years of growth, the restaurant industry has yet to find resolution to the cause of many of its woes – restaurants return very little profit which cripples their ability to improve wages and work conditions, and do what is right vs. doing what they can afford to do.

 

  • The gentrification of neighborhoods, which seems to always begin with an influx of new, popular restaurants, eventually attracts new landlords who are greedy for profit. Increases in rent have driven restaurants out of business even when they are otherwise successful.

The list could go on and on – the bottom line is that as hard as the restaurant business has always been, it now seems to be leaning towards impossible. Necessity may be the mother of invention, but invention begins when people recognize the need and the opportunity for change. Isn’t it time for those of us in the restaurant business to recognize all of the signs and find a way to collaborate on real solutions?

PLAN BETTER – TRAIN HARDER

Harvest America Ventures, LLC

Restaurant Consulting

www.harvestamericacues.com BLOG

 

 

 

 

 

 

 

EVERYBODY WANTS TO ALIGN WITH A WINNER

24 Saturday Feb 2018

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Pride can be a wonderful motivator. Chefs and cooks are, by nature, very proud individuals – they choose to enter a demanding field of relentless work because there can be immense amount of pride in creating beautiful, delicious food for a grateful audience. There is also pride in working for a restaurant, or for that matter, any business that is successful in earning a profit.   The key, of course, is the distinction between earning and making a profit. Earning infers value is given that equates to prices charged and the manner with which employees and products are treated. When this happens a cook or chef is proud of the business that he or she works for that demands so much passion and energy.

What is ironic is that the pride that one has in their individual work will quickly dissipate if the business doesn’t hit the mark. If the customers aren’t there, the sales are off budget, the costs are not in control, or the vision is lacking then that pride in work seems to be less significant.

We have all witnessed restaurants with the right talent behind the range but the inability to match that talent with solid business sense. Once the bills stack up, the vendors’ start knocking at the door, and the dining room fails to fill on even the best days of the week then individual employees lose sight of their work quality and quickly slip into survival mode. Survival is the enemy of “team” for it fails to understand that any real solution will still come from a group that bands together, merges individual talents into a cohesive strategy, and rises above those bumps in the road. Survival has a smell and a taste that is hard to describe, but easy to identify.

So what are the warning signs of restaurant business failure and how might an operation overcome the challenges that the smell of “survival mode” brings?

  1. A LACK OF FOCUS

It becomes patently clear that things are going sideways when the property starts to lose sight of the basics of operation: consistency, quality, exceptional service, and a uniquely valuable guest experience. Focus becomes even more important when financial challenges rear up their ugly head. This is the time to double down on what restaurants know how to do best.

  1. NO CLEAR CUT RECOVERY STRATEGY

Every restaurant can and must prepare for the inevitable slumps in business, change in guest expectations, labor challenges, and competitive curve balls. When things go wrong it is more of a problem when the operator is caught without a fall back plan.

  1. THE LOOK OF DESPAIR

Picture that deer in the headlights stare – you know what it looks like. That frozen “holy crap” look that says with real clarity – I’m way over my head and I don’t know whether to just lie down in the middle of the road or run like hell. This desperation look is very transparent. Leadership is in the greatest demand when many would assume that there is little chance of recovery. This is when the good become great. Employees will always look towards a leader to guide them through the storm and offer some level of trust and assurance.

  1. STRETCHING THE LIMIT OF VENDOR PAYMENT TERMS

Ugly, ugly, ugly. When properties begin to leave vendors hanging for payment then the walls start to tighten on everyone. When a chef can’t guarantee a farmer or cheese vendor that the check is truly in the mail, when salespeople catch wind of late payments, and when new vendors will only do a “cash on delivery” basis then everything gets much, much more difficult. This happens in a business that is “cash flow” dependent and susceptible to seasonal differences in volume. The best plan for the operator is to work in advance with vendors so that stretched payments are not a surprise, and if possible, arrange for a short-term line of credit with your bank to help cover those slower months.

  1. A TOTAL FOCUS ON COST CONTROL WITHOUT A PLAN FOR INCREASING SALES

For a chef, the cooks, and the guest – the smell of failure becomes overwhelming when the property chooses to cut portions, lower quality standards, and place less emphasis on the value of talented labor to deliver the right product with the right level of service orientation. When the answer to bottom line problems is to focus solely on costs then the operation begins to feel as if it is in desperation mode. Operators should always be on top of cost control but must realize that “the top line drives the bottom line”. Restaurant revenue needs to be a unified effort if recovery is to be the prize.

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  1. CUTTING SERVICES TO SAVE MONEY

Eliminating that traditional Sunday Brunch, getting rid of valet parking that has been in place for years, stopping an established practice of customizing catered events rather than always sticking with predetermined menus, or maybe something as simple as eliminating that happy hour that helped to bring in early business may not be bad decisions, but to your guest the perception is that you no longer care about them, but rather are simply looking for ways to save pennies. Be cautious with how your cost cutting measures will be perceived.

  1. A RESISTENCE TO LOOKING IN THE MIRROR

Chances are if things are not going well – you are probably to blame. The knee jerk reaction, and human nature, is to find someone or something else to point the finger at – but as is often said: “If you point the finger at someone else – remember that there are at least three other fingers point directly back at you.” Admit what the problem is, accept responsibility, and work collectively to make the necessary corrections.

  1. DOING THINGS THE SAME AND EXPECTING DIFFERENT RESULTS

This is the definition of insanity. If the business is not working then take corrective action and be willing to go in a different direction. AS A POINT OF CONSIDERATION: Ask your employees and your guests how you should do things differently. They might have the best ideas to help turn the business around.

  1. MORE CONCERN WITH THE COMPETITION THAN YOURSELF

Yes competition makes business more difficult; yes some competitors are ruthless and seem to relish the opportunity to stomp on your success, and yes staying ahead of your competition can be incredibly time consuming, but before you invest all of your waking moments on staying competitive or crushing your neighbor – think about how you do business. Typically if the competition is outperforming you it is because you are underperforming them in some way shape or form. Fix your own house and turn the tide on competitive anxiety.

  1. INCONSISTENT PRICING STRATEGIES

Instead of getting totally wrapped up in a price war with the competition, or building a program of discounts that leaves your guest wondering what they will pay on any given day – look at two very basic questions:

  • What value are you offering for the price (this goers beyond food and service) – what is your experience?
  • Are you confident that the pricing structure matches the guest profile in your area

When you know the answers to these two questions then price accordingly and stick with it. Whenever you discount you are saying to a guest: “This discount is what we could really charge and the rest of the time we are charging too much.” Or – “We are not sure that our experience is worth the prices we charge – so try this new price on for size.”

  1. NOT PAYING ATTENTION TO YOUR EMPLOYEES OBSERVATIONS

Back to this – LET YOUR EMPLOYEES HELP with solutions. Remember your staff members are likely closer to the product, service, and guest perceptions than you –LISTEN TO THEM!

  1. NOT PAYING ATTENTION TO YOUR GUESTS OBSERVATIONS

OK – just as important – if you are unsure why sales are down or profit is out of whack – then take the time to ask, reflect on, and make decisions based on solid customer feedback. Here’s a side benefit – if guests think that you truly relish their opinions and act on their recommendations they will find even more ways to stay loyal and become ambassadors for your business.

  1. RESISTING CHANGE AND NOT ADMITTING MISTAKES

Change is tough. Even those people who claim to be in love with change – will likely resist it if it impacts on them. So – change is never easy, but at the same time it will always be a part of running a business. Embrace it and work with change to your advantage.

  1. GIVING UP

When this happens in a restaurant it is like the lights are dim and flickering, the ceiling is leaking, the employees lose their ability to care, the product is inconsistent at best, and whatever experience the restaurant built initially is now unrecognizable. These are those last days of operation when it is blatantly clear that it’s over and the air is let out of the tire. Giving up is one of the saddest things to witness, a state of mind that is nearly impossible to overcome. Don’t find yourself here – pay attention to the early warning signs, have a plan, and engage your competent staff as problem solvers while there is still plenty of hope. Winning is always in your hands to define and winning is a lot easier to digest.

PLAN BETTER – TRAIN HARDER

Harvest America Ventures, LLC

Restaurant Consulting and Training

http://www.harvestamericaventures.com

 

THE SLOW, PAINFUL DEATH OF A RESTAURANT

07 Thursday Dec 2017

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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:

  1. 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.

  1. 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.

  1. 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.

  1. 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”.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. CONSISTENCY

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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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

www.harvestamericaventures.com