By Nishank Khanna, CMO of Clarify Capital
Every restaurant owner dreams of flowing profits, thrilled guests and a balanced life. This vision is only possible by creating habits that drive success.
A survey of 500 small business owners by Clarify Capital shows what the most successful restaurant owners do consistently.
1. Know who your best guests are
Identify who your best guests are by looking at things like order size, check total, and delivery times (if you deliver). Factor in any hidden costs. This is a good time to create a customer persona on who your guests are, so you know who to talk/market to.
Your goal now is to adjust your marketing efforts to bring in more people like them.
2. Do small marketing tests to identify profitable channels
Even the most seasoned entrepreneurs fall into the trap of spending their marketing budget too quickly. We have seen far too many restaurants do a little research, set up some Yelp or Facebook Ads and call it a day. Sure, the ads received clicks. But they did result in guests?
Do small tests and keep an eye on ROI.
Identify 2-3 marketing channels that you want to test – such as social media, print, radio, local TV, etc. Allocate a small budget to these tests and track conversions to ensure they are profitable. Only then scale them to spend your budget on channels that worked.
3. Understand the importance of having working capital
Far too many restaurants defer looking at the finances on a regular basis. Unless you have $100 trillion dollars in the bank, your leeway of throwing things at the wall to see what sticks is much shorter. Without the needed working capital, a restaurant owner won’t be able to grow their business, pay bills, employees or vendors.
Identity if you need extra working capital besides the cash you already have. If you do, you can either trim down on the needed resources, get a restaurant loan, or seek out investors.
Being cognizant of your finances is critical to succeed in the restaurant business.
4. Hire the right people
Be aware of the Halo Effect. The pitfall of liking a potential candidate based on a few traits while glancing over red flags and missing skills.
Your job as a business owner is to hire people smarter than yourself. As a restaurant owner, you also want to hire the most personable and talented team you can. Re-hiring lost or terminated employees gets expensive fast.
Craft job postings that are unique to what you need in a candidate and fits your restaurant's culture. Don't copy another company's job description.
5. Test different prices to increase ROI
Speak to any restaurant owner and 9 out of 10 times they will say "I wish I charged more from the start” especially when so many of us are reluctant to raise prices once they’ve been set.
That said, you should test out different menu pricing strategies to maximize profitability. For example, try putting your best margin items at the top of the menu or even drop the $ from your menu, but also play around with the dollar amount.
6. Understand the value customer care
You must value interactions with guests. They are the core of your business, and identifying their needs is crucial. Get into the habit of remembering names and seating preferences of loyal customers.
Give out the occasional free item to new guests. Reward your regulars. Gestures like these bring people back again and again.
7. Develop team skills and delegate
Many owners fall into the “lead by crisis” mode, which can seriously dampen a team’s energy.
They recognize that delegating some of the day-to-day duties to trustworthy employees frees them up to focus on bigger issues. Look out for their wellbeing, too, such as training them in areas of their interest and can help your business.