Don’t let pride or poor planning be the reason you shut your doors within the first year.
By Chris Rumpf, Contributor
There are a number of reasons 60% of restaurants fail in their first year, most of which can be bundled under being bad at business. New restaurant owners can avoid the most common mistakes by remembering they are atop the chain of command and need to prioritize running a healthy business by delegating most of the daily tasks. It’s true that owners and managers need to focus on the big picture and the smallest details, but they don’t need to be the ones to jump in and fix everything.
To avoid becoming just another restaurant casualty, follow the following advice. We’re skipping the “location, location, location” because everyone knows that by now, right?
Hire Too Many
You read that correctly. That’s advice and not the reason for failure. You’ll lose some of your first hires within weeks of opening (maybe before).
Watch what your staff does during the times when there are clearly extra hands on deck. Do they help out others or find a corner and pull out their phone? Those early days will likely include your first firings as well. While there is no magic number, we’ve heard of restaurants hiring three times as many employees as they felt they needed for the early days.
Be Business Minded
You got into this because of your love of food and business acumen to be in the service industry. If your financials aren’t in order, it doesn’t matter how good the food is. The food costs, staffing and taxes will soon have you brushing up on basic accounting.
Before your doors open, you should have a spreadsheet — or better yet and integrated point of sale system that can track inventory and sales data — that gives you an idea of what cost and profits for each dish. Once open, you can reevaluate that data with a mind on how popular certain dishes are and see whether you need to promote a common dish and remove your favorite special.
Gather Guest Feedback
You followed your desires and spent a lot of time on a concept and menu that you think will attract guests, right? Your restaurant you should be talking to guests, regularly. What did they like or dislike about the food, service, and setting? Respect their feedback; they may see things that you don’t or have blind spots to. What matters is whether your guests like your restaurant.
Try to get formal surveys as well. Perhaps include a URL to an online survey that includes a 10% coupon on their next visit. Take the time to read the honest feedback and leave your pride at the door.
Are you attracting guests that are right for you? How does your actual customer personas compare to your target guests? A full house in the first month could conceal the fact that many customers splurged on $20 entrees but can’t afford to return.
Do the customer responses align with your intentions? It could be the favorite parts about your concept are being completely missed and you need to either adapt to what the customer perceptions are, or put more effort into conveying the restaurant and food experience you planned to provide.
Open Strong with a Soft Opening
When setting a date for your grand opening, it is important to anticipate delays with permits and schedule around holidays or seasonal lulls when the locals are out of town.
Schedule a soft opening a week or two in advance of your grand opening date. With a smaller menu of standout dishes, the soft opening will help the staff adjust to the expected rush and smooth out procedures under more forgiving circumstances than opening day. These more relaxed openings often resemble parties with friends, fellow industry workers, and others who helped you get started.
The sympathetic audience will still provide you with honest feedback (before it’s too late) and the staff will appreciate a practice run that doesn’t carry the stress or high stakes of a grand opening.
Soft openings also create a buzz from crucial word-of-mouth marketing ahead of the grand opening, when you want the house packed. There will be a lot of first impressions in the first month. Guests will excuse some speed bumps in service and preparation, but not dysfunction or bad food.
With the grand opening a week or two off, there is plenty of time to smooth out any issues while you send out press releases and invite restaurant critics and other food professionals to your official launch.
SOP & POS
Proper written processes provide guidance and set expectations for staff, who can consult rather than asking one another or managers. Rather than reinforce a chain of command, this gives employees a sense of independence and a way to get reminders on standard operating procedures without the worry or shame of asking someone else.
This is where you’ll want to include using your POS to gather and evaluate your restaurant’s crucial data. Try using your POS to predict work hours, monitor closing times, and for tracking inventory. Test dishes and the bump in business of a soft opening should help alert you to shortcomings in those processes.
The first few months will be less predictable because you are just opening, but the quicker you staff around the lulls and cut down on food waste, the sooner you move toward profitability.
About the Author:
Chris Rumpf is a fifteen-year veteran of managed services, focusing on hospitality, restaurant and retail automation. His company, Flyght, pioneers a proven process to unify the tech inside restaurants, retailers and hotels. Chris speaks at national industry events on hospitality and retail managed services, and his knowledge on retail trends.