Running a restaurant is no easy feat. According to FSR Magazine, “sixty percent of restaurants don’t make it past their first year and 80 percent go out of business within five years.” With disheartening statistics like these, how is it that some restaurants not only survive, but prosper?
While the economy rises and falls unpredictably, restaurant patrons will always want high-quality food and customer service. To provide customers what they want and to prevent your business from going under, try these seven tips for restaurant success.
Tip #1: Make A Realistic Assessment of Your Position
It’s hard to watch your business struggling; the worry reaches into your soul and affects your state of mind. However, you need to deeply analyze your situation in order to improve your revenue. This exercise will give you a starting position for your comeback:
- Analyze your business’ operations from every angle to make an honest and thorough assessment. Be brutally honest and address your operations, suppliers, staff, customers and yourself.
- Gather all the bills, open up your bank statement, and evaluate your customer influx to get an accurate, full-picture view of your situation. Leave no stone unturned, and look at everything from employee scheduling and payroll to how you manage your inventory.
Tip #2: Reconsider Your Menu
You derive your revenue from your menu, so it’s an excellent place to start when it comes to saving your restaurant. The vital question is, are you correctly pricing your food?
If your food has miscalculated prices well, then you are undermining all business operations. Your menu pricing should take into consideration:
- The total cost of the necessary ingredients
- The cost of staff labor to prepare the item
- Overhead expenses, such as rent and bills
- Your desired profit margin
You may have to consider streamlining and simplifying your menu. It’s common for restaurants to have an unnecessarily long menu in the interest of trying to serve as many customers as possible. However, if menu options don’t get ordered often, it creates waste.
Minimizing your menu has down-the-line benefits such as:
- Lower inventory, so cash is not held up in stock
- Purchases are more straightforward, and storage costs are lower
- Fewer staff are needed to cook and serve a shorter menu
Choosing which menu items to keep on the menu is a balancing act. You will have to evaluate:
- Customer demand for each menu item
- The profit margins on each menu item
- Which menu items use similar ingredients so that you minimize waste
Tip #3: Upgrade Your POS System
Over the years, POS system technology has come a long way. For example, there are now quality POS systems on the market that can handle multiple payment methods, including cash, card and digital payments. They are also able to integrate with third-party apps, making them versatile.
Now, you can even opt for a cloud-based POS system, which have the following benefits:
- Are cheaper to adopt and maintain
- Provide real-time reporting
- Can store unlimited data
- Allow for remote management
- Can scale up or down quickly, thereby saving the restaurant money
- Have better security software
Quality POS systems come with additional sales, inventory management, staff scheduling and customer management features. These features not only provide you with better management tools, but they also reduce the cost of technology acquisition. You can click here to learn more about restaurant POS software.
Tip #4: Update Your Website and Increase Your Social Media Presence
The internet is the widest-reaching, most affordable mass marketing tool in the world. If you invest in your online presence, you can get a better ROI than in most available marketing channels. To be more visible online, list your business on third-party listing sites such as FourSquare and Google My Business.
More customers are buying their food online if you have no online presence, they will not be able to find you. Make sure that your online menu is easy to read. Social media marketing is also extremely successful for restaurants that post high-quality images of their food and ambiance.
Tip #5: Reassess Your Staff
Staff is essential to keep operations running smoothly. It’s best to let them know the situation the restaurant is in, that way they can understand and more importantly support the hard decisions you will have to make.
To make sense of the numbers, you may have to let go of some staff members. Focus on keeping the essential and most productive staff members. Those that do stay may have to take pay cuts to help bolster your restaurant’s cash flow.
Tip #6: Make Customers Come Back for More
Do not underestimate the power of repeat business. Think about the amount of effort and money that goes into acquiring a new customer; now compare that to a customer who simply comes back with a little prompting from you. The costs are lower for a repeat customer, and over time, the sales will out shadow the costs of serving that customer.
Creating s great customer experience forms the foundation of getting repeat customers. So your food must be great, the staff has to be pleasant, and the ambience agreeable.
After that, you can incentivize customers to come back through loyalty programs and reward points. These can be run on your restaurant’s mobile app and connected to your POS system for efficiency.
Tip #7: Negotiate
Your business does not operate in isolation; it has many stakeholders such as local council, supplies, staff and customers. These stakeholders rely on your business to stay open, so leverage that as you negotiate every part of your business. Take these examples:
- A bank is more interested in you paying off your restaurant loan and coming back for more loans. So if you can show them a recovery plan that includes the steps above, they can give you breathing room.
- The same applies to suppliers and most creditors. They can offer your restaurant terms to ease your cash flow if they do not budge then simply look for new, more understanding suppliers.
- Customers are never keen to switch from their regular restaurant’s. If you can communicate your situation and provide a solution that is painless but beneficial to you, then they will comply. For example, you can explain that third-party delivery apps take commission which eats into your profits, so you request all customers to order directly from your app to retain more revenue.
Nothing Worth Doing Is Easy
Every business has its ups and downs. Just keep in mind that surviving the low points takes perseverance, planning and execution. Follow the above tips and give your restaurant a fighting chance, but be aware that that success will not happen overnight. Do the right things, and over time, your restaurant will become not only sustainable, but profitable.