Around 60% of restaurants end their businesses within a year, and 80% of them before they hit their 5th year of operations. Why does this happen? Common reasons include poor customer service, negligent restaurant management in finances and inventory. If your restaurant is facing any of these issues, these tips can get your restaurant back on track.
#1: Poor Customer Service
Customers are at the heart of any business. It is no surprise that poor customer service is one of the top reasons why restaurants close. For every complaint you receive, another three go unheard. Receiving occasional complaints could mean having more unhappy customers than you think. Is the waiting time for your food kept reasonable? Have you been putting in adequate effort in maintaining your restaurant’s cleanliness? These are all measures of your customer service levels.
Turn it around: Always remember that your customers are of utmost priority especially since they drive in revenue. Focus on anticipating what customers want, and not what you (as an owner) prefer. One way to measure your customer service level would be to ask for feedback.You could also come up with loyalty rewards, or anything that gives your customers a sense of exclusivity. Guests tend to pay 46% more with loyalty programs, which means more revenue for you!
#2: Lack of Accurate Financial Planning
Is your current cash flow status is a blur to you? Naturally, upgrading your menu tends to take precedence. Financial planning on the other hand, could be seen as a less pressing issue. On the other hand, financial planning could be seen as a less pressing issue. However, neglecting the numbers could result in messy accounts. You will run the risk of spending more than you should unknowingly. For example, have you been running many promotional campaigns? Without adequate consideration of the additional costs incurred you could be making losses instead. You may get more crowd, but you may not be profiting because of the slash in prices.
Turn it around: Always ensure you have cash reserves to hold out for 12-16 months to tide you through off-peak months. Keep your profits for rainy days, and be frugal where you can. For one, you don’t need to invest a lot of money to print new menus every other month. Be disciplined in checking your accounts every week so you’d always be aware of your cash flow status. Most restaurants tend to set prices way too low. So make sure you don’t lose money off your menu! To ensure you’re not making a loss, the cost of your food should be at least 30-35% of your menu price.
#3: Poor Inventory Management
Without constantly recording your usage of items, you may be making unknown losses. Do you often find yourself having excessive or insufficient ingredients? That means your inventory system may not be serving you well. Are you offering free drinks to your customers when you make mistakes? Are these recorded? Every item used in the restaurant should be recorded and reflected in your inventory. Not keeping your inventory in order would likely affect your finances.
Turn it around: The first thing you need in place is a strict portion control. Measuring and weighing every single ingredient you use may sound extreme, but definitely important. At the same time, implement a clear inventory management system so you don’t double buy! Having to coordinate all your items in one system, from your utensils to the ingredients, may seem daunting. Instead of doing this from scratch, consider using Bluecart to make your inventory management a breeze.
#4: Unfocused Marketing Efforts
The lack of marketing efforts would make it hard to gain brand awareness, as you’re only relying on walk-in crowd. If you are engaging in marketing efforts, are they targeting the correct audience? Or are you mass publicising without a goal? If you are still using traditional marketing platforms, you may not be reaching as many people as you’d have liked to.
Turn it around: Start online marketing campaigns. You can do it for free on social media platforms and Google+ Pages! Or you can use Nom, a social media application targeted towards F&B lovers. Be sure to add pictures of your food online too, so online users will be enticed to give you a visit. If you’re still unsure on how to further your marketing campaigns, attend business seminars to get a clearer picture of which mediums will work best for your restaurant. It’s never too late to get started!
#5: Poor Location
Your restaurant’s location may not be ideal. You are probably getting insufficient traffic, or your concept may not fit your current location. High rent could be draining your bank dry. Maybe there are too many competitors with a similar concept situated near you, vying with you for the same group of customers. You’ve spent a lot of time perfecting your food and concept. But the location of your restaurant is simply not doing you any justice.
Turn it around: It would be impossible to shift out overnight, so be innovative in thinking of ways to make the best out of your location. Look at what successful restaurants are serving in your area, and who they are targeting. Take inspiration from them and repurpose your restaurant’s concept. Alternatively, grow your non-dine-in business by having an online ordering channel. Having an online shopping cart would increase sales and brand awareness as people can know about you easily. This means reaching out to a larger pool of customers. We don’t mean to blow our horns, but with a seamless and intuitive solution such as Oddle, you get to customize your own shopping cart. Oddle also allows you to manage your entire online business from the front-end to the back-end management, which is ideal for you to kick-start online ordering!
#6: Mismatch Between Your Concept and Your Staff
Have there been frequent miscommunication between your staff? Are you frustrated because they are not meeting your expectations? These could be the result of hiring the wrong people in your restaurant. F&B owners tend to have the misconception that there is no need to have clear job descriptions or proper screening of candidates, unlike desk-bound jobs.
Turn it around: A structured hiring process can turn things around. Having clear job descriptions will help you in screening candidates for your restaurant. On top of hiring the right ground staff, you also need to hire the right manager. A manager who has the same beliefs and vision as you is important in ensuring your restaurant runs the way you want it to. Consider using Industry, a hiring solution which allows you to post job listings and screen through candidates easily. Having a strict criteria is of utmost importance. It’s better to spend more time screening through your candidates than hiring staff who are unable to improve your restaurant’s efficiency.
Failures are only part of your learning process. It’s never too late to learn how to turn your situation around. We hope these tips will help you enhance your restaurant management!
Love this article?
If you enjoyed reading this article, don't forget to share it! Get started on finding useful tips, advice, insights, resources and inspiration for growing your restaurant business by signing up to the Oddle newsletter.