The restaurant business is a tough, in fact, the sad truth is that up to 30% of restaurants won't make it past their first year in business. But fear not, restaurant success is possible, and it can be yours, with the help of proven systems.
We recently connected with several top restauranteurs, consultants and food business owners to gather advice on how you can launch, scale and grow a successful restaurant.
Here's what they had to say!
The restaurant industry is tough, with many moving parts and expenses to navigate; however, like any established business model, there are proven systems, factors, and examples you can follow to ensure restaurant success. We broke it down into 7 recurring elements.
Let's dig more deeply into each of these elements, and how you can use them to succeed in the restaurant game.
Coming in at number one, and recommended by most of the restaurant experts as their top piece of advice have a solid business plan.
There is a lot to consider when building out a restaurant business plan, and it will impact your business hugely. So let's take it back to the high level systems, and break it down even further into the top 13 elements every good restaurant business plan should include.
Voila, there you have it, the table of contents for a great business plan. Obviously each of the above sections should be built out in depth and investigated, but we have you covered there too -if you want to learn how to write a restaurant business plan check out the full article here.
Have a solid business plan to ensure you have all the concepts and details sorted out. Build out the financial model to ensure you can afford to open a restaurant and understand the ongoing costs.
- Jenny Companion, VP, Consulting & Operations, The Fifteen Group
Coming in at number two on our top 7 list - setting up good systems and SOPs. SOPs also known as standard operating procedures are the systems and protocols that you use to run your business. By systematizing everything you do, you lower the risk of missing important details, losing money, being fined, or worse, being part of the aforementioned 30% percent :( .
And the upside of SOPs? Endless, including your team working more efficiently, profits increasing, and you setting a baseline for your brand and company culture.
1. Opening and closing checklists
2. Equipment management checklists
3. Inventory checklists
4. Standard operating procedures
5. People management checklists
6. Prep checklists
7. Side work checklists
8. ADA compliance checklists
9. Financial audit checklists
If you want to learn more about restaurant checklists, we recommend you check out our article, every checklist you need to run a restaurant.
It's all about the numbers when it comes to running a business, and especially a restaurant.
Restaurant reporting and money management is a crucial to restaurant success to ensure you aren't leaving money on the table, or leaking money slowly from unexpected and hidden costs.
When it comes to restaurant profit and loss, some key areas to focus on include labor costs, operations costs, and food costs. Keep a close eye on your expenses, and consider cutting them down with the following tips:
1 - Try Menu Engineering
During different times of the year or economic events, food costs for specific items will vary. Consider engineering your menu to offer cyclical dishes that reflect these shifts.
2 - Increase Your Training
Did you know that your team can develop an exact feel for how to measure units with practice and muscle memory? It's true. Consider investing in portion control practice with your team to help them serve the right amount every time, using muscle memory. In addition to this, be sure to train kitchen staff on how to properly portion and prepare food to reduce wastage — speaking of...
3 - Lower Wastage
The average restaurant wastes up to 75,000 pounds of food annually, with food being one of the highest variable costs in running a restaurant. Making the best use of it can maximize your margins. Do this by being mindful of the ordering, storing, and quality of the food you purchase.
4 - Prioritize Portion Control
Properly portioning dishes has a massive impact on the bottom line because mistakes add up quickly. Use best practices by portioning food during pre-shift before service commences, using measuring cups, ladles and color-coded tools to help your team stay on track.
5 - Build Relationships with Suppliers
Restaurants are built on community, food, and togetherness. Food is cyclical, and if your restaurant changes its menu frequently, it pays to build relationships with those on the front line when it comes to keeping things fresh and delicious.
6 - Love Your Inventory Management System
This point should arguably be number one, as your inventory management system is the epicenter of food tracking and inventory. Finding a great inventory management system that works for you will be the key to optimizing your food costs.
7 - Schedule Smart
Labor costs are one of the most significant expenses for managing restaurant costs — typically hitting around 30% of gross revenue. This can be reduced by using scheduling software to help you schedule smart. Such software can help reduce labor costs by 3% by using overtime alerts and providing labor forecasts.
8 - Don't Pay For Unworked Hours
In a recent study, a local juice bar discovered they were losing $91,200 per year paying employees for unworked hours. An easy solution to combat time theft is by using time tracking software. This tool alerts business owners when staff members punch into their shifts outside their allotted scheduled shift times.
9 - Make Hiring Easy
According to multiple sources, the average cost of hiring a new position is around $4,000, so using smart technology, tools, and tips to streamline these operations can save you big money. If you haven’t already, consider using an applicant tracking system to make hiring easy. You might also want to consider a platform that allows employees to self-onboard, and other tools like interview templates and SOP’s.
10 - Automate Where You Can
Can you automate it? Then do! We live in the glorious age of technology, meaning many epic tools can help us run our business without having to lift a finger. If you manage a restaurant, consider using a software solution that offers automated tools such as streamlining worked hours to payroll, automating payroll calculations, or creating schedules for you based on forecasts for the week.
Restaurants are a business first. Know what your costs are and how to control them.
- Chris Knight, Hospitality Operations Consultant, The Fifteen Group
11 - Save 10 Hours A Week On Admin
Less time spent on admin tasks like payroll calculations, employee recruiting, employee hiring, or onboarding adds up. A recent study found that they saved up to 10 hours per week using workforce management software to navigate their administrative and people management tasks.
12 - Use The Data
The most shocking thing about data is that the results are not what you expect most of the time. As a business owner who manages sales vs labor metrics, understanding and learning from the data could help you avoid losing money from being over or understaffed regularly. Lean into tools that offer integrations between your labor and sales so you can make choices that will make your business money
13 - Appreciate the Good Ones
According to multiple sources, the average cost of hiring a new position is around $4,000, so it pays to keep the good ones. There are many ways to keep great people. Still, some high-level takeaways include hiring smart, having a great onboarding process, offering flexible working hours, listening to and appreciating your staff, and tracking employee performance. This can be done manually or with the help of HR software.
14 - Get Green
Did you know that utility costs average between 2.5-4.5% of overall sales? We live in a time of smart houses and smart kitchens and, since every little bit counts, why not take advantage of it. Other ways going green could help you save money include:
• Opting for tablets or QR codes instead of menus.
• Using cost (and energy) saving lighting or utilities.
• Buying local.
15 - Get Creative With Rent
Rent is up there when it comes to operations costs, but there are always ways to cut costs if you are open to getting creative. For example, one option could be renegotiating your lease with your landlord. Alternatively, you could rent out your space for events or partner with another food service provider to offer their goods. There is also the option to downsize or purchase a space and renovate it using used or unique goods. Where there's a will, there's a way!
But wait, there's more. Good negotiating can get you the price you want, and our experts wanted to remind us that everything is negotiable.
Buying an established restaurant? Consider bargaining for their used equipment in tandem with purchasing the property. It’s a win-win: it can help your budget and streamline their sales processes. Throughout the entire negotiation process, keep in mind—theoretically—they want to sell (at least when logic trumps emotional attachment). Don’t be afraid to offer something within your budget to see if they’ll budge.
Restaurant hiring is a whole big thing. There are a lot of moving parts, and a million things to consider, but in the end, it's the people who really matter, so it's worth it to invest your time here. In fact, every expert we spoke to agreed that hiring the right people is a huge key when it comes to establishing success in the food service industry.
Know that hiring is the most important thing you will do in the beginning of your journey.
- Colin Denton, Owner, Kokomo
So it's worth it to take the time to decide on what type of candidate you are looking to hire in advance, and invest in systems, tools and technology to help you streamline the process.
Do you know these 13 tips to finding your dream restaurant hire?
When it comes to buying a profitable restaurant, you don’t have all the answers (or even know all the questions), and that’s okay. Instead of relying on your gut instincts and personal experience in the industry, look into hiring restaurant consultants or a restaurant broker to help mitigate the decisions you're making.
Consultants and experts will be aware of common pitfalls and patterns of success to help you build a successful foundation for your restaurant. Restaurant consultants can help you set up everything from a menu plan, to selecting what software to use to run your store.
The long and the short of it is that setting up shop can be tricky, and using a professional consulting agency is well worth it.
Focus on what you are the best at, and outsource everything else to experts.
- Jim Taylor, Owner, TaylorCo Consulting & BenchmarkSixty
In the beginning, opening and running a restaurant can look like a labor of love.
Long hours, challenging profit margins, and steep competition are not conducive to an easy launch. But if you love what you do, it will all be worth it. Restaurant experts in the industry advise that you consider the challenges that come with opening up shop, especially in a 2022 post pandemic world. Know what you are in store for, and if you are still in - be fully bought in.
Ensure that you are ready for working long days, weekends, holidays, and nights - and that you love customer service.
- Tim Cuff CCC, Chef Consultant, The Fifteen Group
Technology is one of the key pillars that make up the backbone of your restaurant operations. Without it, you would likely lose track of your numbers, lose time manually performing tasks, and lose money due to, well all of those factors and more.
Technology may seem daunting at first, but in today's world restaurant software companies have evolved to make the software selection and onboarding process a piece of cake. To keep things simple, let's start at the beginning, with the 8 types of technology you need to run a restaurant
The best part is, you can cross of points 1-4 with one simple all-in-one solution!
Push offers integrated restaurant payroll, HR, time tracking and scheduling software built for restaurant owners specifically, to help them succeed. Don't believe me? Book a free demo to learn more.
“In the labor numbers, we were reporting about a $300 to $400 difference than what we were getting through Push!”
-Tara Hardie, ZZA Hospitality Group, 16 locations