Starting and running a restaurant successfully isn’t a walk in the park. Up to 60% of restaurants close their doors within the first year of opening because of the cut-throat competition in this industry and the ill-advised restaurant strategies that some managers put in place.
Restaurant businesses come up with different strategies to reach their goals, get good ROI, footfall, etc, but somehow, things don’t seem to work out. This could be because they are making or overlooking some mistakes that are hurting the business.
If you are new in this business, you need a restaurant strategy with specific goals and objectives that are customer-centred to drive revenue. Some strategies may seem good on the surface but they are not entirely profitable. Let’s have a look at these types of strategies.
1. Focusing Marketing on Acquiring New Customers
Every business fights to acquire new customers. If anything, no business can exist without customers. However, as you work on acquiring these new customers, you should also put some effort into retaining the loyal ones.
As a smart restaurant manager, you shouldn’t take your regulars for granted. If you can manage to increase your customer retention rate by only 5%, you’ll experience growth in profits of between 25-95%. A drop in customer retention rate will significantly lower your profitability.
The best way to retain your old patrons is to reward them for their loyalty. In 2017, VISA and Bond Brand Loyalty conducted a study on 28,000 customers to determine the effect of loyalty programs on customer retention. The study concluded that up to 81% of customers will be retained if you offer an effective loyalty program.
Come up with a system to track the behaviours of your customers to identify those who visit your premises regularly then design customised loyalty programs to reward them with what they likely to order most.
2. Relying on Digital Marketing for Restaurant Promotions
Digital marketing sounds like a great idea when it comes to showing the whole world what you have on offer but being overly dependent on internet marketing alone while neglecting other marketing avenues is detrimental to your business.
You also need to promote your business in-house by maximising the time your guests are on your premises. From custom coasters to posters for upcoming events inviting your customers and their families, look for missed opportunities.
Apart from social media, you should also not rely solely on the word of mouth – it’s difficult to track and is, therefore, unreliable. Instead, come up with a detailed marketing plan well in advance and ensure your plan can convert your customers into your marketing agents.
There’s no better way of marketing than involving your customers in your company’s social events as this will create a strong bond between your brand and your customers. You don’t need to have a fancy or expensive event, just something to create awareness of your business in the local community. This will also help you to attract new customers, especially if you include some promotions and discounts.
3. Pushing for Sales during Off-peak Hours
Though it’s important to market the restaurant more in off-peak hours, it’s also good to do so during peak hours. Being aggressive only during off-peak hours and less aggressive during high-peak hours may send negative signals to your clients.
Your customers should always get the same treatment regardless of the time. It is during peak hours that you should be more aggressive to get your brand known to many. Your sales during the promotion should be able to sustain your operation. When you’ve managed to get footfalls during peak hours, the satisfied customers will certainly come back to your restaurant even during off-peak hours.
4. Focusing Only on Your Strengths
Focusing on what gives more sales is good, but you also need to reflect on your weak areas and write them down so you can work on them one by one.
While not many restaurants and restaurant owners want to talk about their weaknesses, it is important that your restaurant also focuses on its own. Do you have finger-licking food but no social presence online? Take the necessary step to ensure this is covered. Still stuck with old recipes and menus that are no longer attractive to your customers? Be bold and try out new menus.
Get a cool interior designer if your premises haven’t been refurbished in years. You can also explore other opportunities such as outside catering, delivery of meals to offices among many others. These will allow you to expand your customer base by a great percentage. New offerings not only help you make your customers happy but will also expose you to potential ones.
5. Over-Friendly Staff
Good customer service is good, but overfriendliness is not.
While friendliness is good for customer retention in a restaurant business, it should have its limits. Being over-friendly with customers will put pressure on them to reciprocate and this may end up making things a bit embarrassing.
A customer may only have a few minutes to take a meal and if you engage them in a friendly talk you may end up wasting their time. If anything, they came for the meal and not a social event with chatty servers.
Over-friendliness may also lead to a lack of respect for the customer. How many times have servers kept a ‘friendly’ customer waiting as they go ahead and serve others? And when they finally come to serve the customers, they start with long stories before taking their orders. Being over-friendly to customers may lead to many other problems. Find out more about the disadvantages of being over-friendly here.
6. Cutting Costs
Costs eat into your profit, so cutting costs is good for sustainability but it should not be a hindrance for you to improve your operations. Before you cut a specific cost, look at the bigger picture. Ask yourself how it will affect your business in the long run.
For example, keeping that old POS machine may seem like a better decision than buying a new and modern one. However, the cost of running an old POS machine will outweigh the benefits of keeping it.
Buying a new and modern POS machine may be costly at the time will make the order taking more efficient, less costly to maintain and saves time.
Other cost-cutting measures that can hurt your business include:
- Hiring Unqualified Staff
It is tempting to hire unqualified staff to lower overheads. In the hospitality industry, the quality of customer service can either make or break you. Hiring unqualified staff will keep the salary costs down but you will end up spending more time and money in training them.
- Cutting Down on Ingredients and Portions
Cutting ingredients and portions down is the quickest way to reduce costs, but it will affect your customers’ experience. This could lead to disappointed customers who will unlikely come back or recommend your restaurant. If you see the need to cut down on portions or remove some ingredients, always ensure that you do your research first on your customers’ eating capacity and requirements. If you need to improve your cash flow, then also consider increasing your prices. Again, the data you gathered will help you decide.
- Cutting Maintenance
A well-maintained restaurant attracts customers more than a restaurant with faulty appliances or equipment, chipped tableware, burned lights or broken handles. These shortfalls create an atmosphere of neglect and despair that drive customers away.
- Stopping Advertising
In as much as you can use your employees and customers as your brand ambassadors, you should not be tempted to stop advertising to cut costs. You can spend wisely on advertising by focusing on areas that matter most, like social media campaigns, reaching diners on their mobile devices, organising social events in the community and so much more.
- Rush Diners
This usually happens mostly during high-peak seasons. You want to maximise table turnover by ordering customers to eat faster so you can increase your revenue. Majority of customers like to take their time to enjoy their meals and they don’t like to be rushed during or even after taking their meals.
There are better ways to increase table turnover. For example, you can speed up your order taking and serving process to repeat customers to save time.
- Close Early
Closing early to save you from paying overtime is a very bad restaurant strategy. By closing early, you’ll be shortening your working hours and this will have a detrimental effect on your business in the long run.
You’ll indirectly reduce the flow of regulars who will start thinking your business is closing down. Closing early may also block away those who want to eat at your restaurant during late hours.
Getting to know your target customers and understanding their dining habits will help you decide whether or not closing early will benefit your business or not.
7. Menu Items for Everyone
Diversity is good but as they say, too much of anything is dangerous. Do not diversify to the point of overstuffing your menu. It’s referred to as choice overwhelm or paradox of choice. Give people too many options and they will get confused and avoid making a decision.
Hospitality companies encourage customisation and limited menu options. Research shows that restaurants will boost their sales by offering between seven to ten items per menu category. Quick and casual service concepts do well with 6 items per category.
You can have your menu digitised on restaurant tablets so that clients can customise the menu items to help them make choices easily. Another way of helping your clients is to have the menu items sequentially divided rather than having everything cluttered hapharzadly.
Have a full course section, an appetiser section, a breakfast section, etc so your customers can go straight to the type of meal they want. Doing this helps increase the efficiency of operations, especially if you have a variety of dishes on offer.
8. Hiring Trainers for your Staff
Training your staff is good but if you rely on trainers alone, some of your employees may not effectively grasp the concepts.
That’s why it’s sometimes advisable to have a learning culture in your restaurant in which junior employees learn through observation from senior employees.
Peer learning is cost-effective and it makes the process to be fun rather than boring and rigid as experienced in a classroom environment. The more your employees learn through observation, the more they add value to your brand and your company culture.
When your employees learn from one another, they’ll have enough time to ask questions and to practice what they have learned. Hired trainers usually work within the boundaries of time and may not give your employees enough time to ask questions and to test whether they have understood the new concepts learned.
Offering discounts is a good way of attracting customers. However, when you over-do it, you may run into loses. During off-peak seasons, many restaurants resort to offering discounts as a means of attracting new clients and driving sales. If this is not done carefully, it may lead to the deterioration of your brand image and the way customers perceive your business.
When you are fond of offering discounts, customers will have an impression that your meals aren’t worth their normal prices or they are past their sell-by dates. Discounts work but again it should not be overdone.
Short term discount is good because it will give your customers the “rush” feeling to visit your restaurant. Unlike if they know that the brand keeps on offering discounts, customers will think they can postpone the purchase.
Instead of depending on discounts, strive to be known as a restaurant that serves delicious meals, not one with the best discounts. Offering high-quality food at normal prices is far better than throwing in some unnecessary coupons.
This doesn’t mean using coupons is bad. It would be good if you use coupons once in a while without overdoing it. This is because those who came to your restaurant because of the coupons are not looking for quality but a bargain.
The moment you withdraw the coupons, some clients might have a feeling that your food is now overpriced. You can learn better ways of offering discounts here.
10. Relying on Preparing Amazing Food
Preparing amazing food is the ultimate dream of many restaurants. However, this should not be the only means you use to attract customers. If amazing food was the only marketing strategy for the success of a restaurant, thousands of collapsed restaurants could still be in business today.
There’s a lot more involved in attracting customers and having a thriving business. You need to understand that dining isn’t just about filling the stomach with tasty food but about having a wonderful dining experience – and that’s exactly what your customers are looking for.
From the cleanliness of your restaurant to the welcoming atmosphere, and the wonderful services offered by your staff to the ease of accessibility of your premises and the noise levels, all these are factors that contribute to the dining experience of your customers.
You can do a little research to find out what exactly makes your customers have a wonderful dining experience. This is because what is regarded as wonderful in one locality may not be the same in another locality. Basically, how best to treat your customers will depend on where your restaurant is located.
A customer who has had a wonderful dining experience in your restaurant is likely to come back with friends or family.
Improving Your “Good” Restaurant Strategies
Whatever changes you make in your restaurant, ensure the customers’ interests come first followed by that of your staff. Always inform your staff of these changes in advance so that you don’t demoralise them, especially if the changes have something to do with cost-cutting. Also, ensure the new measures taken do not compromise the quality of your food.
Having regular meetings with your staff is the best way to keep them updated on any changes you might want to put in place rather than surprising them with changes. Some of your employees might also be having excellent ideas that can help boost sales.
Sometimes it may be necessary to consider hiring F&B Consultants to help you come up with a good business strategy. At Glee, we will help you ensure that you get the right restaurant strategies to propel your business to the next level. We have helped launch more than 50 concepts and opened various outlets in the Gulf region. Contact us today if you wish to run a profitable restaurant.