Owning a restaurant that serves great food sounds like a noble and very enticing idea. But have you checked the statistics on successful restaurants? For a long time, there has been the belief that up to 90% of restaurants don’t run for more than five years. Well, the real figures put it at around 60-70% but a significant number of these restaurants do not even stay successful for the first year. While you may think these are gloomy statistics, sometimes the allure of actually running a restaurant may hide the problems and obligations that come with owning a restaurant. As a result, many business owners do not get to see the second year of a successful enterprise. With the right restaurant management company, however, you can save your business from being among the high number of unsuccessful businesses. But first, here are some signs that your restaurant business may be on the rocks.
Signs that your restaurant business is failing
Management shows little apathy
Starting a new restaurant can be one of the greatest joys on earth and most owners or even managers will claim that they put their heart and soul in their new restaurants. This may, however, not be enough if the management of the restaurant does not have a physical presence in the day-to-day running of the business. Why is this a crucial sign of a failing restaurant? The lack of apathy also trickles down to the staff. If the management is not concerned about the business then why should staff members appreciate the business or its clients?
Poor customer service
Great customer experience is the main hallmark of any successful business in the service industry. A restaurant that offers poor customer service is a ticking time bomb and it will not take long before even the regular customers seek services elsewhere. A business is less likely to fail if they can offer excellent or even average customer service.
Your menu is not updated
Minor issues in your menu are likely to tick off even the most loyal clients in your restaurant business. Failing to update your menu items and prices is a sure sign of a failing business. Although you put in a lot of effort in providing excellent food and service to your clients, a good restaurant always takes care of these small issues too. Ensure your manager is on top of things or get a reputed restaurant consulting company to assist you.
Having the best cuisines and customer service under the sun will not save your failing business if it has a bad location. Why is this so important? The location of your restaurant will ultimately decide who accesses your premises and how often they do so. Although changing your location may not be a possible solution, knowing that your location hinders your success is the first step in improving your performance.
A reduction in quality of services
The reduction of quality or even quantity of services can easily be a sign that your business is on the rocks. Did your restaurant start pouring smaller quantities of wine than they did when opening? Maybe you served 8 pieces in your sushi roll but it is now reduced to 6 but you still charge the same price. This may seem to be a way of cutting costs but it means that the business has not been doing well.
Why Restaurant Businesses are Failing?
The surest way to ensure that your business fails in its first few months is to ignore the importance of finances in running the business. This is also a double-edged sword as having inadequate funds for running the business will lead to a quick restaurant closure while also investing too much in your restaurant business may eat into your cash flow. However, one common issue between these two concepts is that you will ultimately lack the cash flow to run your business.
Sure, having the best (priciest) interior designer or kitchen equipment will enhance your customer experience but is it really necessary? Many restaurant owners will overspend even before they open their business but the extra expenses may not be that necessary. Remember that most restaurants do not start making money right off the bat and it is important to have a financial cushion that will help you take care of your bills before you break even.
2. An inexperienced management
You may have the best intentions when opening your restaurant but this may not be enough to sustain a successful restaurant. Recognizing and appreciating the demands or even standards required when running a restaurant is not always clear to new owners. Even when it becomes clear, it is often too late. For example, being a new restaurant owner may require you to prepare food or clean the toilets for the first few months but it is also important to have a view of the bigger picture. Although you need to keep tabs with the day-to-day running of the restaurant, focusing too much on the smaller picture will lead to business failure.
This means that you should understand the art and importance of delegating some tasks and keeping in touch with the larger operations of the business. Have a well-rounded view of your restaurant to ensure that no single aspect of the business such as accounting is letting you down. It is impossible to be experienced when you have never managed a restaurant before so the best thing is to learn from the experts. Alternatively, find the best restaurant management services and you’ll eventually see the importance of good management in a restaurant.
3. A lazy management
Opening up a restaurant takes up a lot of work and most managers will readily put in the hours required to ensure that the grand opening takes place. It is also not too uncommon to find restaurant owners who take the back seat once the restaurant is up and running. The only thing that is worse than an inexperienced management is a lazy management.
Most new managers believe that restaurants run themselves or that the opening of the restaurant is the most difficult part. Showing up late or not showing up at all for work is similar to burning your restaurant down.
4. Poor and Inconsistent customer service
Don’t you just love customer service that you can always count on? Clients, in this day and age, are pickier than ever and will not hesitate to give your restaurant a bad review if they experience poor customer service. At times, your customer service may be great but the lack of consistency on your part may still lead to failure. A significant number of new restaurant managers invest huge sums in opening the restaurant but still fail to train their staff.
Ensure that your servers learn the art of communication, especially to clients that may seem difficult. You may lose a client because of a negative Yelp review even if there were hundreds of positive reviews before it. Also, ensure that you have someone to welcome or even address the needs of each client. After all, excellent customer service will determine whether you survive your first few years of operating.
5. Little to no advertising
A common myth among new managers is that restaurant owners need to pay little attention to advertising and marketing but it couldn’t be further from the truth. As more restaurants get opened across the world, the need for proper advertising cannot be more apparent. A good marketing campaign will not only increase the number of customers but will also help to enhance your brand’s image.
Another myth is that restaurants need to invest huge sums in advertising to increase their invisibility. However, a good social media campaign or even word of mouth campaign is sufficient and costs little investment. Don’t know where to start? Good hospitality management companies in Dubai can help you with your marketing efforts.
6. Bad location
The importance of a good location to a restaurant should not be understated. While you are likely to think about the physical presence of your restaurant when you think about location, location can mean a lot of things. These include:
- Limited parking- A client who does not find a good parking space is likely to look for another restaurant with better parking regardless of the quality of your food.
- Being out of touch with your clients- Having a meat-based cuisine in an area that mostly comprises of vegan clients will lead to the quick death of your restaurant business.
- Competition- Offering the best service is a sure way to win over your competition but not when they offer the same meals at half the cost.
- Visibility- Clients will turn you down or fail to see your business if you are far away from the street.
The only way to avoid such problems is to address the issue of location before you open your business doors. Restaurant consultants can help you address such issues when drawing up the restaurant business plan.
7. Accounting practices
A sure way to ensure that your business fails is by failing to pay attention to standard accounting practices. Restaurants usually operate on small or right margins that it becomes necessary to ensure that you pay to important aspects of accounting in the business. Always remember to keep an eye on your cash flow to ensure that some of the big expenses such as paying employees and purchasing ingredients are not neglected as these always determine the success or failure of a business in the hospitality industry. Double checking everything in your books may be tiresome but it will save you a lot by preventing financial issues. Employing a CPA to ensure that everything is in the right place may be the only thing you need to rescue your business.
8. Hiring practices and bad partner relations
Is any employee constantly serving still in your restaurant? If so, then your business is overstaffed. Having two servers and three idle cooks means that you are probably paying more in payroll costs than you should. To have a successful restaurant, you should have a strong team of competent individuals in the restaurant. A common rule is that no job is too insignificant to have an unfit person performing it. Your employees will mostly determine the identity and direction of your restaurant’s brand.
Sharing the ownership of the restaurant with a partner also introduces different dynamics to the management of the business, especially if the business partners have close family or friendship ties. Romantic ties make it even more difficult to run a successful partnership. A number of restaurants ultimately fail because the partners are unable to resolve disputes amicably. A good partnership should recognize the roles of each partner and define a specific way of resolving disputes.
Addressing these challenges in your failing F&B business
It is impractical to highlight the reasons why businesses fail without offering solutions to address the said challenges. It is also impossible to acquire the experience of managing a successful restaurant overnight, hence the need to get restaurant management services. So, what is the role of a restaurant management company in Dubai? You may ask.
1. Overseeing the administrative aspects of your restaurant
A lot of work is necessary for ensuring that your business is up and running each day and this is exactly what restaurant managers do, they take care of the administrative functions required to make your restaurant a success. Some of these functions include;
- Outlining the list of services offered in the restaurant
- Setting and maintaining the standard of staff performance and duties
- Recording and overseeing the inventory of the restaurant
- Maintaining the quality of food, services and even the sanitary condition of the restaurant
- Cost control management and trust is crucial. Management company would ensure there are no “leaks” – managing cash coming in and going out, as well as the food consumption and wastage.
2. Creating and implementing marketing strategies
A good restaurant managing company will take care of your advertising and marketing as you focus on creating the best food and services for your clients. They will develop promotional campaigns while also organizing relevant events for your clients. This will not only improve your brand on a long-term basis but also improve business in the short term.
3. Managing restaurant staff
The importance of a good workforce is one of the integral aspects of restaurant management and a successful business should not overlook this. Restaurant consultants will help you hire the best staff as well as supervise your current workforce. They will not only help you hire the right employees for your business but also help train them to meet your desired standards.
4. Organizing a good network of vendor
Your food is only as good as your vendors and this is one of the primary roles of restaurant management. Your restaurant manager should organize and coordinate the supplies arrangement of your business to ensure you have reliable delivery of food and beverages.
5. Ensuring food and health standards are maintained
As a restaurant, adhering to food and even health standards can save you from a lot of legal squabbles. A restaurant management company will help you to address reported incidents, oversee maintenance of your premises and help you access the proper certifications for the staff.
Added benefits of hiring a restaurant management company
A restaurant management company will identify some of the challenges that your business faces and address them before they become fatal. For example, a restaurant management business can easily highlight staff costs or energy faucets that are causing you financial losses and give solutions to the problems. Customer relations is also an added benefit of employing a restaurant management company. The amount of value that these companies bring is enough to justify the affordable restaurant management company fees. Furthermore, these firms can also help you save on taxes as you can get tax deductions for the services they offer.
In summary, restaurant management companies in Dubai help alleviate some of the stress and challenges of running a restaurant. As a business owner, it is important that you focus on some of the important aspects of the business such as offering great food and customer service to your client and leave the technical aspects of running the business to an experienced restaurant manager.
There is a myriad of benefits of using restaurant consultancy services and you will never regret the decision to hire one. New restaurant owners should get the services of restaurant consulting companies to help shed some light on the norms and practices that make a restaurant successful in the first few years of operation. Experienced restaurant owners can also use this service to automate a number of functions in the company. However, it is also important that you find a reputable firm that can help your business recover. With more than 50 years of experience in the restaurant management niche, Glee Hospitality can offer you a comprehensive experience in managing and helping to recover your failing restaurant business. The company also has a strong regional presence in the Middle East, which ensures that we understand your demography.
So, if you feel that your F&B business is in trouble or just want to make sure that it will get through the first critical years, contact us for assistance.