According to NRAI India Food Services Report 2016, the restaurant industry will grow at a CAGR of 10% by 2021. This indicates huge potential for business for the existing as well as budding restaurateurs. However, this also means that it would get tougher for them to run a successful restaurant business. You may wonder why. Because, several restaurants are either struggling to survive or have already pulled down shutters owing to many adverse factors such as high rental cost, increasing the cost of labor, inflation of food prices, decreasing margins, the slowdown in consumer spend and intense completion, among a few others. Read about the top 10 reasons why restaurants shut down within the first year of operations here.
In the last 18 months, several Quick Service Restaurants (QSR) and coffee chains have closed more than 80 stores across the country! It is estimated that 50% of the restaurants that opened in the recent years have shut down. Considering the predicament, it makes it even more difficult to run a successful restaurant. However, with careful planning and smart execution, you can master the art of running a successful restaurant business. Read on to know how!
How to Run a Successful Restaurant Business
If you want to keep your business thriving and run a successful restaurant, here are some golden tips to follow.
1. It’s all About the USP
Give a solid reason for customers to visit your restaurant, continue their patronage and even spread a word about you in their social circle. Your USP could be your signature dish, a star chef, price, pet-friendly access or the overall theme that stands out prominently through the menu, interiors & staff uniform. All successful restaurants have been known to have a strong USP that draws customers to the outlet.
2. Choose Your Location Wisely
The location of your restaurant plays a pivotal role in your restaurant’s success. An easily accessible area that is visible to the customers helps draw in customers without much efforts on your part. It is essential to do market research before you finalize your location. Remember to identify your potential customer base and choose your location to target them. However, with stiff competition and sky-rocketing rentals, the ideal location of your restaurant can come at an exorbitant price.
Here are some tips for choosing the right location that would help in making your restaurant successful.
3. Don’t Let the Costs Nag You
Restaurants incur various fixed (rent, staff salary) and variable (electricity, food of vegetables & other food ingredients) costs. The trick to run a successful restaurant business is optimizing your margins to reduce these costs, without compromising on the quality of your restaurant.
Maybe you can source cooking ingredients from a vendor who gives you a good discount. Or, you can choose a location that has plenty of natural air and sunlight, saving a considerable amount on your electricity bill. You can employ temporary staff during the non-peak hours and keep your permanent staff engaged only for the rush hours. You may not have much say in the rent of the property, but try negotiating with the owner to give you ample parking space or exclusive use of an alternate elevator for the guests in the same amount of rent. Due to high rentals, restaurant owners are also opting for Cloud Kitchens and Food Trucks.
Learn the expert tips to control your restaurant costs here.
4. Chase Your Inventory
Your restaurant’s inventory need not only be well-stocked, but it should also be run like the well-oiled machine. Maintain an inventory sheet which should be updated daily, weekly or twice a week, depending on the size of your restaurant. Make a list of fast and slow moving food items during peak as well as non-peak hours so that you can replenish the goods without overstocking. You may be surprised to know that even using faulty weighing scales or not updating the latest market price of a particular food item could increase your inventory cost significantly! You should keep your inventory in check to run a successful restaurant business.
This article will tell you all you need to know about inventory management.
5. Train Your Staff, Keep Them Happy Too
Your food, decor and seating arrangement may be great, but if your staff is discourteous or dressed shabbily, it may create a negative impression in the minds of your customers. At the same time, if there is no demarcation of responsibilities and accountability, staff management can cause chaos in the restaurant kitchen. This is how you can manage your staff:
- Clear allocation of duties and instructions for each activity – serving tables, dishwashing, table cleaning, kitchen cleaning, inventory management, food purchasing, invoicing, etc.
- Train your staff to make the guests feel welcome through a smile, polite behavior, and neat dressing.
- Your staff should also know how to handle emergency situations (fire, electricity outage) and customer complaints.
You have expectations from your staff, but so do they. Like in any other industry, it is crucial to keep your employees motivated and happy. Treat them like your partners in value creation. Offer them a competitive salary, sanitary working conditions, ample work holidays, performance incentives and career progression opportunities. This will improve the staff productivity and help you run a successful restaurant business.
6. Hop onto the Technology Bandwagon
You need to act swiftly to integrate your restaurant with technology if you want to stay on the top and run a successful restaurant business. According to statistics, the most important technical features popular among customers are online reservations (36%), free wifi (23%), and online/mobile ordering (19%). Your patrons expect technology-driven experience and your competitors are offering it. 81% of restaurants are currently using a POS or electric register system, 68% offer wifi, 37% provide online order, and 32% accept mobile payment.
Restaurants are also experimenting with other high-end technological tools. Technology is helping restaurateurs to run their backend efficiently. A POS system can not only manage your day to day operations such as inventory, invoicing, staff schedule, cash flow, and payroll, but also reduce human errors and paperwork.
7. Remember, Customer is King. Always!
There may be times when your customers are not happy with their experience at your restaurant. They may communicate their displeasure through the feedback form, on the spot complaint to the wait staff/manager or posting a negative review on the social media. You can’t afford negative publicity. Make sure that you promptly address the issue by talking to the customers and understanding their grievances. Do not hesitate at all in apologizing and rectifying the mistake immediately.
You can appease them by waiving off the bill, offering a free meal on the next visit, a VIP pass to your next event or sending a bouquet of roses or a box of chocolates.
This expert tips will help you to deal with demanding customers.
8. Keep your Licenses in Place
There are several statutory and regulatory compliances that restaurants need to follow – shop & establishment license, food business operator license, food standards & safety act, employee rights act, etc. In case you do not adhere to the legal rules and regulations, your restaurant has a high risk of closing down. For instance, Real Poseidon, an underwater restaurant in Ahmedabad was sealed by the municipal authorities because it did not seek the building use permission.
9. Don’t be Ashamed to Scream ‘I am the best!’
The restaurant business is a game of showmanship. If you don’t advertise who you are and how good you are, your restaurant will witness empty tables on most days. Develop a robust marketing strategy to create a buzz about your restaurant. The social media is the most powerful marketing tool – post a picture of your special dish, customers having a great time, special events or chefs. If your budget permits, you can print advertisements in newspapers, distribute flyers or create a radio jingle offering discount coupons.
10. Don’t Miss the Finer Details
In spite of taking care of all the above, your restaurant may fail to impress customers, creating a dent in your reputation. The reason could be the fine details which you didn’t consider essential to your restaurant’s success or probably didn’t pay attention to on a particular day but irked your customers enough not to come back. These could be –
- Soiled linens and cutlery
- Greasy fingerprints on the menu card
- Dirty washrooms
- Cutlery, paper napkins or salt-pepper set missing on the table
Lastly, nothing could beat your own critic review of your business. Just step into the shoes of customers and find out what is so great & not so great about your restaurant. If the bias clouds your judgment, conduct surprise audits or invite mystery customers. That should work and help you in running a successful restaurant business.