For many people, setting up a restaurant sounds like the perfect way to become their own boss. It’s a very easy start up business option and one that you don’t need too much experience or expert knowledge to get it going. Lots of people think that it is as simple as taking over a restaurant, hiring a chef and some waiters and waitresses, and then welcoming diners. However, it rarely is that easy. In fact, the majority of new restaurants don’t survive for more than two years.
But there is no reason why your restaurant should fail this quickly, even if you have never done anything like this before. Here are the most common problems that new restaurants face, and what you can do to overcome them.
A Bad Location
You may think that it all comes down to the food you serve in your restaurant. But, in actual fact, location is everything in the restaurant industry. The location of your restaurant will make or break your business. If you end up putting your restaurant in a terrible location, then you will suffer from poor sales. A bad location is one that is out of the way and hard to get to. But central locations can also be bad ones, especially if they provide your establishment with bad visibility or don’t come with good parking facilities.When you are looking for a location for your restaurant, try to get somewhere central that is close to parking as well as public transport links. There should also be lots of people passing by, as this will increase your chance of making plenty of money from passing trade.
Terrible Customer Service
When people eat out at a restaurant, they expect to be served by friendly staff in a very professional manner. If your employees are ever rude or curt to customers, you should expect to see some very negative reviews on the likes of Tripadvisor! So make sure that your employees know that you always expect them to be courteous and friendly to all diners. Even if someone complains, staff still need to be professional about the situation. It’s a good idea to put your staff through training regularly so that they are always at the top of their game. There are lots of training courses that are aimed at the hospitality industry. They teach the basics of good customer service and how to deal with difficult customers in tricky situations.
A Poorly Managed Team
Ideally, you should hire a restaurant manager who will be in charge of all your front of house staff. They will coordinate with all the waiters and waitresses and ensure that the work schedule maker is always up to date with everyone’s shifts. If there is ever anyone who needs a shift covering, the restaurant manager will help figure out the best person to cover it. As you can see, this manager is very important to ensure the smooth running of your restaurant. However, if you hire someone who turns out to be a poor manager, you will find that your restaurant and staff suffer as a result. Managers can fail in various ways, but some of the most common reasons are that they alienate the other staff or eat all your profits. To make sure your restaurant doesn’t fall foul to a bad manager, you need to make sure that your recruitment process to find one is very rigorous. It’s a great idea to ask for references from their previous employers. If they don’t come back with a glowing reference, then you might have to start your search for an excellent restaurant manager right from the beginning.
Bad Cash Flow
Once you start running a restaurant, you will find that you have a lot of daily expenses. These include things such as ingredients, staff wages, and overhead costs. As you can tell, it is important that you manage your cash flow effectively so that you never run out of cash to pay all your bills with. Even though you can put a lot of expenses on credit cards these days, it is still necessary to have enough cash in your main business bank account. If you find that your bank balance keeps on dipping into the red, you need to reassess your current cash flow. To make sure things don’t get much worse, you will need to start making some cuts in your restaurant to cut down on all your expenses.
Overspending
Overspending is closely linked to cash flow problems. If you spend more than you can afford, there is no way your restaurant business is ever going to make a profit. Generally speaking, most restaurant owners don’t spend too much before they open. It’s in the run up to their launch when they spend money like it’s going out of fashion! This is because people think they need to spend big in order to attract potential customers to come to their big launch event. Owners sometimes go overboard when they are getting their kitchen ready. You need to ask yourself whether it is really worth spending a large chunk of your budget on a fancy oven and other kitchen equipment. But if there are cheaper versions available, you should really pick them. The savings that you make by buying mid-range products will definitely pay off as you will have a lot more money in the bank for when you open.
Poor Promotional Campaigns
If your promotional campaigns and other marketing tactics aren’t up to scratch, you won’t have much chance of getting enough people through your door. And not enough customers means there is no way you can make a profit. So, how can you improve your restaurant’s marketing? There are a few things you can do to ensure that your marketing is hitting your target audience. Firstly, sign up to social media so that you can take advantage of these channels. Post shareable content and deals so that your posts get shared far and wide. That way, you will be reaching as many people as possible. But it’s also important to do some traditional marketing as well. So, consider buying advertising space in local newspapers and sending flyers out to homes in your local area.
Failing Regulation Tests
Any business that serves food has to meet certain health and safety regulations. If you don’t, then your restaurant could be shut down at any moment. So, you need to make sure that each of your employees is following hygienic practices while they work and know everything there is to know about safe food storage and preparation. As these important rules and regulations continually change, it is worth sending your staff away on training courses that focus on food hygiene. There are also some online courses that they can take to get necessary food hygiene certificates. These are often cheaper than sending them in person, and the course can be taken in the comfort of their own home. But as well as food safety and hygiene, you also need to make sure that your building and kitchen equipment meet current safety regulations. These regulations include things such as a restaurant requires an emergency exit and wipeable surfaces in the kitchen.
As you can see, there are a few different things that new restaurant owners can slip up on. Make sure that these problems don’t affect your business, though! Hopefully, this blog post has told you everything you need to know about successfully avoiding and solving them.
Best of luck!