I have been a partner in two restaurants for the past six years. My restaurants were not performing well and although the operating partner and management were doing a reasonable job with customer service and the menu, the business side was not being managed correctly. In all my years of experience it seemed crazy that a restaurant that was doing good turnovers was not making it on the bottom-line. Eventually the landlord began calling in all outstanding debt and threatened possible closure of both businesses.
It was difficult for me to be involved in the actual running of the restaurants as they are situated in another city approximately 350 kms away, and I wasn’t able to get there as frequently as I would’ve liked. The stress of the two restaurants not performing well became too much, and in March 2010 I made the decision to leave my corporate position and my family and commute every week.
South Africa has been negatively affected by the global crisis, and this in turn had an impact on the restaurant industry. Food prices, labour costs and electricity were increasing disproportionately to the sales revenue at a rapid pace.
A pessimistic outlook during difficult times will always impact negatively on a business. A successful manager therefore remains positive and optimistic, always looking for opportunity. The recession and other obstacles need to be acknowledged, yet the focus needs to be on what a manager does have control over. For example, we have no control over the economy, but we do have every bit of control over what takes place in our own businesses. This is what I call the internal control and focus of one’s own business.
Points you can control:
- Create a budget for the year. If you do not have a budget, you will not know what targets you need to achieve. A budget provides direction, focus and purpose.
- Service more than ever is the differentiating factor. Customers now demand even greater value for their money and excellent customer service adds considerable value to the experience. Investigate ways to improve your service cycle. Your biggest competition is your customer, not the restaurant across the road. The best (free) marketing is a satisfied customer shouting your praises.
- Hire the correct staff. Unfortunately managers generally do not spend enough time or lack the know-how and/or skills to hire the correct individuals. Hire for attitude, as skills and knowledge can always be learned. Remember, your waiters are your first line marketers. It is also very easy to hire and very difficult to “unhire” staff. The biggest stress in a restaurant is the staff. Hire the correct staff and the majority of your stress will disappear.
- Management is key – get this wrong and no matter how good your line staff is, the restaurant will not succeed without good management. If your staff doesn’t perform, look at your managers first.
- Have systems and controls firmly in place. All management need to be disciplined to ensure that these systems and controls are implemented and managed. Without controls and measurements, you are running your business in the dark.
- The only 3 ways to increase sales turnoverare
- New customers
- Customers increasing their visits
- The key method to achieve this is to train your staff. See training as an investment. Amongst the many advantages, the benefits of trained staff include improved service, increased sales, upselling and improved staff motivation.
- Always market your business. Investigate innovative methods to market your business. Ensure you are utilising social media, such as Facebook and Twitter. Focus on community marketing. Revisit tips 3 & 6.
- Be brilliant at the basics. Successful management focus on getting the basics spot on. Some managers want to be extravagant with big ideas, yet they do not have the basics in place.
- Aggressively control your costs (tip 1 – budget). Educate your staff about all the costs incurred in your business. Sometimes staff perceive you are making loads of money even if you aren’t.
- Be bold. Be prepared to make the changes that will positively affect your business, even if it is a painful change. As Albert Einstein defined insanity: “doing the same thing over and over again and expecting a different result.”
The last year has been challenging, however I am happy to say that after implementing all of the above, coupled with hard work, I now have a flourishing business with revenue constantly increasing and with food costs and expenses that have decreased significantly. Running a restaurant isn’t rocket science, just stick to the basics and have some fun while you are at it.
Larry Hodes, Guest Blogger
Larry Hodes has over 25 years of experience in hospitality, which includes consulting to the hospitality industry, owning and operating 2 restaurants, working as an Organisational Development Manager for a global food service company, heading up HR and training for a large restaurant chain, Restaurant Operations Manager for a 5-star hotel, as well as management for other independent and chain restaurants. Currently he is a partner in The Restaurant Code a hospitality consulting company.
Larry is a past chairperson of the Restaurant Association of South Africa Training Committee and the South African National Barista Competition and a past director of the Speciality Coffee Association of South Africa.