There is a reason why restaurant businesses see an extraordinarily high failure rate. For one, margins are fairly low in this business. Add to this the high rate of turnover and fixed costs and you can see why this industry is not for the first time entrepreneur.
While the factors mentioned above are indeed challenging, they are not entirely unsurmountable. Let us take a look at a few factors that are accelerating your restaurant’s failure and how this can be overcome.
You do not have an SOP (Standard Operating Procedure)
A number of things go wrong in the daily operations of a restaurant. You could deliver a wrong item, your food could include ingredients that your customer told you they were allergic to, you could be taking too long to process your orders, a customer might refuse to pay citing reasons they were unhappy with, and so on.
Over a month or a yearly period, these things happen so routinely that a restaurant manager would actually start expecting these things to happen. Fixing them for the customer is an entirely different ball game though. Do you start refunding customers every time an issue crops up? How do you make sure that customers do not abuse your hospitality?
Different managers react to situations differently. It is important for a restaurant to have a Standard Operating Procedure (SOP) document for this purpose. This allows you to homogenize the process based on best practices and make sure that you create a great atmosphere for your patrons without having to be too hospitable. An SOP could go beyond just mishaps and also include information on how to receive a customer, how to serve them, and how to prepare certain dishes.
You are not rewarding loyalty
We all have our favorite restaurants, don’t we? While customers, for the most part, don’t expect a restaurant to explicitly reward them for loyalty, doing so helps with your marketing. A small cafe in a hillside town is likely to know each of their customers by their first name - such restaurants should not have a problem finding loyal patrons and rewarding them.
However, if you run a large restaurant with hundreds or thousands of guests, it is not always possible to know who your loyal customers are. For this reason, it is important to incorporate a loyalty program that ties your customers’ loyalty directly with rewards. This way, it is possible to create incentives for a customer to stay loyal to your restaurant and thus improve the number of repeat visitors.
You are not handling inventory optimally
Food wastage is a perennial problem in any restaurant. According to some estimates, restaurants can save between 2 to 6 percent of their annual costs if they optimized their inventory better. That’s a lot of savings for an industry that runs on wafer thin margins. Investing in a restaurant inventory management software is the first step towards building a more optimized inventory model for your business.
You are not using the right marketing channels
Sending fliers to mail boxes across your neighborhood is a good start, but is not enough to bring enough customers to your restaurant. It is important to realize where your prospective guests hang out and reach out to them appropriately.
Many restaurants today have begun investing in ‘Instagram-friendly’ decors and interiors in an attempt to use their customers as marketing channels to reach other customers via Instagram. Other restaurants make use of innovative and engaging quizzes to engage with customers on platforms like Facebook - these channels help restaurants scale up their lead generation exponentially - contributing to increasing footfalls.
Do you know a strategy that helped a restaurant grow their business? Share it with us in the comments.