What does it mean to be successful in the restaurant business? Some would argue that simply keeping the doors open more than a few years is quite a feat. And that’s true in a sense. Starting a restaurant is difficult, and keeping one running is even harder. But the fact is that just staying afloat isn’t enough. Restaurant chain and franchise owners with multiple locations are playing the game at a different level. It’s really difficult to expand and maintain a large scale operation without sacrificing quality, going crazy with too much work, or running into other kinds of trouble. In fact, the issues that face an expanding business are like those facing smaller organizations, but magnified. How do restaurant owners successfully scale their businesses? Here are our favorite secrets of successful restaurant owners from around the web.
Put the Right Systems in Place
In an interview with OpenTable, Tacolicious owner Joe Hargrave spoke about how his perspective had to change as he went from having four employees to several hundred. At some point, he had to stop micromanaging. But that’s when he stopped making money. It was time to upgrade his infrastructure and create director level positions for Admin, Operations, and HR. “It’s not going corporate, it’s just protecting everything and making sure that this vision is scaled and documented properly.”
Sushi restaurant owner Tyson Cole agrees, “Organization doesn’t kill the flow of creativity. Putting outstanding systems in place gives you the freedom to be creative.” Many chains and franchises have processes and systems already. But the fact is that technology, regulations, the fast pace of change in customer preferences, and other factors are increasing the need for systemization—and systems that were state-of-the-art ten years ago may be outdated today. As a result, one of the secrets of successful restaurant owners is to review their processes on a regular basis to find areas for improvement at the corporate and local levels.
Create Additional Revenue Streams
Another one of the best secrets of successful restaurant owners is to create an additional revenue stream. Memorabilia like hats, t-shirts, mugs, and coasters along with other retail items (like barbecue sauce or hot sauce) may offer additional revenue with a high profit margin. The Hard Rock Café is a famous example of a chain that does memorabilia very well. These items can serve a twofold purpose of boosting profitability and getting your brand more exposure. However, it does take a concerted effort to make “upselling” a routine part of the customer experience. Wait staff and cashiers must be trained to help maximize sale of these items.
It may also make sense to add a retail function to the company website to drive sales for customers who are ordering or browsing online. It’s definitely important to engage on social media to boost sales of products and create excitement about new or favorite items. For example, running contests with prizes for customers who post photos of themselves in fun locations wearing your gear is good for engagement. Bear in mind that there are two types of buyer personas for this type of product: tourists and longtime customers. Developing a product line that will appeal to both is important for economies of scale and to make marketing easier. But if you have to choose, remember that your regulars are probably your best bet for repeat purchases!
Do Menu Changes the Smart Way
Since restaurants operate on slim margins, incremental transformation is often the order of the day. Making a big change entails a big risk, and may not be worth it. Fortunately, having a well-rounded menu means there’s a lot of opportunity to experiment with a few things at a time. As long as you are tracking, quantifying, and analyzing the results, you can use that information to increase your margins. According to a piece posted at marketing4restaurants.com Donovan’s has this down to a science. They keep part of them menu the same no matter what, even avoiding seasonal shifts. This keeps their regular customers (who comprise 80% of their clientele) coming back for their favorites.
The restaurant may trial new dishes, but only gives them a two week run to see if they hit it off. They may move the item around on the menu to different visual locations to see if that makes a difference. That’s a good reason to ensure you’ve got a good deal on printing—because testing items in this way can be costly in terms of frequent menu revisions. But finding the next best-selling item that lands you five star reviews and new loyal customers can be worth it.
Grow in the Right Locations
According to restaurateur and author Kep Sweeney in an interview with Entrepreneur Magazine, location selection continues to be an issue. “A lot of people do a square-peg-in-a-round-hole approach. They’ll get real estate because it’s available, but it might not be in concert with the concept that they want to do.” Having a dine-in restaurant in a high traffic location that’s better suited to a quick-serve dining style is one example. But local competition is another factor to consider.
Johnny Hsu, a long-time restaurant industry veteran found out about the risks of geographic proximity the hard way when he opened a second location too close to his first as a business venture with a friend. It had a completely different menu, and he thought that would make it alright. It wasn’t. He soon discovered that Le Chine was competing with his existing Imperial restaurant. It was a costly mistake. Therefore, another of the secrets of successful restaurant owners is to pay attention not just to how close they are to other franchise locations but also the other restaurants in the area.
Spend on People
Cutting corners on the guest experience is almost always a mistake. Having a strong base of repeat customers is what keeps restaurants thriving and gives them the impetus to keep growing. Using personal interaction in the restaurant as well as follow up on social media and email/text is essential for keeping your brand front and center. Ensure there are line items in your budget dedicated to improving the on-site guest experience and on staying in touch once they leave.
The other place where spending on people matters is with staff. Decent pay, good benefits, and a culture of engagement are important to keep turnover low and reduce the cost of constant retraining and staff shortages (both of which negatively impact the customer experience). With multi-location restaurants, it’s not just about replacing wait staff or kitchen crews. You also need to pay attention to your director level positions. A strong leadership team in alignment with your vision is one of the best kept secrets of successful restaurant owners. Have a plan for grooming your upper tier leaders so they can grow with your organization.
How can Efficient Hire help you grow? We specialize in onboarding, WOTC capture, and I-9 processing for restaurants. Find out more about the secrets of successful restaurant owners and how we can customize our solution for your organization.