Owning a restaurant is certainly a rewarding experience, but it comes with its full set of challenges. In the quest to stay on top of the competition, there are bound to be mistakes made. While some mistakes can be a learning experience, others can end up being expensive for your restaurant.
The weight and responsibility of making significant decisions rest on your shoulders alone, even if you have a fantastic support staff. Fortunately, you can learn from the mistakes made by other restaurant owners and make efforts to avoid them.
Here are some of the major costly mistakes to avoid when running a restaurant:
1. Doing Everything Yourself
One of the major mistakes a lot of restaurant owners make is trying to manage everything themselves. This especially holds true for new restaurant owners. Restaurant management requires a team effort, and failure to realize the significance of delegating can hinder the progress and growth of your business.
Merely because you know how to complete a particular task doesn’t mean you need to handle it. Any responsibility that isn’t a core competency of your restaurant must be delegated to your staff or outsourced.
If you can’t afford to hire an additional employee, you can get outside help, particularly for tasks you don’t have expertise in. For instance, social media marketing and web designing. Many business owners prefer to save money on such activities by doing it themselves. This not just adds to their other major responsibilities, but any mistake they make can cost them a lot.
You might think you are saving money, but you aren’t in the long run. Being the owner or manager of a restaurant means your time is money, and it should be used wisely. Start learning to delegate certain tasks to your staff members or hire an expert to attain positive results while managing other business activities.
2. Poor Concept Execution
A great idea is of no use if it hasn’t been executed properly. This is where many restaurant owners fail and have to close up their place within the first year of the launch. When opening a restaurant, many jump at the first great concept or idea but soon realize it didn’t turn out the way they planned.
This is due to a lack of thorough research and planning. You must be as detailed as you possibly can when you are planning the execution of the idea – from getting the funding for the restaurant to the management of staff. Always do industry analysis and market research to make sure that your ideal would work. Hiring a consultant is a wise idea if this is the first time you are opening a business.
3. Hiring the Wrong People
Another major mistake restaurant owners make is not putting much thought into the hiring process. They simply end up hiring anyone thinking it would work. From the chefs to the servers, you must look for people who are team workers, proficient in handling stress, problems solvers and friendly.
Particular attention should be given when choosing the chef as the entire identity of the restaurant depends on the food that would be prepared and served. Moreover, each employee has an integral role to play in your restaurant; therefore, make sure you hire the right people.
4. Neglecting the Grand Opening
Not organizing a grand opening of your restaurant is another mistake that you must avoid. To attract the attention of your target customers, you need to create some hype about your restaurant, and a grand opening is a perfect way to do that.
It gives you a first chance to create a great impression and announce the entry of your restaurant into the industry. Organizing a grand opening and inviting customers to get a taste of the food you offer is an excellent way to market your restaurant and get the word out.
If the customers enjoy the experience, they will not just return but will also spread the word around. You can also have a soft opening in which you invite your friends, family, and stakeholders. It is more like a test run to see how you and your staff do. It is also a great way to identify any problems and correct them before officially opening your doors.
5. Lack of Staff Training and Communication
Being a restaurant owner means you must have specific goals and aims for your restaurant. These goals can be achieved with the help of your staff. However, without providing them with the proper training or having an open communication channel, things can quickly start going wrong.
Your staff is crucial for the success of your restaurant and should be considered as the greatest asset. Many restaurant owners don’t understand their significance and neglect training their staff. It is essential to communicate with your staff and create an effective culture for smoother operations.
6. Over-Purchasing Products
While this might seem obvious, you would be surprised how many restaurant owners make this mistake. Managing a restaurant requires ensuring that the inventory is maintained correctly. Over-purchasing is a major mistake that can drive up the cost of food in your restaurant operations.
It does not just contribute to waste, but it eats up your profits. Here is how over-purchasing is impacting your profits:
- Over-purchasing results in overstocking, which increases the chances of pilferage without you even noticing it.
- First-in, first-out (FIFO) isn’t religiously followed when the kitchen is too busy, resulting in a higher amount of wastage.
- To liberate space and avoid wastage, you end up running discounts on different items that eat up your overall profit.
It can get challenging to keep in line with your costs if you have an overflowing shortage. Make sure your inventory is audited, as well as your waste so that you can order to par each time.
7. Not Considering Customers Feedback
While making efforts to satisfy the customers, many restaurant owners neglect to take feedback into consideration, which is one of the costliest mistakes you can make. The success of your restaurant is largely dependent on your customers, and without them, you can’t survive.
Their concerns and satisfaction should be the priority, and while ensuring you provide excellent service and delicious food is integral, you also need to listen to their feedback. It might be challenging to change things around but getting negative feedback about a specific thing means it is not working well for your customers.
Ask about what they thought about the experience; better yet, place an on-table survey that the customers can fill while dining at your restaurant.
8. Not Investing in Marketing or PR
After you spent a considerable chunk of money launching a restaurant and organizing a grand opening, you would notice a decrease in your customers. That’s typically because you aren’t investing in marketing your restaurant.
With increasing competition and a high number of restaurants and cafés opening up, your restaurant can drown if you don’t keep reminding your customers why they should enjoy meals at your place. Indeed, word-of-mouth is a crucial factor in advertising, but you need more than just that.
Start identifying the appropriate marketing channel for your restaurant and form the right content to start marketing your content. Take advantage of social media, particularly Instagram, Facebook, and Twitter, to get the word out.
9. Creating a Complicated Menu
Another major mistake many restaurants make is creating a complex menu. The last thing hungry diners want is going through many pages to find the right item with a grumbling stomach. You definitely need to offer options in your menu but be consistent with what you deliver.
Go with a smaller and more organized menu by working with the chef and highlighting the dishes that can go well with the brand of your restaurant. Smaller menus help customers to decide sooner, which also means a higher table turnover and more profits!
10. Poor Menu Pricing Strategy
Having an effective pricing strategy is crucial for the success of a restaurant. No matter how much traffic you are enjoying and how successful your restaurant is, if the price of a dish is lower than the overall cost of preparing it, you are facing a loss.
Ideally, the cost of dishes should be twice or thrice the times of the cost of food, depending on the type of restaurant you are running. Remember, you aren’t just selling a meal; you are selling a service. Make sure to include overhead cost, food cost, and profit to create the right menu pricing strategy.
In the excitement of opening a new restaurant, many owners often end up making mistakes that turn out to be highly costly. It is essential to know that operating a restaurant requires continuous effort and monitoring.
You might seem to be going in the right direction during the initial days, but you will start noticing the losses if you continue making these mistakes. Starting your own restaurant is a significant accomplishment, but you must be aware of the commonly made mistakes and know how to avoid them in order to succeed.
You can further boost the overall success of your restaurant by using MenuCRM. It can be your online ordering system, restaurant website, customer communication system, CRM, and even a loyalty platform. It provides full features that can simplify processes for independent restaurant owners.