Successful restaurant owners have many traits in common. They have a passion for food, an adventurous spirit, a strong work ethic, and the ability to teach and lead. These may be traits that come naturally to the best restaurateurs, but they can also learn some valuable habits to help them efficiently and effectively run a business and meet their goals. Here we've outlined seven practices of highly successful restaurant owners.
1. Keep Close Track of Your Finances
The statistics can seem daunting. The fact that 60% of restaurants fail in their first year and 80% close within five years of their grand opening is an indication that few have what it takes for long-term success. There are many reasons why a restaurant fails — no industry experience on the part of the owner, poor location, not enough operating capital — but the main reason is a lack of planning.
If you want to open a restaurant, or if you're going to take a fresh look at where you are in your journey as a restaurateur, you must develop a business plan. A successful business plan covers everything from the food you’ll serve to how your restaurant will look and how you want your customers to feel. Most importantly, it will act as a roadmap to your financial success.
Keeping accurate track of your restaurant’s finances is essential to building a successful restaurant. This process includes focusing on your daily finances, such as cash flow, payroll, and inventory. Creating a profit and loss statement, keeping your personal and business finances separate, and knowing exactly where every dollar goes will ensure you retain a firm hold on your restaurant’s financial well-being. A restaurant operations overview report can also give you valuable insights. Many restaurant failures are associated with poor accounting practices, so keeping track of finances is critical to your future success.
2. Invest in Technology
Accounting and inventory management software are just a couple of the technologies that small business owners should invest in. Knowing your numbers allows you to better operate your business and make sound decisions regarding future investments. You may also consider looking into eCommerce solutions to help future proof your business. The pandemic accelerated the rise of contactless solutions like mobile ordering and payment and self-ordering kiosks. With health and safety being a top priority for many diners, demonstrating a commitment to a hygienic environment will be critical to your restaurant's success. The CDC offers several steps you can take to reduce the risk of illness for your customers, employees, and your community while building trust.
Also, consider investing in a new POS system. Today your POS system can process credit cards, track sales, simplify bookkeeping, and much more. A POS system can save restaurant owners time and money while increasing their efficiency and effectiveness. POS systems offer more accurate sales reporting and shorter transaction times. Other efficiency benefits include POS software that tracks staff time and inventory, saving time in daily operations preparing payroll, bookkeeping, and inventory management.
3. Market Your Restaurant
Less time, a smaller staff, and tight budgets mean restaurateurs wear lots of hats. One of the most important is that of the marketer – after all, it's how you generate customers.
Marketing is an integral part of every business plan. Effective marketing brings your restaurant to the attention of new and existing customers. If you don't have the time and money to market your restaurant, you may not have that restaurant for long. Potential customers need to know you exist, and existing customers must be reminded. If there's no compelling reason for customers to try your restaurant, they won't. Your marketing plan is the vehicle by which you compel them. Get a free restaurant marketing plan template.
Competition among restaurants is as fierce as ever. Developing the right strategy for marketing your restaurant is critical to your success. First off, decide what you want your restaurant to be. Your brand identity will have a considerable impact on the type of marketing that will work best at reaching your ideal customer.
There are email marketing campaigns, SMS or text messaging, social media, and blog posts. It's no secret that social media has changed how you communicate with potential and existing customers and is one of the most effective ways of promoting your restaurant. Also, a properly optimized website will not only get your business found online, but it will also generate customers and create return business.
A great way to spread the word about your business is by getting involved in your local community. Community involvement increases brand awareness. It makes your business visible, allows people to get to know you and your restaurant better, and helps you create a reliable, trustworthy, and generous business image. It can also give you a leg up over the competition and boost employee morale. There are a variety of ways that you can get more involved in your community and benefit your business as well:
4. Expand or Remodel
Expanding your restaurant's outside seating area with a deck, patio or tent, could bring you real financial benefits. Adding a bar to that outdoor space can increase revenue even more.
Vucurevich Simons Advisory Group (VSAG) conducted a business analysis and demonstrated that with a proposed initial investment of $200k, the forecasted seasonal use return could result in $500k in sales. That’s a 65 percent return on investment for their customer who considered adding outdoor seating.
Upgrading your existing patio with heat lamps for winter months and fans for warmer weather will allow comfortable outside dining year-round. Be sure that once you have your outdoor seating area, keep it updated just as you would your indoor space.
Other smart renovation investments for restaurant owners include adding energy-efficient equipment and lighting, fresh paint and new flooring, updated tables, chairs and booths, and interior and exterior signage.
5. Learn How to Delegate Responsibilities
You can't do it all on your own. While it is essential to take a hands-on approach as a restaurant owner, you need a reliable team to delegate responsibilities. Doing this will free you up to work on building your business and even give you leeway for some much-needed time off. If you expand to an additional location, you'll need people you trust to ensure operations go smoothly. Some tips to help you delegate include knowing your strengths and weaknesses, matching the task to the right employee, giving clear and specific instructions, keeping communication open, and recognizing and rewarding success.
6. Take Advantage of Opportunities when They Arise
Being able to seize opportunities when they present themselves is essential in getting ahead in small business. Spotting trends and adding them to your menu can also help you succeed. A great example of a trend that helps restaurants survive the pandemic is the use of ghost kitchens, off-premises channels powered by the virtual marketplace. QSR magazine spotlighted one restaurant that has grown its 10 locations to 150 during the pandemic and hopes to reach 500 locations by year’s end.
Whether it is an industry trend, inventory opportunity, new equipment, an expansion, or a potential second location, having the financial flexibility and guts to take a risk will play a significant role in your business's success.
7. Set Clear and Attainable Goals
What does success mean to you? Goals can be tough to reach unless you clearly outline them and devise a plan to complete them. Figure out exactly where you want to be when it comes to revenue, profit, and your ability to take time for friends, family, and yourself. Be realistic, but don't be afraid to go after your dreams.
Flexibility is one of the significant advantages that small businesses hold over larger corporations. Business flexibility is defined as a company's ability to make whatever internal changes are necessary to respond quickly and effectively to the changing external environment. For companies that don't embrace flexibility, changes in the business environment can mean significant setbacks. A flexible business plan is not complex but outlines every growth stage. If you want a flexible business plan, don’t complicate it. The direction and flow of the plan are much more important.
These seven habits are all part of having a solid business plan. Outlining every detail of your operation while remaining flexible will give you the best chance to succeed.
Click here to download the QuickStone Capital free business plan template and get started today. Or check out how 7shifts optimizes your restaurants labour management.
For the past fifteen years, Quikstone has helped thousands of merchants grow their restaurants with fast and flexible working capital for all their business needs. With an A+ rating from the Better Business Bureau, Quikstone is a leader in the financial services industry. We’re proud of the fact that 80% of our merchants are repeat customers who consider Quikstone a trusted business advisor with their best interests at heart.
7shifts is a team management software designed for restaurants. We help managers and operators spend less time and effort scheduling their staff, reduce their monthly labor costs and improve team communication. The result is simplified team management, one shift at a time.
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Steve Hall is the Executive Director of Business Development at Quickstone Capital.