Overcoming the 5 Pain Points of a Restaurant Owner
Do you own and/or run a restaurant? Do you know your biggest challenges? And how you plan to tackle them?
Although every restaurant operation is different, research says that staffing is the top pain point for restaurateurs, followed by high operating and food costs in second place, and attracting and retaining customers third.
To these, we'd add a fourth: The demands of complying with rules and regulations, and increasingly stringent hygiene inspections.
And a fifth: Using technology and other trends to best effect in your business.
In our experience, overcoming obstacles within your restaurant largely boils down to successfully tacking these five issues.
That's no mean feat. Let's take a close look at some of the strategies a restaurant owner or manager might adopt to deliver on them.
Recruiting, Training and Retaining Great Restaurant Employees
Front of house employee turnover can run to well over 100% a year. That means that, on average, you'll have to numerically replace your entire team of servers, hosts and other customer-facing employees in less than a year.
Making each replacement costs thousands of dollars in recruiting, advertising, and training costs. And there are other, hidden costs, for instance, if reduced customer service leads to reduced business.
Entire books have been written on the topic. But the solutions typically condense into five main points:
- Establish a corporate culture that employees can buy into -- building team spirit by caring about your people, thanking them and rewarding outstanding performance, and setting a personal example of commitment and hard work.
- Provide job descriptions and ensure that every employee understands their role and how it fits into the overall business picture. Keep them informed of business performance.
- Use interview tactics that help you weed out the potential underperformers at the outset. Insist on and check for Criminal Violations. Watch for negative body language. And don't rush. Here's a great site for interview tips: https://tinyurl.com/Restaurant-tips-1
- Provide thorough training, especially focused on customer service. Use this to identify and address weaknesses.
- Seek feedback. Encourage employees to put forward their ideas and to be constructively critical at the right times. Listen to their views! And conduct exit interviews when good employees are about to leave, to provide further insight.
Managing Restaurant Operating Costs
It's sad but true that most restaurant operations close within the first few years. Numbers are disputed but something like only 20% of restaurants are still going after five years.
Trying to ensure yours is one of them calls for tight financial controls which, in turn, demands that you always have an instant picture of cash flow, operating balances, labor and supply costs.
Software should allow you to do this daily or, at least weekly, with projections based on past and expected future performance. For example, food and labor costs should each work out at around 30% of costs. If they're more, it's time to rethink.
But there's much more you can do to maintain a firm grip on your finances, such as:
- Managing inventory more closely to minimize wastage and storage.
- Limiting menus to reduce the variety of supplies required.
- Requiring competitive bids from suppliers and renegotiating prices if feasible.
- Ensuring you always have enough money to run your business for the next year -- with enough set aside for emergencies.
- Knowing what your biggest risks are and monitoring them closely
- Knowing what your most popular items are and regularly reviewing menu pricing.
- Constantly looking for opportunities to do things better and, if possible, reduce costs.
Attracting and Retaining Restaurant Customers
The right food at the right price in the right place at the right time. That's what your customers want -- along with courteous and efficient service.
So many restaurants fall short in one or more of these key areas. It’s worth spending some time measuring your performance against these must-haves.
But before any of that, you have to get them in to sample your food and service. Increasingly, this is being done via social media advertising and email marketing, rather than print, broadcast and direct mail.
Here are some other powerful tactics you can use to bring in and retain customers:
- Create a marketing plan. Review it and update it regularly. This needn't be a big, time-consuming task. But it does provide a road map for how you intend to interact with customers. Here's an easy seven-step guide for creating a restaurant marketing plan: https://tinyurl.com/Restaurant-tips-2
- Differentiate yourself from competitors -- this could be via menu choice and themes, decor, service standards and so on. These are all components of your brand. What is your brand message? What is your unique selling proposition (USP)?
- Introduce a brand loyalty program and reward frequent visitors. Track customers and gather their email addresses. Launch an email or SMS marketing program. Contact them with special offers and last-minute deals at quiet times.
- Seek feedback, informally and through surveys, and act on what you find. Encourage and reward satisfied customers to promote you by word of mouth. Also, monitor all online postings and feedback. Always respond positively (not defensively) to criticism.
- Ensure you have a strong online presence both with a well-designed website and active relevant social media postings.
- Keep your menus clean and well-presented. Experience suggests smaller menu choices tend to be more appealing. Train your employees to memorize the menu and taste each item.
Keeping up With Texas Restaurants Rules and Regulations
The rules that govern both businesses in general and restaurants specifically are not only many, but they also change frequently.
As an example, we have seemingly never-ending changes to health insurance requirements, minimum wage laws, permits, liquor licenses, LGBTQ rights and the often-dreaded hygiene inspections.
How are you supposed to monitor and comply with these?
Though they take a while to wade through, it's worth getting to know your state food regulations, which you'll find here: https://tinyurl.com/Texas-food-rules
You should also contact and get to know relevant local officials in the Houston Health Department and Harris County Public Health - Environmental Public Health. Being proactive in this way can often strengthen your reputation.
You should also monitor the area's current inspection reports so you can pick up on others' infringements. Start here: http://inspection.directory/texas/houston
Finally, membership of the Texas Restaurant Association https://www.txrestaurant.org/ will also keep you plugged into changing local and Federal requirements.
Using Technology and Other Trends to Help your Texas Restaurant Business
Some innovative restaurants now have robots serving their customers. While you may not be ready for the robot revolution in your business just yet, there are certainly ways that technology and other contemporary trends can help improve efficiency and customer satisfaction to get you past some of your pain points.
For the times, they are a changing. Example: 39% of smartphone users now say they'd prefer to use their devices to pay for meals and bar tabs. Or, 52% of regular diners say they now make their reservations online if they can.
Are you servicing these people and their needs? Keeping abreast of restaurant technology is one crucial element of securing the future of your business.
- Advances in point of sale technology including hand-held devices for use by servers for improved security.
- Use of on-table tablets for placing orders, to speed up service.
- Software to improve customer contact and loyalty programs.
- Growing demand for home delivery, to expand overall sales.
- New tech in the kitchen -- such as Bluetooth temperature sensors -- to improve food safety and quality.
- Scheduling software to improve employee shift planning and other timetabling.
- You can also keep pace with the latest developments by setting up a Google news alert using the phrase "restaurant technology" or subscribe to media such as Restaurant Technology News.
By the way, although it's a few years old now, you might want to check out a full study of our state by the Texas Restaurant Association, which still has some useful information and advice. Find it here: https://surrender.biz/restaurateur-issues-and-challenges/
Second, many of the risks addressed in this blog can be mitigated through good insurance and risk management advice.
For example, commercial liability protects against customer claims and lawsuits; business interruption coverage protects you against unforeseen disruptions to your activities, and cyber insurance protects you against the risks of a customer data breach.
Your agent should also be able to help you stay abreast of regulatory requirements that might affect insurance coverage as well as advise you on risk management
If you'd like to learn more about these issues, please get in touch with Pasadena Insurance Agency, your restaurant insurance and risk management expert for the Greater Houston area.Or click here for a Free Restaurant Insurance quote!