If These 5 Things are in Place You MIGHT Have a Restaurant Business

You have a location. You have a menu. You open the doors and guests are coming in and eating at your establishment.

But do you have a business? Don’t answer so fast. There are certain things that must be in place to have a real business.

Not to burst your bubble, but without these 5 things, you actually have more of what would be classified as a hobby. An expensive hobby.

The restaurant industry has a horrendous reputation for being tough and with especially high failure statistics. Perhaps the reason is due to the fact that most don’t run their restaurant like a business? Restaurant success is not a game of luck. It is a business and there are rules that those that find long term success follow.

The good news for you? You just need to follow the rules.

Now, some might cringe at the ideas of following “the rules.” You started your own restaurant because you didn’t want to follow the rules. Rules allow you to instill some discipline in your business. You need discipline to reach high levels of success. You can’t get there without it.

Know Your Numbers

Least we forget that the restaurant business is a business. For that, you must know your financial numbers. This is not a luxury, it is a necessity! There is a fiduciary duty you have as an owner or a leader in a restaurant to protect the brand assets. Those assets are the bottom line. There is an overflow of creative culinary talent in the market, I would wager that only 10% know how to make money with that talent.

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How many top chefs have you heard of lately either going bankrupt or being kicked out of their own company for malicious behavior? And those are the ones that make the headlines. There are countless more that just slowly fade away without being noticed.

Economic responsibility starts and ends with the small business owner in a local community. You make money and spend money within your community. When that cycle breaks down, towns become vacant and are left as remnants of once prosperous so-called boom towns that became ghost towns (think Tombstone, Arizona; Calico, California; Rhyolite, Nevada).

So where to start? How about knowing the exact cost of every item on your menu? You might be shocked that this is a major area that most restaurant operators fail to implement. If you don’t like numbers or you don’t know how to calculate this, then hire someone! You can’t go any longer without getting on top of your numbers. Stop saying you “should” and start saying you “must”.

Know Your Market

If you are going into a market it is far better to disrupt the status quo than to create it. Starbucks didn’t invent the coffee market, they disrupted how we thought about coffee by transforming it from diners to its own cozy shop people would want to spend time at. Chipotle did not invent the burrito, they disrupted the way we order a burrito with the customization model. Chick-fil-A did not invent the chicken sandwich, they disrupted the service associated with getting a chicken sandwich!

Are you trying to create a market or are you disrupting your market? This is where so many go astray. They look at the market and think that Ethiopian BBQ Sushi would be great! There is nothing else like that currently in their area...and there might be a very good reason why.

Creating a market takes a lot of money, marketing, and a brilliant brand positioning strategy to make it work. While you might have one or even two of those three things, you’re going to need all three to make it work. Many a restaurant has gone under thinking that they were going to change the restaurant world with an unproven business model.

Know Your Team

When you look around at your team, what do you see? Friends? Family? Co-workers? Strangers? Professionals? The way you answer that says a lot about you as a leader and is a reflection of your culture.

One thing that the restaurant industry is lacking is real leadership. We have plenty of managers, but a few leaders. My definition is fairly straightforward: a manager manages the shift, while a leader, leads the vision. Managers tend to have a style that can best be described as a firefighter. You’ve surely seen these managers in action. They rush around all day busy putting out fires (problems). In fact, they pride themselves on the number of fires they can put out each shift. The firefighter manager lives to be a problem solver.

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The leader has a totally opposite mindset. Their drive is to empower their team to be solution seekers. When the fire (problem) pops up at the restaurant, they ask the team for solutions. They also talk to their team to understand them on a deeper level than the traditional employee-employer relationship.

If you want to build a successful team around you that can solve complex issues (that will arise in the restaurant industry), you need to know what each team member can and cannot do. If a team member doesn’t like or is not proficient in spreadsheets, why make them in charge of accounting? You have a shy and reserved person yet you put them in front as a host because you think it will help them grow. At what cost? A poor first impression for your guests when they walk in and are greeted with a lack of enthusiasm.

Know Your Strengths

Knowing your team is one side of the equation. The other side is you have to know yourself. Awareness precedes choice and choice precedes change. You must become self-aware of who you are as a person and as a leader. No, that does not mean you need to sit in meditation for 3 hours a day (however 20 minutes is good for you). This is about knowing what you are good at. Knowing what you are okay at. And, knowing what you just suck at.

Trying to develop your weaknesses is a waste of time. You will grow stronger as a team when you focus in on what you are amazing at. Oh, and allow me to digress on the topic of having passion. The gurus out there say if you're passionate about what you do, you’ll be fine. Not exactly. Passion is nice and it amplifies your skills. It won’t replace skills and being damn awesome at what you do. Screw passion, become a badass with your skill sets!

So, what are you so damn great at that people cannot ignore you? That’s your strength right there! Focus on what you excel at and build a team around you for the areas you are not so good at (or perhaps you suck at). When you do have your dream team in place, step back and allow them to do what they do best.

Remember that you hired them for their skills and there is a big difference between training and taming a person. When you train your team, you harness and focus their natural strengths to higher levels. When you tame your team, you suppress those natural strengths and make them less.

Have a Solid Plan

Without a crystal clear plan, you will not get very far in the restaurant world. Sure, you might have some initial success without a plan. Hey, even a broken watch is right twice a day! Long term success requires a long term vision and a plan to get there.

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Look at it this way: you could drive from Los Angeles to New York City without a map. Chances are without a clear route or even a vague plan, your chances are very slim you’ll get there. Hey, it could happen. So could getting hit by lightning twice in the same day!

Proper planning allows you to make adjustments when you get off track. Think of a plan like having a map. In fact, I use the analogy of a map as having a Massive Action Plan (M.A.P.).

  • What is your plan to develop yourself?

  • What is your plan to develop your team?

  • What is your plan for marketing?

  • What is your plan for growing sales?

  • What is your plan to increase profits?

  • What is your plan for recruiting?

  • What is your plan for improving your systems?

  • What is your plan for improving the guest experience?

  • What is your plan for your menu?

These questions above are a great place to start if you don’t already have a plan in action. The bottom line is that successful restaurants always have a plan. They know precisely where they are and where they want to be (1 year, 3, years, and 5 years) down the road. Once you have a plan in place, you just need to map out your journey with action steps that will take you there.

Want more tips from Donald Burns on how to create a better restaurant? Check out the recent episode of The Barron Report below where Burns breaks down some of the psychological principles that get in your way from building the restaurant and life you truly desire.