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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Shutterstock

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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Shutterstock

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.

Enough Already! 3 Things About Restaurant Profits You Need to Hear

Enough Already! 3 Things About Restaurant Profits You Need to Hear

How are the profits in your restaurant? Great? Amazing? Is it your best year ever or are your profits on life support? Wherever you are now, it can be said that you want more. It’s human nature to want to climb to the top. 

The restaurant business can be very brutal on people at times especially when it comes to the area of making money. How do you beat the odds and maximize your profit potential? Here are 3 things that are getting in the way of you and your profits:

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This is What It Takes To Be a Leader In Your Restaurant

This is What It Takes To Be a Leader In Your Restaurant

You made it. You’re a leader in your restaurant. Well, that might be what your business card says or how you see yourself. The truth is often quite the opposite. We tend to think that being a leader is about the title or even tenure. Nothing is further from the reality that many people are not the leader they think they are.

There are a few elements that come along with the title of being a leader. Some are well known and a few are those intangibles that make a leader truly stand out. In the restaurant industry today there is plenty of mediocrity floating around. If you want to be a leader in your restaurant, then you must aim for outstanding.

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3 Key Phrases That Sign the Decline of a Restaurant

3 Key Phrases That Sign the Decline of a Restaurant

When you listen to people talk about their restaurant, there are subtle (and sometimes not so subtle) verbal signals that causes you to have a reaction. A negative reaction. As a consultant, you hear these words spoken and in the back of your mind you hear a voice in your head say, “wait for it”. Usually those voices are not wrong. It could be a few months or a year. Eventually, those that throw around boasting remarks tend to be sitting down and eating the very words they were saying.

What you say is a reflection on what is really going on in that three-pound piece of gray matter nestled on the top of your body. The funny thing about the words we say to ourselves, is that when we repeat them with energy, we actually believe them!

Here are three common phrases uttered by short sighted restaurants that originate from the three cardinal sins of leadership: ego, pride, and denial.

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Incorporate These Seating Strategies to Improve Your Restaurant Revenue Management

There are many tactical elements to operating a restaurant business and Restaurant Revenue Management (RRM) is one of them.

RRM can be defined simply as selling the right seat, to the right customer, at the right price, and for the right duration of time.

As property and overall restaurant operating costs continue to increase, so does the desire to maximize seating and guest turnover. This goes for either a full service or quick service restaurant environment. There is, however, a science to restaurant seating strategies— the essence of RRM.

First and foremost, restaurateurs need to understand their intended guest experience and their ideal customer profile — including guest behaviours — to maximize their seating potential.  

private seating fine dining

With the right seating strategy, a restaurateur will position themselves to increase guest spending, increase turned tables, and contribute to a more positive guest experience. Consequently, this will greatly affect the operator’s revenue and profit potential.

An award winning seating strategy will include the following planning steps and thought processes.

Here are six factors to think about:

1. Room Size

The general rule of thumb for a restaurant is to allocate 60 to 70 percent of real estate to the dining area with the remaining percentage allocated for kitchen, storage, and washrooms etc. Ideally, a restaurant wants to keep approximately 20 to 25 square feet per seat, to offer the most comfort and flexibility for guests and the most adequate flow for staff including traffic aisles, server stations, and beverage bars/counters.

For example, a 5,000 square foot property will provide approximately 3,250 square feet (65 percent) for the dining and/or service area, resulting in an average of 144 optimal seats (22.5 square feet per seat).

2. Table Size

As with the above room size, there is a general rule of thumb for table size as well. Ideally, guests should be given a minimum of 300 square inches of space (per guest). For example, a 24 inch by 30 inch table will offer 720 total square inches of space or 360 total square inches per guest for up to two guests, often enough space for traditional plating, utensils, and glassware.

table guest space

Table size can fluctuate based on concept, menu, plating style, and service sequence. Make the tables too small, and guests will feel uncomfortable and leave more quickly. Make the tables too large, and your property will lose valuable real estate. In this case, size does matter!

3. Table Optimization

A profitable interior design combines a variety of table sizes to meet the demand of different sized parties in addition to maximizing Sales Per Minute (SPM), an essential key performance indicator of Restaurant Revenue Management. For a restaurant to be successful, it needs to live in the moment by maximizing every day, every hour, and every seat.

Optimizing table sizes and their positioning, will improve traffic flow and turnover while reducing noise and accidents within the restaurant. Utilize point-of-sale reports to understand typical party sizes, average duration of stay, and dollars spent to ensure the restaurant is not wasting any seats or opportunities.

4. Guest Positioning

Depending on the concept, we know guests either sit themselves or wait to be seated. If one were to sit back and watch how guests were to seat themselves in a full service restaurant, a high percentage of guests would rather choose to sit near a window, featured wall (near fireplaces or wine racks, for example), or a partition wall. This is because these elements create a level of comfort.

modern seating arrangement

When planning a floor layout, it is important to keep this in mind and create multiple “levels of comfort” that guests will connect with and want to be seated near, allowing the restaurant to maximize the space and not have undesirable seating areas that lead to quick visits and less spending.

5. Seating Styles

Without getting into specific details on chair styles (that’s another article), there are three key seating arrangements that are known to either keep guests in their seats and/or keep them spending more money.

Banquette tables (a bench along a wall with an opposite chair), often reduces sales per minute because it keeps guests sitting longer (which can be a great thing). This results, however, in a requirement for the restaurant to up-sell coffees, desserts, and/or other profitable items throughout the meal. This is a critical communication point to all service staff.

booth seating

Booths on the other hand, are the number one option for guests and users of these booths are known to spend more in both time and dollars, as they feel highly comfortable and often feel a higher sense of privacy. Unfortunately, most restaurants cannot offer a space consisting 100 percent of booths, nor is it ideal for single diners. The right table and seating mix is required, but more booths than others, is a more desirable approach.

Traditional tables, those with two or more seats, often lead to quicker visits, unless strategically positioned near levels of comfort and appropriately spaced apart — offering a more intimate experience and ultimately leading to longer stays. It is essential this setting is truly mixed for seating of two and four (or more) to maximize potential and to reduce the risk of a single diner, for example, sitting at a table for four.

6. Guest Duration

By now, we understand that the longer a guest stays, the more they need to spend to maximize the seat and space. As a restaurateur who knows their concept and ideal customer profile, one must decide whether to focus on longer stays and higher revenues per table or to focus on volume of guests (resulting in volume food and beverage production). What is needed to not only breakeven, but be profitable long term while having a highly productive, but not overrun kitchen and bar?

Every concept and every location will be slightly different, but once you know the average meal length, one can determine many other aspects of the restaurant such as full potential for each day of the week which will then correlate to improving other financial management components including optimal staff schedules and food and beverage preparation.