The restaurant business is notoriously tough. CNBC.com estimates that 60% of restaurants fail in their first year, while 80% are forced to close within five years. With such a high failure rate, it’s important to avoid making common restaurant startup mistakes, because you’ll only get a few shots at making it work.
According to FSR Magazine, staffing is one of the most pressing issues for restaurant owners. Turnover in the restaurant industry is higher than in other sectors. The National Restaurant Association estimates that restaurant turnover is about 63%, in part due to hiring students or other workers that aren’t looking for permanent employment. It is also partly due, however, to hiring people not suited to the job. Of all restaurant startup mistakes, the most serious may be hiring the wrong people. There is a lot of time, money and frustration involved in constantly training new employees. When hiring, make sure you:
- Choose Wisely: Your employees should understand the vision for your restaurant and want to help accomplish these goals. For example, a coffee shop owner should look for people who are passionate about coffee. It seems easy, but many restaurant owners hire anyone they can, only to have those employees quit soon after.
- Acknowledge that Management Matters: Hiring trusted managers will help ensure success. Managers who don’t treat staff fairly and give them the tools they need to succeed can be the reason for staff turnover. If you’re receiving complaints about a manager, take steps to fix the issue quickly.
Keep a Close Eye on Your Business
Your eyes, your ears, and your point of sale (POS) system will help you recognize and correct restaurant startup mistakes.
- Track Finances: Food and labor (prime costs) are commonly a restaurant’s biggest budget items. Regulate your staffing needs carefully so you aren’t over- or understaffed. Track your inventory and reevaluate menu options frequently. Food prices fluctuate often, so a dish that was profitable last week might be a loss the following week. At a restaurant, about 80 percent of profit comes from 20 percent of the menu items, so it pays to be vigilant.
- Stay Involved: Even top-notch managers aren’t a substitute for the owner. This doesn’t mean you have to do everything yourself, but it does mean spending the time to learn about your business and customers. Being an absentee owner is a recipe for failure (pun intended).
Tools Available to Help Save Time and Money
It may seem like you’ve got it made once the menu is finalized, the right staff is hired and business is brisk. A common restaurant startup mistake is stopping there. It’s actually the time to invest in the tools your business needs to maintain productivity and efficiency and to implement a marketing plan that will keep customers coming back.
- Tools for Success: An intuitive POS system will make it easy for your staff to input and change orders, print checks and accept payments. A POS system will help reduce the costs of correcting errors. The right technology, combined with continuously improving your processes will help you control costs.
- Marketing Campaigns: Blanket marketing campaigns are great to get people in the door, but they’re a waste of money to run repeatedly. Instead, launch a loyalty program and email list that will allow you to build a database of interested patrons to communicate with directly. In addition, stay active on social media and monitor and respond to comments on review sites.
Learning from your mistakes (and the restaurant startup mistakes other businesses have made) will put you on the path to building a profitable business. Smart staffing and staying involved is critical to day-to-day operations, using the right tools to help control costs and stay productive, and strategically building customer loyalty can all contribute to success.
For information on how the right restaurant POS technology can keep your business on the right track, contact Leebro POS.