Category Archives: Questions

What makes a successful restaurant?

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You won’t be able to find the answer as to what it is exactly that makes a restaurant successful in any forum. Without experiencing it for yourself, it’s tough to imagine that a restaurant is one of the most complicated businesses you can run. Most businesses are pretty simple. You buy a product, mark it up enough to cover your overhead, and hire people who can sell it effectively and count change, or you manage a warehouse, a sales team, a manufacturing line or a specific service your business offers.

A restaurant is so much more complicated than that. First, you are more than a retailer. You are running a warehouse. You have to have the same skills a good warehouse manager has, including a system for checking everything in and out of inventory, protecting your product from theft, knowing how to keep your vendors honest in their pricing and their service, tracking and recording all your purchases and usage. All of this for a 200 item inventory of PERISHABLE goods, not just pieces that can be stored indefinately.

You are also a manufacturer. You have to run several assembly lines at once, and fill the orders for your product faster than any manufacturing line ever has to. You’re not just making one product either. Usually, it’s at least 20, sometimes as many as 100 different products, all with the same employees. The parts for these products are also perishable. If your warehousing systems aren’t good, it can ruin the manufacturing of the products. If your products aren’t getting made efficiently, consistently, and cost effectively, the whole ship will go down.

You are also a delivery service. You have to have systems for delivering a product with a very short life span to the right place within a time limit, all the while doublechecking that the manufacturing of the product meets standards. The delivery systems inside your restaurant is even more important than any you might offer outside the four walls.

You’re running a sales team too. Your front of house staff have to not only be experts on your product, but also know how to sell customers your highest profit products. You’re margin for error on staffing sales personnel alone could sink you. Without effective sales staff, or staff with the ability to communicate work with the other systems in place, the whole system won’t work.

You are also a service provider. In addition to being your sales force, your front of house staff are also customer service representatives. The number of things that can go wrong within this entire complicated system are enormous. Your FOH staff have to make sure none of those mistakes ever effect the customer. That’s a big task.

You may also be a repair service and a custodian to your own building if you don’t want to pay someone else to do it. There is a lot of equipment in a restaurant to break, and a lot of square footage to keep clean. A breakdown in either of these operating systems could also ruin your business.

All this before we even make it to the management. Managers and owners in restaurants have to know how to run all these different types of businesses under one roof, in addition to being bookkeepers, expert marketers, graphic designers, realtors and human resource pros, while keeping up on legal issues from labor law to health codes, building codes and city ordinances. Not an easy task while you’re supervising a team full of low wage employees. It’s not easy finding managers with all these skills at the wages restaurants can afford to pay. It’s not even easy to have all these skills as the owner. With all the rest of this to consider, how can you even fathom how to price your product to pay for everything? Most owners can’t. They guess, or they use some bad math someone else taught them that doesn’t take into account the unique financial situation of their own restaurant, or the market they are competing in. Then they guess at what a good purchasing contract with their vendors is, they guess at whether their lease is a good one, and they bet on their food being SO good, people will line up at their door to get it.

A lack of experience in any one area of a restaurant can sink it. That doesn’t mean it will, many bad restaurants make money DESPITE the mistakes of their managers and owners, but that doesn’t make it a good idea to try. My advice to anyone opening a restaurant without experience is to use someone else’s. Either pay someone knowledgable to teach you what you don’t know, or open a franchise where all the planning is done for you and the operating systems are already in place.

If you are looking for reasons why restaurants fail, they are easy to find. There are a million of them. If you are looking for reasons why restaurants succeed, that’s a tougher task. I think marketing is the most important thing an owner does, but any one thing they don’t do in their business can counteract their greatest strength, even a natural knack for marketing.

Maybe after all this, you can see why I say that great food just isn’t enough. It’s only the minimum necessary requirement to running a successful restaurant. There is so much more.

Should I charge a fee on to-go food to cover the additional expense of carryout containers?

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You don’t need an extra charge to cover packaging costs. It will only make your customer’s think you are nickel and diming them.

While you do have to pay for packaging to put your to-go food in, there are many expenses you are avoiding by not servicing that customer inside your restaurant. There are no chemical costs to washing their dishes, cleaning their table, and cleaning up after any smudges, smears, spills and stains they may leave behind. There are no products used in your bathroom, or condiments at the table. They are not filling a seat which would reduce the number of customers who can sit in your restaurant at one time. There is no wear and tear on your furniture, fixtures or equipment, and no utilities used on their behalf. You do not have to pay the labor for a staff member to service that person in your restaurant, to clean up after them, or perform extra closing duties due to them.

While it may seem to you that to-go packaging is an added expense to servicing takeout customers, it’s really just the opposite. Even with paying extra for packaging, your gross profit on a carryout customer is significantly greater than a dine-in customer.

Instead of charging extra for special carryout containers, you should be concentrating on marketing the fact that you are environmentally conscious, and be secure in the fact that it is making you a larger profit.

I need a good incentive program that is fair to everyone.

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Bonus Plan Calculator Spreadsheet from our webstore

I suggest only using one thing to base your incentives on, the only thing that really matters, which is profit.

Whether you are encouraging upselling or controlling food costs, the ultimate goal is more profit to you. So rather than encouraging different segments of the staff to concentrate on different parts of the P&L, and setting the stage for them to fight with each other over what the other one is doing that is hurting their bonus, just cut out all the questions and bonus based strictly on your profit. From there, you have to educate your staff on all the nuances of achieving profitability. Then everyone has a common goal, and you don’t have issues like kitchen staff skimping on portions to try and hit a bonus. Bonusing someone for controlling your food costs doesn’t translate into profit if they also dissapoint your customers.

Visit our webstore to find a great bonus plan example and calculator to help you set up a simple profit-based bonus structure for your employees.

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When is it OK not to comp a meal?

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Food comping should only be used in extreme cases. By comping food, you train your customers to expect it. Then when you don’t, they’re dissapointed for not getting something they wouldn’t have gotten at another restaurant anyways.

A customer that simply orders something they end up not liking, not because it was bad, but because it doesn’t suit their taste, is never someone whose meal should be comped in my opinion. Along with other complaints from customers who eat most or all their meal, or do not have enough of an appetite to let you make them something else, you should be offering these people some sort of bounce back offer instead of a comp.

Your first approach should always be to try and replace the food with something they do like. Even if you have to make a dish twice, as long as you collect the money for it, you still have some gross profit left to contribute. When you give a comp, you not only don’t get the money, but you also incurred the expense of preparing the food. The difference between collecting a reduced gross profit, and actually paying your customer to eat with you is huge.

If you can’t replace the food, and the customer’s complaint is reasonable, offer them a coupon or gift certificate and promise to make their next visit better. By comping the meal, you can’t guarantee that the customer will even come back. When you give them a discount for their next visit instead of a comp, there is a very good chance they will return, and they likely won’t be alone. You’ll have the opportunity to make a better impression and win a regular customer.