3 Things That Keep Restaurant Owners Up at NightHow to handle the challenges of being a restaurateur.
As a restaurateur, you face dozens of decisions — from food purchasing and inventory management to regulatory compliance and cutting costs. But what are the biggest challenges that make restaurant owners toss and turn in the night?
According to Stephen Zagor, dean of culinary business and industry studies at The Institute of Culinary Education in New York, the top three worries of a restaurateur are sales, employee turnover and profits.
Zagor dove into each of these topics with NCR Silver.
Regardless of how prosperous your restaurant is, “there’s always going to be a level of uncertainty,” Zagor said. “You could have the most successful restaurant in the world and you still wake up in the morning or stay up at night thinking ‘Am I going to be forgotten today?’ or ‘Is the competition going to overwhelm me?’ The number one fear is always getting bodies in the door.”
While sales will vary depending on a number of factors — the economy, weather, special events and more — there are practices that can help improve your numbers.
First, make sure your staff is upselling by offering appetizers, desserts and additional drinks. If a customer orders a salad, offer to add a protein such as chicken or shrimp. Consistently offering add-ons (like cheese with an order of eggs, for example) can help your bottom line as well as improve the customer’s experience as you anticipate their needs with suggestions to improve their meal.
Another factor to consider is online reviews, which can affect sales significantly.
“The situation right now is that everyone has a voice on the internet, whether it’s local media or a restaurant critic,” Zagor said. “Every opinion influences your success opportunity.”
Some guests like to leave real-time feedback, sitting at a table and writing a Yelp review while they are at your restaurant, he said. Unfortunately, that means rather than calling someone over if they have an issue, they will post their complaint online. Remember, people are far more likely to write a negative review than a positive one.
To avoid situations like this, try to resolve issues as quickly as possible before your patrons have time to get online and complain. Encourage positive reviews by offering the best service possible and promoting your website and social channels.
One of the main reasons turnover can be high is the nature of the restaurant business itself, Zagor said.
“The kinds of people who work at restaurants are often people who are on their way up in their lives or on their way down in their lives… It’s a part-time job. It’s sort of the Uber driving of food. They already know it’s going to be temporary… or it may be an extra job, viewed by the employee as a ‘side hustle.’”
Of course, some restaurant staff are aiming to stay for longer periods. What factors motivate them to stay?
“According to studies, the number one thing that creates a positive business culture is liking the people you work with,” Zagor said. “Having a group of people who work well together with a supportive and positive ownership culture can go a long way. If people feel like they’re doing something valuable and meaningful, are getting the proper amount of praise and direction, and are learning something, they’ll generally stick on for a while.”
Nurturing an environment in which your “work family” can thrive will help retention as well as productivity. By simply helping out and being supportive rather than punitive (when appropriate) will go a long way in making your team happy.
And of course, your staff needs to feel adequately compensated, Zagor said. “If employees like the business and the money is sufficient for them to meet their needs, turnover will be minimized.”
It’s estimated that about half of restaurants fail in their second year.
“Everyone has a great idea and then they don’t really know how to operate. They think it looks easy — you buy food, you mark it up and you sell it. It’s a very seductive business,” Zagor explained.
One thing to keep a close eye on is food costs. Market prices for meat, baked goods and produce fluctuate weekly, so make sure to price slightly above your true food cost to ensure you stay priced profitably.
Another variable to look at is labor costs. Analyze ticket sales and volume and see if you can afford to cut staff during slower days. Of course, the idea here is to cut costs without sacrificing service, so only cut staff if you are confident the level of service will remain high.
Ultimately, a restaurant owner will always have concerns over these challenges and many more. However, if you consistently measure and analyze key metrics — such as ticket volume, sales, busy times, service, reviews, etc. — you will be more in control of your restaurant and feel more confident as a business owner.
“You can only set up the system so much, watch people so much, inspect things so much,” Zagor said. “It’s like raising a kid; at some point you have to let the kid go.”