BIG OLD HAIRY MISTAKE #1 TO AVOID AT START-UP
Approximately 50,000 new restaurants will open in the US this year. That’s about 137 new concepts opening their doors each day!! Historically, about 60% of these restaurants will fail in their first year. That means six out of ten will close their doors within 12 months. With the health of our business riding on the restaurant industry, our primary ‘reason for being’ is to help owners become wildly successful by providing financial services and technologies to manage and grow their money.
With years of working with both new and established restaurants, we believe we have “seen it all”. Strong concepts with highly skilled entrepreneurs can fail just as easily as a front-yard lemonade stand while a burger and shake drive-through joint can take off like a bat out of hell. Looking back on our experience, we have found that there are several things that successful restaurants tend to do better than those who struggle and we wanted to share that insight here.
BIG OLD HAIRY MISTAKE # 1 that RESTAURANT START-UPs MUST AVOID
Good owners can wait tables, work the line, wash dishes, deal with vendors, do the books and competently hire and train staff. But just because you can do these things well, doesn't mean you should. Oh no, you may say, we are a start-up and money is tight, we have to wear a lot of different hats! And we say, of course you do, but only to the extent necessary to ensure that your process and procedures are sound. Your number one job as a restaurant owner is to create and maintain a vision for success and that, my friend, will be covered in another article.
As the owner, you need to develop your restaurant concept so it can run perfectly well without you, because you will want to take a vacation, be able to care for family members, or even get sick yourself from time to time. That means you need to develop operating procedures for every aspect of the restaurant and document them so that others can step into these roles as needed. And do it before opening, even before selecting your location.
Just to be clear, BIG OLD HAIRY Mistake # 1 is…
Failing to Document Your Operational Systems and Procedures Before Opening
Why so early? Well, those operating procedures will help you figure out how much space you need to run your restaurant, how many employees you'll need to hire and how you'll train them, and what equipment you'll need to install. You'll want to know all of this when you are putting together your financial projections and your buildout budget, as well as when you start hunting for real estate.
Take the time to map out all these details early and it will save you a great deal of scrambling later, as well as protect you from making expensive mistakes in designing and equipping your operation.
We know that creating systems and processes is typically the last thing an owner wants to do. And we have watched countless restaurants open their doors without even a single recipe written down! Believe me, it happens all the time. But remember, with a 60% failure rate in year one, why take the risk? And if you are betting your and your family’s financial futures on this venture, how can you justify not doing everything possible to mitigate the enormous risks you're taking?
In case you are not yet convinced, let us share some of the enormous benefits systems and procedures provide to your restaurant business and how these systems will drive profit to your business and create wealth for you and your family!
Core Benefits of Systems & Procedures
Consistency = Predictable Quality: Detailed checklists and procedures help ensure that every dish, drink, and customer interaction meets your standards. This builds customer trust and loyalty, leading to repeat business and positive word-of-mouth.
Efficiency = Cost Savings: Clear processes eliminate wasted time, redundant work, and errors. Efficient kitchens reduce food waste, and streamlined ordering prevents costly overstocking. Every dollar saved goes towards your bottom line.
Training = Reduced Onboarding Time: Documented procedures make it much easier to train new staff. This minimizes training costs, avoids onboarding delays, and protects your restaurant's quality even when facing turnover.
Accountability = Fewer Mistakes: When everyone knows the 'right way' to do things, mistakes and misunderstandings decrease. This cuts down on costly remaking of food or drinks, and prevents dissatisfied customers!
Scalability = Easier Expansion: Well-defined systems create a blueprint for growth. You can easily replicate your success in new locations and train franchisees, all while maintaining the quality that made you successful in the first place.
How These Benefits Impact Profit
Increased Revenue: A combination of satisfied customers, efficient service, and consistent food and drink quality allows you to handle higher order volumes and potentially even increase prices over time!
Cost Control: Minimizing waste, streamlining operations, and reducing errors directly save money and increase profit margins.
Reduced Staffing Costs: Effective systems make staff more self-reliant during busy shifts, allowing you to manage with a leaner team without sacrificing service.
Protection Against Risk: Procedures for food safety, sanitation, and cash handling reduce the risk of health code fines, lawsuits, or negative publicity that can severely damage a new business.
It is always tough to get started, so here are some key areas that you should focus on when working on your systems and procedures:
Recipes and Food Preparation: Precise recipes and portion controls ensure every item meets expectations and costs are controlled.
Ordering and Inventory: Systems for tracking ingredients and supplies prevent costly spoilage and stock-outs that can disrupt service.
Customer Service: Outlined greeting standards, complaint handling procedures, and steps for building relationships create a memorable and positive dining experience.
Financial Management: Procedures for sales reporting, cash handling, and accounting ensure accurate tracking and protect your business from financial problems.
And a few final tips for implementing your new-found commitment to creating a wildly successful restaurant!
Document EVERYTHING: Don't just rely on memory - write it down, from prep to plating instructions to closing procedures.
Simplicity is Key: Procedures should be clear and easy for staff to understand and follow.
Flexibility: Be open to adjusting your systems as needed. As you gain experience, you'll discover ways to refine.
Involve Your Staff: Get their feedback on procedures during the creation process for better buy-in and practicality.
Want some help deep-diving into various systems and procedures? SalesHEAD has numerous system templates, tools and training available to help you in your journey including
Kitchen Management Restaurant Checklists Menu Costing Recipe Management System
Prime Cost Tracking Templates Labor Scheduling Cashier/Server Checkout Procedures And more…
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Jeff Johnson, Founder & Chief SalesHEAD at SalesHEAD Services has been helping restaurant owners turn their operations into thriving businesses for years by providing financial services, advice and leading-edge point-of-sale technology.
George McLaughlin & Michael Ball: A Made from Scratch Biscuit Experience
On the Local Leaders Podcast last month, we had the honor of talking with George McLaughlin and Mike Ball of Vicious Biscuit, a South Carolina company poised for growth.
In this episode, George and Mike discuss building leaders, creating a biscuit experience, growth plans and much more.
Check out our clip from the podcast below!
For the full podcast version and to choose your favorite podcasting channel, please use this link…
Brigs Restaurant: Growing Successfully from the Inside Out
Local Leaders Spotlight
Growing a successful restaurant is a challenge but David Brigs of Brigs Restaurants has successfully grown the original location into a total of five locations spread across the Triangle area of North Carolina.
Join us on the Local Leaders Podcast to hear David talk about his journey as he discusses 56% interest rates, franchising, ruling the eggs benedict market and much more. We hope you will enjoy the podcast!
5 Ideas to Help Grow your Restaurant
Business is good but it can always be better, right! We have gathered five great ideas to help your restaurant thrive.
Restaurant Marketing for December
With the holiday’s just around the corner, it’s time to start planning your marketing activities for the month of December. Restaurant News has posted its holiday list for each day of the month and you can download it here!
Restaurant Marketing Ideas for September
Great article from RestaurantNews.com for those of you in the food business. Check it out and see what you can incorporate into your marketing plan. By the way, they have a nice marketing calendar available for download as well to help you remember!
http://www.restaurantnews.com/restaurant-marketing-ideas-for-september-081219/
SalesHEAD Guide to Reducing Credit Card Processing Costs
It’s the beginning of the month again and time for that dreaded credit card statement to arrive.
Opening the statement is kind of like getting a kick in the pants! We cringe when we see how much money has literally been taken from our pockets. And who can understand the statement anyway?
Believe me, you are not alone, credit card processors have hundreds of ways of disguising costs and keeping customers like you from ever figuring out how to save money.
Since accepting card payments is a must for most businesses, we believe that education is the key to making more informed decisions, and in turn, saving money for your business. In this article, we will shed light on how the card processing industry works, who the players are that are reaching into your pockets and how the method in which you accept card payments impacts your costs. We will also dissect the various pricing structures utilized in the industry, define some of the key terms you may see as well as explain how the various cards in your customer’s wallets also affect your costs each month.
See Full Article Here
zero COST Processing has Arrived!
YES, it’s true! NO COST PAYMENT PROCESSING IS A REALITY!
For the past few years, merchant processing companies have been super busy creating and launching programs that enable business owners to accept card payments cost free. We know, it sounds too good to be true but for business owners ready to end the madness of spending hundreds or even thousands of dollars each month in processing fees, your time has arrived!
Before you fall out of your chair, let’s dig a little deeper into these programs so you can decide if it is right for your business. Below, we explain the “no cost” program, how it works and what you should look for when selecting a processing provider.
What is “No Cost” Processing?
You will here different terminology from the various payment providers in the market today when talking about these programs. The most common terms are ‘Cash Discount’ and ‘Surcharge’ Programs. At it’s essence, all of these programs do the same thing, transfer the cost of payment acceptance from the business owner to the customer. And why not? Many of us remember the days when buying gas had both a Cash and a Credit price, right? Well, this is the same concept, use Cash and Save!
As business owners, we have all heard it a thousand times. The customer pulls out a card and then suddenly says, “Oh, use this card instead so I can get my points”! Although we as business owners are crystal clear, the customer simply doesn’t understand that they are taking an additional 1/2 to 1% right out of the owner’s pocket!
Why should we continue to pay for our customers rewards program?
HOW SURCHARGE PROGRAMS WORK
Now that we have talked about why surcharge programs are on the rise in the payments industry, let’s look at how they work.
With a surcharge/cash discount program, the merchant is agreeing to be charged a flat percentage rate for every card transaction. On average, the flat percentage rate charged to the merchant is 3.5% but could also be as high as 4.0%.
In order to recover the cost, the terminal will be programmed to automatically add the surcharge to the customers ticket, usually at the same rate charged to the merchant, in this case 3.5%.
For example, the merchant sells a $ 100 product or service and the customer uses his/her credit card for payment.
Product/Service Cost = $ 100.00
Surcharge % Rate = 3.5% or $ 3.50
Total Charge to Customer = 103.50 ($ 100 + $ 3.50 surcharge)
In this example, the merchant/business owner has agreed to pay the processing company 3.5% and in turn is adding the surcharge of 3.5% to the customers ticket, thus recovering the cost.
PRICING STRUCTURE
As of the day of this writing, Surcharge/Cash Discount Programs are priced as “flat rate”, meaning the merchant is charged a flat percentage rate for every card payment transaction that occurs. On average, the flat rate percentage charged to the merchant is 3.5% but could also be higher.
With these programs, the merchant will then charge the customer
Other monthly fees may apply such as Statement Fee, Program Fee, Transaction Fee, etc. so make sure you understand what additional fees are involved before signing any merchant agreement.
Contract Term
Be very careful here. Merchant processing providers have long been known for failing to disclose the agreement term, leaving business owners with hefty early termination charges when trying to cancel down the road.
Look for a provider who offers a month to month agreement option and make sure that the paperwork states that there will be no early termination or contract cancellation costs if and when you decide to cancel the agreement. Do NOT take the salesperson’s word for it, make sure it’s in the Agreement!