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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We will continue to bring you the BIG OLD HAIRY Mistakes to avoid in our upcoming weekly issue as well as other informative topics about building highly successful restaurant businesses!
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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.
