A New Restaurant

As the economy continues to struggle, many restaurants have had to deal with a shrinking profit line.  That may mean looking beyond your traditional business model, and starting to look for more ways to generate income.

One popular choice is to attract more catering sales.  For a restaurant catering does not mean going on-site to work the event.  What it typically means is providing bulk food items at a reasonable rate that could either be delivered, or picked up at the restaurant.

Another popular route is to market a carry-out option.  Your customers could call ahead and have the food ready when they arrive.  This allows them to stop by on the way home from work and be able to enjoy a meal with their family without all of the fuss of preparing the dinner themselves.

Whatever option works for you, the key is to look beyond what you are currently doing in order to attract more customers into your business.

Todays post is from Greg McGuire at The Back Burner blog.  I hope you find it as interesting as I did.

Small independent restaurants have been dropping like flies over the past year.  Chances are, if you’ve made it this far through the recession, the worst is behind you.  That doesn’t mean tough days aren’t ahead, but hopefully you’ve at least stopped just trying to stay above water and have started swimming a little.  The waters out there are still dangerous, but if you’re not thinking about growth, you’re setting yourself up for decline.

Restaurants are a business like any other, and as an entrepreneur, you’ve already taken the plunge into the risky but potentially rewarding world of business ownership.  Growing a business is never easy, and trying to grow that business in the current economic climate is even harder, which is why a few key principles for small business ring more true today than ever: (more…)

Your management style can have a lot to do with your success in running a restaurant, or any other business. While people can debate all day long about which is the best management style to use in different situations, one thing people will agree on, if you get it right (or wrong) it can have a big affect on the success of your business.

There are a variety of management styles, and most effective managers use a combination of styles to handle different situations. (more…)

Back in 2003 chef Rocco DiSpirito commented that 9 out of 10 restaurants will fail in their first year of existence.  Chef Rocco can’t really be blamed for throwing that restaurant failure number around.  After all, conventional wisdom is that restaurants fail at a significantly higher rate than almost any other small business.  But is restaurant failure really so much higher, or is that just an urban legend?

Interestingly, an associate professor in the Hospitality Management program at Ohio State University named H. G.Parsa decided to put those numbers to the test.  He found that not only is the restaurant failure rate was wrong, it wasn’t even close to the truth.

He tracked 2,500 restaurants over a 3 year period, and found that the restaurant failure rate in the first year was only 25%.  Over a 3 year period that rate rises to 60%.  While that rate is high, it is consistent with the failure rate of small businesses in general, and certainly never comes close to the 90% that most people like to cite.

The unfortunate part is, even though other studies have supported Professor Parsa’s findings, the high restaurant failure myth persists.  Worst of all, banks use that figure when determining the loans available to new restaurant owners.  Because of the high perceived risk, restaurant owners are either denied the amount of loans they desire, or they finance less because of being charged higher interest rates.

It all leads to a nasty Catch-22; One of the leading causes of failure for small businesses is being under-financed.  Because banks are hesitant to lend to new restaurant owners, or lend at higher interest rates, many new restaurants are opened with less financing than they really need to survive.  This leads to restaurant failure, and helps to keep the myth alive.

What this means for you is, if you are thinking about opening a restaurant, don’t let the misinformation about high failure rates scare you away.  It is risky, but so is opening any small business.  You can succeed if you follow sound business principles.  Read my article on Top 5 Reasons Restaurants Fail for more information about what it takes to make your restaurant a success.

If you are a follower of the Bravo show Top Chef, you got to see first hand a lesson in what happens when you don’t follow your own vision.  In the season finale Carla was paired with previous Top Chef contestant Casey Thompson.  Casey made several suggestions which Carla took, even though it was not the style of food that got her to the finals.  The end result was that the meal was a failure, and it ultimately cost Carla the title of Top Chef.

Since the airing of the final episode, there has been a lot of debate over who was to blame, (more…)

A while back I wrote an article titled Top 5 Reasons Most Restaurants Fail.  In that article, one of the reasons I gave was that great recipes are not a recipe for success.  While it is true that good food alone will not keep your restaurant off of the failure heap, you can not afford to overlook the importance of serving a great meal.

When you strip away all the bells and whistles of any successful restaurant, it all comes down to food service.  After all, this is a food service industry.  Yes, there are other important factors to consider when starting and operating your restaurant, but none of them can overcome bad food.

You should still make sure you pick a good location for your business that is easy to see and easy to get to.  You should make sure your staff is trained on how to do their jobs.  You should make sure that your staff has an outstanding customer service mind-set.  these are important, but if the food is not good, there won’t be any customers to worry about.

One reason restaurants fail is that the owners and managers lose focus on the food.  Face it, if the food isn’t good the customer will not see it as a value regardless of the cost.

Focus on the food first.  Don’t let poor quality lead to you restaurant failure.

There is a Mexican restaurant in our town that my family loves.  We go there frequently because of the good food and very reasonable prices.  Most of the time the service is very good, but there have been a couple of small gliches in our experience.

One of the items on the menu is “White Salsa.”  It is a spiced white sauce, and is one of the items on the menu (more…)

When I started this blog, I began with the focus on what it takes to start a restaurant.  I wrote about everything from business plans to competitive research to developing a theme or concept.  A lot of my early posts were designed to give information to people that were interested in starting a restaurant, but weren’t really sure what it took to do that successfully.

Over time, the focus began to shift for a couple of reasons. (more…)

One of the things I have found when making adjustments to the schedule is you find out how comfortable people have gotten.  Suddenly you’re requiring more work out of your employees without giving them extra time to do get the work done.  For many, the first reaction is, “I don’t have time to get it done.”

When you hear those words, there are two possibilities to consider.  The first is that you really did cut too deeply, and there is no way to accomplish all that needs to be done at the current staff levels.  The second possibility is the one I usually come up against; there is enough time to get things done, but the staff doesn’t really want to wok any harder.

If you’ve thought through the tasks at hand and have planned carefully,  then be assured that more can be accomplished than your worker may be willing to admit.  What they are looking for is to see if they can get you to back off and either give some of the work to someone else, or rehire someone to come in and do the work.  Once they see that you are sticking to your decision, the complaints soon stop, and surprisingly, all of the work gets done.

Are you using your menu effectively?  Chances are your not.

I found a video about a man that makes a living going to restaurants and helping them engineer their menus to increase sales.  It’s really worth watching.  I’m willing to bet that you will learn a thing or two.

http://tinyurl.com/5jx7mu