Ideally, the restaurant business should be one that guarantees success because everyone has to eat. However, in recent years, it has been one of the toughest to break into. Yet, thousands of new restaurants spring up daily with different names and concepts.
According to statistics, around 60% of new restaurants fail within the first year. And nearly 80% shut down before their fifth anniversary. Several factors contribute to a restaurant’s downfall.
Some of these factors include high rentals, strong competition, decreasing margins, food prices inflation, etc. Thus, it is easy to see that running a successful restaurant business is no walk in the park.
All of these shouldn’t discourage you from opening a new restaurant. The business can survive and thrive despite these difficulties if you have a great plan. However, you must study and know your target market and competitors.
The food business is an extremely competitive one as you have to convince people to come to eat and drink at your place. Failure to do this will give your business a higher chance of shutting down sooner rather than later.
The bottom line is that you need a great business and marketing strategy to survive the restaurant business. This article discusses seven steps towards a successful restaurant business in 2022.
Why do restaurant businesses fail?
The restaurant business seems lucrative but available statistics already show how many establishments struggle within their first five years. This shows that running a restaurant business requires more than having the space, chefs, and waiters ready. There are many factors contributing to the failure of some restaurant businesses. These include:
- Bad location and high rentals: Location is a key factor in the restaurant business. Building or renting out a space for your restaurant at a poor location could contribute to its failure because getting customers will be hard. Also, high rentals could be pocket draining.
- Inexperience: Opening a restaurant just for passion or money without any experience or guidance is a big error. It is one of the leading causes of restaurant failure. Anyone looking to start a restaurant business needs to learn how to properly run the business.
- Inflation in food prices: High food prices may also see your business run into a loss or struggle to break even.
- Poor customer service: If your customers experience poor service from your staff, there’s every possibility that they won’t be returning and may give your business a bad review which can affect the inflow of customers.
- Poor marketing: One of the core aspects of a restaurant business is marketing. You have to put your food business out there and push it to the face of every potential customer. Failing in this aspect can bring your business down faster than you can imagine.
- Lack of reporting and analytics: If you fail to properly monitor your business and fix the aspects that are lagging, it will increase its likelihood of crashing.
7 steps to boost a restaurant’s success in 2022
By now, you must be rethinking the entire idea of starting a restaurant business because of how hectic it looks. However, it is not all gloom as 20% of restaurants go on to find long-term growth and success.
When done right, the restaurant business is a profitable and enjoyable venture. You need to study the mistakes others made and work towards avoiding them. Read on to find out seven important steps to ensure your restaurant business is a successful journey.
Have a clear business plan
There’s a popular saying that if you fail to plan, you plan to fail. Before embarking on the journey that is your restaurant business, you need to write out a clear business plan. Think of your business plan as a file that you go back to regularly to help you plan for growth and measure your progress.
It has to be written in a simple, understandable, logical, and feasible manner. The business plan should also be sustainable in the long run. Your business plan should include extensive market research, an in-depth analysis of your competitors, insight into your target audience, an outline of your marketing plan, and a solid financial and budgeting projection.
It should also include details like SWOT analysis, operations plan, and financial analysis. Another importance of having a business plan is to craft out your business’s details and summarize your idea to potential investors. Also, if you choose to apply for restaurant loans, the business plan will serve as an indicator that you have the potential to be successful.
Secure a great location
Once you finish with the business plan, you can begin to execute other important tasks. One essential factor that contributes to a successful restaurant business is location. Usually, restaurant business owners focus more on their menu and aesthetics when starting their business, but they forget that location is one of the most important factors.
You need to situate your restaurant in a strategic place that guarantees a steady flow of customers. Whether you decide to rent space or build from the ground up, location is everything in the restaurant business. If your restaurant is poorly located, not only will you struggle to have customers but your business might be heading for doom.
Make extensive research about the areas you wish to set up shop. Check for competition. Also, ensure that your target customers can easily reach you there.
Have a beautiful floor plan
A restaurant floor plan is a blueprint that maps out your entire restaurant layout. It shows the distance and relationship between rooms, tables, service and waiting areas, payment stations, bars, and more.
Restaurant floor plans are useful tools that aid service personnel like waiters, hosts, barbacks, and bartenders in getting their bearings, locating the clients they serve, and finding the equipment they require for their jobs. Additionally, they aid new employees in understanding the restaurant’s layout, including the locations of the waiting area, bar, dining area, prep area, kitchen, storage, toilets, and dish pit.
Aesthetics is now one of the leading reasons people patronize restaurants. Besides having a great menu and delicious food, it’s important that your restaurant’s building and floor plans are well constructed and aesthetically pleasing.
The configuration of seating, bar, and kitchen areas can make a massive difference in how customers experience your restaurant and how effectively and efficiently employees can move through it during a service.
Hire a great chef
The chef is the star of your restaurant business. They can be the sole reason several customers patronize your brand or desist from doing so.
No one likes a subpar meal. No matter how aesthetically pleasing your restaurant is, food with bad or average taste will always be a deal breaker for your customers. Hence, hiring a good chef can ensure that your business is successful.
A knowledgeable and experienced chef will develop novel and innovative menus, improve plate presentation, and create a more amazing customer experience. Furthermore, they can assist in the smooth and efficient running of operations by mentoring and guiding your kitchen staff and team members.
You can find great chefs on job boards like LinkedIn and Glassdoor. If you don’t want to use those means, you can choose to use a recruiting agency or hire an internal staff with many years of experience.
Have a winning marketing strategy
In almost every business across every industry in the world, marketing is important. People need some persuasion or incentives to patronize your brand because several other businesses offer the same services as you. It is unlikely for your restaurant business to survive for long without marketing.
Restaurant marketing refers to the channels through which you present and promote your food business to potential customers. There are various ways to promote your business. Some of them include:
- Graphic images
- Video ads
- Email ads
- Influencer marketing
- Google ads
- Pamphlet advertising
- Newspaper etc
Customers love to go to restaurants for delicious meals and a wonderful experience. The best way to ensure that they visit yours is by marketing it effectively.
Train your staff
Your staff welcomes and attends to new and existing customers coming to your restaurant. Hence, they must be properly trained to attend to customers. A well-trained team saves your business money and time. It also increases your profits.
Therefore, ensure that every member of your workforce from the waiters and kitchen staff to the managers receives standard and continuous training to remain excellent in the highly competitive industry. Some important areas to train your staff include:
- Food Handling
- Customer service
- Operations training
- Emergency training
- Hygiene and quality control
Implement reporting and analytics
Restaurant analytics and reporting refer to the collection and analysis of data from all sections of the business and its performance.
Restaurant owners can make informed decisions and implement profitable strategies using data from restaurant reports and analysis. With reports and analytics, one can determine areas of the business that perform well and those that need improvements.
The restaurant business is a fiercely competitive market and you need to be smart to be ahead. This article discusses seven top steps to ensure a successful business.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.