Running a Restaurant/Staying in business

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Question
I am moving to Northern Arizona from Atlanta when I retire shortly and want to know what the biggest enemy to the success  that restaraunt owners face. I am looking to open a restaurant. Seems like many restaurants in Georgia have good food and great service but eventually they close. Not sure what causes this.

thanks

Answer
Hi Phil,

I have been in the restaurant industry for over 45 years (including the last 15 years as a restaurant consultant).  I believe I am well-qualified to answer your question.

Here are the challenges/obstacles that derail many, many restaurants:

1) Either NO business plan or an inaccurate business plan.  This results in underestimating start-up costs, overestimating sales and unrealistic or unachievable expectations.  Profit is not an accident.  It has to be planned for.

2) Undercapitalization.  Refer to Item #1.  Most entrepreneurs, especially those that have not opened restaurants before, underestimate their needs. Besides adequate start-up costs, you need to have enough reserve capital to stay afloat until sales ramp up and you get to a point of positive cash flow.

3) Lack of a defined concept.  If you cannot describe your concept to me in a single paragraph, your concept is not well-defined.  You cannot be all things to all people.  Find a niche with an unmet need and you may succeed.

4) Lack of differentiation.  Okay, you have a concept.  And your concept is built around burgers...just like 23 other restaurants in your community.  Just as you need to define your concept in a single paragraph, you need to be able to tell me what makes your concept DIFFERENT AND BETTER than the rest.  And NO, you cannot say it will be better food and service.  Everyone makes that claim.  You have to do something that is not being done or do something in a different enough way to convince the consumer that you are indeed, different than the pack.

5) Location.  Just because the rent is cheap and the building is large does NOT make this a good choice for a restaurant.  Location is critically important.  Sometimes the cheapest rent turns out to be the most costly thing you did wrong.  Restaurants need sales volumes to succeed, and to have sales volumes you usually need high visibility, ingress and egress, sufficient parking and the right demographic around for your concept.

6) Lack of systems.  Ever wonder how chain restaurant concepts get to be chains?  Because they did all the things above AND they developed systems to implement their restaurants consistently, day in, day out.  "Systems" refer to everything from the exact way you prep and cook your foods (as in standardized, well-defined recipes) to how you clean the restaurant to what your staff says when they answer the phone.  Without these systems it is difficult to survive much less to grow.  Training materials, operations manuals, marketing manuals and more are all tools you need.  They are living documents that you update and refine as you go, but without them you are simply shooting from the hip.

7) Marketing plans.  Yes, even in today's world you need a marketing plan.  And a good one.  Opening a new restaurant?  Your website and Facebook page should be up months before the restaurant is open in order to grab a following and build anticipation BEFORE you even open the doors.  What you need in terms of marketing dollars and a marketing plan depends upon your concept, your location and your target audience.

8) Execution.  Even if you do all of the things above, you have to prove yourself to each and every customer every visit.  Not always an easy task.  In order to succeed in this business you need a fanatical focus on quality. Most restaurants fail because they fail to execute the basics - greet your guests with a friendly smile and make them feel welcome; hot food hot, cold food cold; get the order right the first time; communicate with your guests if it is going to take longer than expected to get them their food.  Get the BASICS right.

9) Staff & Management.  No matter how nice your kitchen looks, how good your menu is or how great a location you are in, you have to have bright, friendly, energetic, engaged employees.  Hire for attitude, not experience.  Praise often and reward great performance.  Lead by example and be committed to guest satisfaction with no excuses.

10) Commitment.  This is not a business for the weak or faint of heart.  It is a lead, follow or get the heck outta my way kinda business.  It takes blood, sweat and tears to succeed.  If you have the commitment to do it and do it right, it can not only provide you with a decent living but also a fulfilling life.

Phil, I would be happy to visit with you by phone if you would like to bounce your ideas off of me.  No fee, no obligation, just honest feedback for you.  We love working with entrepreneurs to help them get off on the right foot.  We can prepare feasibility financial projections, formal business plans, concept development, menu and recipe development, operations, training and marketing manuals and more.  We have helped many, many people open and operate restaurants successfully.  Our fees are reasonable and we have clients across the country.  Feel free to email me directly and we can schedule a time to talk if you would like to.

David Foster

Foster and Associates
dfoster@fosterandassociates.net
(417) 877-0428 office
(417) 849-1903 cell  

Running a Restaurant

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David Foster

Expertise

We have been in the restaurant industry for over 40 years and consult with restaurants, casinos and hotels nationwide. We love helping restaurant operators succeed and can answer any questions related to restaurant start-ups, business plans, operations, labor costs, food costs, liquor costs, employee turnover, marketing etc.

Experience

I am a seasoned foodservice veteran with nearly 42 years experience in the industry. My extensive background includes overseeing multi-unit, multi-concept restaurant operations ranging from cafeterias to fine dining, and everything in between. I have a strong hands-on operations and marketing background that give me a unique insight into the “Real World” challenges of the restaurant industry. I have extensive concept development, menu and recipe development and kitchen layout and design expertise. I am effective in analyzing operational needs and identifying practical solutions in today’s very dynamic foodservice environment. In the industry, I am respected by my peers and have served on the Board of Directors of the Missouri Restaurant Association and have been a featured speaker on the subject of Home Meal Replacement at various national events. I also served on the Culinary Advisory Board of the Ozark Technical College as well as serving on the Board of Directors of Big Brothers, Big Sisters of the Ozarks.

Organizations
Member of the National Restaurant Association, Past Board Member of the Missouri Restaurant Association, Past Board Member of Big Brothers, Big Sisters of the Ozarks

Publications
The Consultant, Seasoned Views (a trade magazine for the restaurant industry)

Education/Credentials
Attended Drury College, Springfield, MO, Varsity Management, SRI

Awards and Honors
I have had restaurant projects featured in The Consultant (a magazine for foodservice consultants with worldwide circulation). I was honored for achieving the highest level of management competence by the Selection Research Institute.

Past/Present Clients
Sugar Creek Casino, Classic Rock Coffee Company, Mark Twain Brewing Company, Springfield Brewing Company, Bruegger's Bagels, M&M Grill, Paco Joe's, Holiday Inn, Hilton Garden Inn, Buffalo Run Casino, Golden Corral Corporation, Crosswinds Café, Chinese Chef, Mr. Dunderbak's Old World Market & Café, Bullfeather’s Wings and Grille, Mainstreet Market, Bear Rock Café, Cartoon's Oyster Bar & Grill, T's Redneck Roadhouse, Jim's Steakhouse, Neighbor's Mill Bakery & Café, Crazy Vine, San Francisco Oven, Maria's Mexican Restaurant, Andy's Frozen Custard, The Granite Club, Umi Japanese Steak, Seafood and Sushi, Springfield Grocer Company, US Foodservice, Premium Standard Farms, Smithfield, Dakota Organic, Kraft Foods, Allens, Inc.

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