Managing a restaurant has a set of responsibilities. Just like any business, restaurants need to generate cash and earn a decent profit. Add the challenges and financial obligations restaurateurs need to face to prevent their companies from closing their doors permanently. Although inexperience is a crucial factor why most businesses fail, here are some of the common mistakes restaurateurs should avoid:
Lack of innovation
Poor customer service
Start-up capital is too low
Failure to understand the market
Choosing the wrong location for their restaurant
Innovation, market analysis, and setting realistic expectations are the keys to a successful endeavor. Here are some essential pointers to help restaurateurs keep their businesses running:
Study the competition
Doing your homework is critical when running a restaurant. Restaurateurs need to study their competition and the market. See why people eat at these restaurants – do they offer Mod-Sin food or Minang cuisine in their menu – and try them. Study their locations and themes. Find their strengths and weaknesses, and let these be your advantage when opening your restaurant. A little bit of research could turn your new restaurant into a go-to destination for food lovers.
Use the start-up capital wisely
Opening a restaurant and running it is an expensive business. A small restaurant requires around 105,000 SGD, while a big restaurant needs about 1,050,000 SGD to survive its first year of operations. If its working capital is drained before it earns a profit, the restaurant will fail. Ensure you have at least 16 months’ worth of cash reserve to fund your restaurant’s operation. Practice the “cash-in-cash-out” finance model to control your business’ cash flow.
Consider buying used equipment
Restaurant owners dream of having “shiny” new equipment in their restaurant. However, buying brand-new equipment could hurt your restaurant’s budget. Consider buying used equipment that is relatively cheaper. You will have enough reserve money to sustain your restaurant.
Give diners the best customer service
Every diner is a valued guest. Their experience would either make or break your restaurant. If they’re happy, they’ll recommend your restaurant. However, if they had a bad experience with your staff or the food, don’t expect a full restaurant in the future. Being nice can be a challenge for many restaurateurs, and it’s a common reason why diners close their doors.
Train your staff to be nice and give the extra mile for each guest. Let them enjoy the food, ambiance, and the staff’s company. Encourage customers to leave their worries outside your restaurant’s door and offer them a haven. A warm bowl of soup and a hearty meal, as simple as they might be, are what your customers need from you.
These are some of the crucial things that every restaurateur needs to remember. The hospitality business is about serving customers, managing operations, and earning a profit. As a restaurateur, you need to attend seminars, read about successful restaurateurs, and research on how to innovate your business. Don’t forget to engage your staff and customers. They can provide you with the feedback you need. Follow these suggestions to become a better restaurant owner.