Depending upon who you ask, somewhere between 50 and 90 percent of restaurants fail within their first three years. So why go into the restaurant business – and how do you have a successful restaurant? The answers are as varied and numerous as the number of people you ask.
Some reasons to go into the restaurant business (in no particular order):
I love to cook! This is my least favorite, though passion for your job is a wonderful starting point. Being a good cook and being a good restaurateur are very different.
I like people and want to provide a great dining experience. Enjoying the hospitality portion of the business: providing good product, good service, a comfortable environment and having customers leave with the feeling of a fantastic experience.
Running a profitable restaurant requires good people skills, patience (and then some!), and good financial controls. Managing costs is a key component to successful restaurant management. Some have argued that this is the second biggest reason why restaurants fail.
1. Maintain and manage inventory. Too much inventory will cause spoilage and encourage theft. (These both mean LOST MONEY.)
2. Review food costs to ensure that they are staying within industry standards. Roughly 28-33 percent of the cost of product should be food costs. If you have high liquor sales, this number should go down.
- High costs could mean that you are paying too much for food.
- However, high food costs may mean that you are not charging enough for your food.
- Staffing costs are generally expected to be in the range of 30-35 percent of revenues for full service restaurants (25-30 percent for limited service). A properly trained staff can increase profits by upselling profitable products and encouraging repeat business.
Managing costs is a critical part of restaurant profits. Don’t reduce service or quality, but manage costs and increase profits by paying attention to these details. Use your POS system to make reviewing costs easier. If you don’t have a POS, review costs more often to make it easier to compile the information.
Remember that the point of operating any business is to provide service and quality, but also to make money.