Restaurant Mistakes That Directly Affect Profit

Food and service mistakes are quite common in the hospitality industry.

Just go to Trip Advisor for reviews, and you will find complaints of all sorts.

Generally, people can be forgiving of these mistakes. Especially if the management is responsive and in tune to what their customers are behaving, they may be able to salvage any gross error done.

However, some mistakes are costly.

These are business mistakes that will require hard marketing and real corrective effort because these directly affect profit.

Mistake # 1 – Your location is not strategic to your type of restaurant

Strategic means carefully planned steps to achieve your target. It is not just about researching the factors that contribute to a strategic location for business… It is about how you combine those factors to serve your ideal customers that makes it work.

Ideally, you envision your ideal customers based on your restaurant’s concept and style. You would want them to go to you for what you can best offer. The next step is to take your business where your ideal customers can be found.

You have to factor in the following:

• • Visibility – Your location should be easily seen from the street. The exception to this is if you purposely wanted an out of the way spot or a secret hole in the wall type of restaurant in which case, you have to have brilliant marketing to have people intentionally seeking your restaurant out. Or make your service and food exceptional that your reputation will spread through word of mouth.

 

• • Foot Traffic – It should be close to consistent and heavy foot traffic. I say the word consistent because it’s not merely having people dine in; it is having ENOUGH volume of people eating in your restaurant to sustain your business!

 

• Demographic –  Say you managed to get a location in a high traffic area, did you consider the kind of people who frequently pass by your restaurant? Compare your target customer with the demographics in your area. Demographic details include age, socioeconomic status and ethnic background in the local population.

For example, if your business is an upscale restaurant, your location should be near corporate or affluent clientele. Otherwise, even if your restaurant is smack in the middle of a high traffic area, but in a working-class neighbourhood, people will not be able to afford your prices consistently. Yes, you may get diners during special occasions, but your goal is to have profits on a day to day basis.

Check out this guide to determine the demographics that appeal to types of service:

• • Bar/Bistro:  Customers age range from 25-45, usually with high disposable income.  They often come after work to unwind so choosing a location that is near a business area is a right spot.

 

• • Casual dining: Families with mid-income households. Make sure that safety is vital in this area since customers will usually include children.

 

• Fine dining: High-income people, possibly 35+ age range. Expectations are the high price point, exceptional service, and reservations. Make sure that your venue has on-site parking.

Mistake #2. Not monitoring the finances

Most restaurant businesses are born as a result of a culinary dream.

Creating dishes and artistry with food can be easy for a person who finds it as their passion, but what if the business focus is exclusive in that aspect and the financial element becomes less of a priority.

Sometimes, this overlook happens when the business receives a certain level of success or fame. Say a restaurant becomes known due to the excellent food or the charismatic chef or the fantastic overall service. There is a tendency to be complacent and to believe that those applauded factors alone can exclusively determine the profitability of their business.

Or another belief is that hiring someone to take care of the numbers for them is sufficient.

Remember, as someone who is in charge of making decisions about your business, you need to understand the basics of accounting. You need to understand food/utility/manpower costs, pricing menu appropriately and to be able to interpret the impact of each financial report you receive.

You need an understanding of the basic financial statements to keep track of your money. Here’s at least three:

1. 1. The cash flow statement – This reflects the cash that comes in and goes out. It also shows what the net result is over a period of time.
   2. An income statement  – This shows your earnings over a period of time.
   3. The balance sheet –  This reflects how your business is at a particular point in time. It outlines the assets you have and who owns them. The information on cash and earnings included in the balance sheet is derived from the other two statements.

This is why some restaurant owners make the smart move of partnering up with someone who is more business savvy, or they take business courses to have a better understanding.

No matter how much money comes in, when finances are not being efficient, owners fail to maximise their profit. Worse, they lose profits in the long run.

Mistake #3 – Hiring the wrong people

Hiring people staff is one of the most difficult challenges that the restaurant industry is facing now. The turnover is swift.

If you are exclusively running the business as the restaurateur,  then hiring a chef is one of your most considerable challenges. You have to start with an excellent chef if you want your food business to come to life.

The chef provides leadership in a restaurant. Therefore, you should be looking for someone who is hardworking and thrives in a high pressured job while overseeing cooking processes, develops menus and contributes to budgeting and marketing decisions affecting the restaurant. The problem is that it can be challenging to find all those characteristics in one person. You will have to have a high salary offer to attract highly skilled ones.

RELATED READS:

5 Things to Look for When Hiring a Chef

How The Right Chefs Can Make Your Business Stand Out

Not to mention what happens to your business when your chef becomes unavailable? Say it is for a day or for a period of time. You have to have an immediate replacement who is skilled and professional to fill the position temporarily.

One of your options is to assign that task to a senior cook who is already familiar with your chef’s procedure in the kitchen.

The other option is to hire a short term chef who will deliver quality service to help achieve consistency in your food and services despite the absence of your regular chef.

This is precisely the goal of AnyTime Chefs. We understand that some businesses may require some extra help for a few numbers of hours per week and can’t find a great reliable chef for that period. Or perhaps, there is a need to cover annual leave or when an emergency occurs.

And as part of a new service offering of AnyTime Chefs, I am happy to share that we have started a consultation service available if you need a more extensive support in your food business. This service includes audits  of your existing service and business performance to determine and correct the factors that negatively affect your business. This service can extend to providing skilled and qualified chefs  to replace your poor or non performing chefs, revising previous menus or creating new ones, establishing new suppliers, creating new recipes and support to determine how much profit is gained for each dish. I will write more about this service next week as this is an exciting development for our company. And yet another way to assist food business owners in growing their businesses. Having said that, this expressly shows how AnyTime Chefs is committed to providing the right chefs for you.

The chef position alone is crucial, what more when hiring the rest of the kitchen team?

The reality is that many restaurant workers consider their jobs as transient. Either they’re students trying to earn extra cash or people who are in their second careers. By the time your chefs have finished training them, they leave for a better job. That’s because sadly, the pay in restaurants for all the high-pressured work is not enough for most people.

This fast turnover further results in creating hiring decisions that are the result of desperation. Because you require someone to fill in the spot, you may be willing to hire just about anyone who will apply.

But what if you are willing to provide a reasonable salary for your team and this is not going to be an issue.

How do you hire?

1. 1. Post an ad that has specific information on the job description. Details should also include your restaurant’s style of service, concept, and keywords that describe your company culture. Ads should look professional and available through various channels such as word of mouth or social media.
   2. If you are screening applicants together with another person, say your restaurant manager, or you’ll have two restaurant managers handle that, have a talk with them and ensure that everyone has the same definition and criteria of what makes a good employee. Make a list of the core values that your employees should possess. Having two people to screen an applicant can be an advantage in ensuring that you are not passing over a great candidate. Same with hiring a potentially lousy employee.
   3. Create a list of questions to help you assess whether the applicant upholds the same values as yours, any professional experiences that may seem not obvious at first glance but requires the same traits you are looking for. When you are prepared with this list of questions, you will get an objective and efficient interview process. Reducing precious time while getting your needed information.
   4. Pay attention to the applicant’s attitude, demeanour, and other physical cues. Their written resume may be impressive, but it does not automatically translate to their ability to work under pressure. I place attitude highly when looking for staff. Read this article from Monster to get ideas on how you can hire for attitude.
   5. Get at least 3 references of the applicant who you’re seriously considering and check them.

This hiring mistake alone will cost you your restaurant’s ability to provide excellent food and service.

Mistake #4 – Being deaf and blind to reviews

Listening to customer feedback and reviews is a way to get insights on what people like or don’t like about your restaurant.

Surprisingly, some restaurant owners are so bent on providing a service that they have been used to that they are unwilling to consider feedback and reviews of their business.  For example, some chefs who own and work at their restaurant refuse to modify or substitute anything. Their mindset is that people should come to their restaurant because they want to eat what their restaurant serves. And not do something on a whim.

There are also owners who intentionally ignore review sites such as YELP because understandably, some reviews can be false. Sadly, reviewers can be unfair.

However, there may also be legitimate complaints and compliments.

If you tend to ignore reviews, especially online reviews which can be brutal due to the safety of anonymity, you have to stop this habit and do your best to approach comments impassively initially. Whether the review is accurate or not.

Tune into the comments that you receive from the majority of your guests, from the food to the staff, whether they are complementary or criticising.

List down the comments that keep coming up, since that means that more than one person is noticing or requesting the same thing.

Another reason why you should fight your personal feelings and listen to feedback is so that you are updated with the current changes that are happening in the Foodservice industry. Feedback can represent the demands of the present times, which is why it’s looking into it enables you to get in touch with what’s happening in the industry.

At the end of the day, your business is a part of the hospitality industry… where you have to take criticism with a grain of salt… daily.

Mistake #5 – Your restaurant manager and staff have no sense of urgency

Working with a sense of urgency means that a person has the awareness and sensitivity in perceiving an important or critical situation. It also reflects their attitude to such situations, whether they think they should quickly act upon it or bid some time. Worst, totally ignore them,

In the case of receiving bad service feedback, how soon does your team act upon it? Do you have systems in place so that your customer’s concern is attended to? Does your team conduct a meeting at the end of the shift to discuss what could be improved?

The culture of a business starts from the top – the management. This is where the most significant impact of change happens. Therefore, when your restaurant managers display effective leadership and accountability, it will trickle down to the rest of your team. Vice versa.

The saddest part of the restaurant business is having inspired, dedicated kitchen team and then having a manager who has no skills in leading them. That is a demoralising situation that will keep happening even if you keep hiring new staff.

Good managers should continually train staff to keep their skills sharp, they should have excellent communication skills and do not ignore feedback both from staff and customers. They are able to address customer complaints. They are not only knowledgeable about the business aspect of the restaurant, but also the hospitality nature of it. They are not just on the job for the money.

How do you encourage a sense of urgency in your team?

• • Appraise your restaurant managers if you have one, or if you are acting as one, take time to review your own attitude towards leadership and providing customer satisfaction.

 

• • Train your team to identify and categorize situations in order of urgency. This will lessen confusion which is usually the cause of slow action. If your staff is armed with the knowledge and skills to address the problem, they are more likely to be able to handle things effectively.

 

• • Clarify and explain the consequences. This goes two ways: the consequences of the action or no action to the business and the consequences of the action or no action to their employment. If you or your managers are always hearing the same excuses, then you may be considered as a tolerant leader, which can be abused. Make it clear to your team what is at stake.

 

• Recognize and reward staff who demonstrate this trait to set as an example.

If there is a culture of responsiveness and willingness in your restaurant, it is more likely that your restaurant managers effectively reinforce systems that guide everyone so that they can be the best at what they do.

Mistake #6 – Quality is not a priority.

Restaurants who prioritize quality will thrive.

Quality is appreciated by the five senses.

It is determined by the cleanliness and cares for the design of the restaurant as well as how presentable the staff is, the taste and presentation of the dishes, how fast or slow the service is…

The reality is that many customers never return after their first try of the restaurants because of the little things.

I will post a separate article on providing quality in food and service, so stay tuned for that.

In Summary:

Running a business involves a human factor, and when people are involved, there will be mistakes along the way.  This article talks about the obvious factors that directly affect your revenue and what you can do to address them, but do know that despite the best preparation, you may still deal with incidents that you have not anticipated.

When systems are in place, you will spend less time in providing additional and corrective training to your staff, less money on marketing your business, and more opportunity for your team to focus on excellent food and service which can directly affect your profit.

Goodluck.

Professional Chefs on Call at Anytime,
Thomas

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