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Running a successful restaurant business can be very elusive. While some restaurants serving only so-so food have a steady stream of customers, others offering both great food and great service shut down after their first year. You may be thinking about owning your own restaurant some day, and you may be looking to buy one.
Here’s 20 tips on how you can make your restaurant a success:
Operations & Management
1. Have some experience coming in. What you don’t know WILL hurt you. So, if you don’t have some experience running a restaurant, then go get some – even it means going back to school or becoming someone’s employee.
2. Quality food is a must. No restaurant will be successful with bad food.
3. Flawless execution. Do your best to make sure that all the elements of the experience you offer your customers come together every day. Be proactive.
4. Great service. Don’t just talk about giving good service, understand it and live it.
5. Empower your staff. Your staff members should have the ability to manage the customer experience and know how to take action when things fail to meet the customer’s expectations.
6. Be an active and participating manager. Absentee ownership is a recipe for for failure and you can’t run a restaurant from home or another office. You must be present, involved and commander of your crew.
7. Have a winning attitude. Positive attitudes are infectious and necessary to bring back customers. So, you and your staff must maintain a winning attitude.
Business & Finance
8. A great location. Customers must be about to find your restaurant and access it easily, including good parking and signage so they can see you. Read 3 Important Tips for Choosing a Location for Your Small Business.
9. Realistic financial formula. The through-put of your restaurant should generate sufficient revenue to meed fixed costs and profit expectations after all variable costs are covered.
10. Maximum purchasing leverage. Know the difference between ‘street price’ and and the price you pay for food and supplies when you buy in volume, or through a wholesaler or buying group.
11. A menu that yields optimum gross margin. Your menu should steer customers to selecting items that yield the highest gross margin. This should be in dollars, not percentages.
12. Your labor should be balanced to demand. This is your fixed labor cost. Avoid wasting your profits on poor scheduling. Know the your labor requirements by hour and schedule accordingly.
13. Plan effective capitalization. The first year you build your business, the second and third year you refine your business, and the fourth and fifth year you maximize your earnings. This is also a great time to prepare your restaurant business for sale. Strike while the iron is hot – the average life of a restaurant is five years. Otherwise, you must re-invent your business to create new excitement for your customers.
Marketing & Advertising
14. Validated concept definition. What experience does your restaurant have to offer? What are its products and service style? What’s your restaurant all about? This is the impression you want to give your customers.
15. Demand types and sources. Is your demand destination impulse or generative? Understand your trade area.
16. Unique brand imagery. This is where you distinguish your restaurant from the competition. You want your restaurant to stand out.
17. Know your customers. This includes researching customer data and demographic profiles that include their needs and preferences.
18. Create a targeted value proposition. Offer your customers choices, conveniences and monetary satisfaction at whatever price points they select.
19. Create a targeted marketing strategy. Your marketing should focus on your trade area, customer demographics and their buying behavior. Always measure the success of your marketing campaigns.
20. Get customer feedback. Always encourage your customers to give you feedback at the time you serve them and act on negative experiences immediately.
Running a restaurant is a huge undertaking. Yet, buying an existing restaurant can sometimes be a big advantage. Not only would you already have an established business with a successful track record, you’d also have an established customer base, equipment, employees and a supply chain. And, in many instances, you can develop a buy-sell agreement that includes training and financing from the existing owner. View existing restaurants for sale right now on BizBuySell.