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10 Things About Running a Restaurant Business

Opening a restaurant isn’t easy, but keeping one open is even harder. About 60% of restaurants close within their first year of operation and 80% don’t make it to their five year anniversary. The numbers are more frightening than a celebrity mug shot and yet it seems like everyone and their grandmother still wants to have their own restaurant. With that in mind, here are 10 things about running a restaurant business you, and your grandmother, should know.

10. Use Social Media

Like it or not, social media plays a very important part in the lives of the vast majority of the population and if you want to run a successful restaurant you will probably need to make use of it. Twitter, Facebook, Instagram… People are looking at their phones constantly throughout the day and the odds are they are spending most of that time browsing at least one, if not multiple social media sites and apps. So, to get them to come to you, you will need to go where they are. Take beautiful food photographs and post them on your instagram account, Tweet out a 15% discount to your followers, post an awesome video of your restaurant filled with happy customers on Facebook, encourage people to take their own pics of your best dishes and post them using your special hashtags… Growing your following and engaging with those followers does take some work and time, but if done right you will almost definitely see the value added to your business. Also, be ready for negative comments. It is almost impossible to be online and not see people complaining and no matter how great a restaurant is, there are going to be those who need to complain. The best thing you can do about it is acknowledge and respond to the complaint, being as helpful as possible. Not only will this help with the angry customers, but the other people who will be reading the comments. Seeing a business that responds and tries to make customers happy will put a very good taste in their mouths – even before they get to the food.

9. Pick a Good Concept

The concept isn’t just about a catchy name and the color of the tablecloths (or even if there will be tablecloths). The concept encompases everything about your restaurant from the name to the theme, the decor, the menu, the staff uniforms, will it be seat yourself or wait to be seated. Is the restaurant going to be fine-dining or casual. What about the price point? Are you looking to serve only a select few per night but charge a bundle or go with lower prices and higher turnover. Or somewhere in between. This can definitely be a fun part of opening a restaurant, but it can also be stressful as you realize how many details there are that you may not have thought of before. Do your research. Look around the area, town, city, what is needed, what is there too much of already. Which places are doing well? What is the demographic of the area. What can they afford? What do they like? Obviously, nothing guarantees success. But putting in the work before you even open the doors, will give your restaurant the best chance possible of making it past that first year mark and continuing on to celebrate five years and beyond.

8. Pay Attention to the Menu

And when we say pay attention to the menu, we don’t just mean the food, but the actual physical menu itself. The menu conveys your restaurant’s concept and feel – from the design to the font you use, it all portrays something to the customer – so make sure it conveys what you want it to convey. Also, when writing up the menu, pay attention to how you describe your food. If you can make your guests’ mouths start to water just by your description, then that is a great start. Are your eggs “free range?” Is the beef “dry aged?” Is it Kansas City beef or Main lobster? Is the produce organic and/or local? There are also descriptors that can help describe the meal and, at the same time, make it sound more elevated. Words like, “braised,” “wood-fired,” “poached,” “demi-glaze,” “reduction,” etc. Even if the customer doesn’t know what it all means, it sure does sound delicious. There are also simple menu design tricks you can use. Some tips include not using dollar signs, use the upper right of the page to push your most sought-after items, and you can even use decoy pricing. This involves placing a very expensive selection next to a less expensive (but still pricey) option. This will make the latter choice seem cheaper in comparison.

7. Have a Reserve of Funds

Your restaurant might be a hit at first, but that doesn’t mean you can go ahead and start spending money like it will always be there when you need it. Many restaurants start off strong, but don’t prepare for things as foreseeable as off seasons. Depending on your location the off season can be a little hit or a huge knock on the business. One should have done some research and so the off season shouldn’t come as a total shock, but regardless, having reserve funds during the down time is mega-important to creating a lasting restaurant business. A general rule of thumb is that it will take about nine months for a restaurant to break even. So, until that time, you definitely want to have adequate reserves and even after you hit that break even point, the restaurant game is never a guarantee. And while some things, like off seasons, can be foreseen, not everything can be – as the entire world has been learning over the last many months. Could your restaurant survive being closed for two months or three months or four months? With adequate financial reserves and smart planning, it might have a shot to come out on the other side. 

6. A Website

It seems pretty obvious in the 21st century but there are still some restaurants that don’t have a website. Or if they do, it is a static page with barely any information. These days if your business doesn’t have a website it’s almost like you don’t exist to people. And a restaurant is a business. Sure, foot traffic will bring in a number of customers, but just as important, if not more so in some areas, is online traffic via sites like Google maps, Yelp and the likes. If someone finds your restaurant listed but there is no website to click on to to look at photos and see a menu and such, there is a good chance a number of possible customers will skip over to the next highest-rated eatery that does have a website. And while it doesn’t have to be anything super fancy, make sure it looks good and shows off your restaurant the way you want it to. This will be the first interaction with your business for lots of people and you know what they say: “you only have one chance to make a first impression.” And taking your website even farther, if you plan on offering take-out and/or delivery via the site, make sure it is user-friendly to place online orders. I think we’ve all experienced websites with poor and confusing interfaces that have caused us to just give up on making any kind of purchase. Make sure that doesn’t happen to people trying to order on your website.

5. Treat Your Guests Well

Some of the best advice passed along about running a restaurant is to “treat your guests well.” And the part of that statement that is sometimes forgotten is “guests.” Looking at the people that come to eat at your restaurant as guests, rather than as customers, might be a subtle difference, but it’s an important one. A customer is someone partaking of your service, but a guest is a more personal relationship and it is important that you to make them feel happy and comfortable. At the Wieners Circle hot dog joint in Chicago they are famous for being foul-mouthed and rude to the customers. It works there because it is part of the experience of the place, but we wouldn’t suggest you try this in your restaurant. And you should always provide good service regardless of the type of restaurant you are running. A pub, a fast food joint, a diner, high-end French cuisine, or a casual taco bar… It doesn’t matter. Friendly, well-trained staff are the frontline of your business and can make or break a night out for your guests. People want to be treated respectfully no matter where they go and if you provide them with an enjoyable experience and good food they will certainly come back again – which is the goal isn’t it?

4. You Probably Won’t Get Rich

With the growth of the foodie culture, the Food Network, celebrity chefs and shows about the business itself, it can be easy to get lost in your dreams of getting rich via restaurant ownership. And while we don’t want to be the ones to burst anyone’s bubble, we also want to be realistic. And the realities of the restaurant industry is that it probably won’t make you rich. Surveys and studies have shown that the people who make the most money owning a restaurant are the people that also work in the restaurant. So, be prepared to get your hands dirty. Also, there are a ton of expenses that come with running a restaurant consider. If you are successful, you could earn a nice living for sure, but dreams of riding up to your restaurant in your brand new ferrari wearing one of your three Rolex watches, probably isn’t in the cards. Of course there are always exceptions to every rule and it is possible to have a restaurant succeed on that mega-level, but it isn’t the norm and it isn’t what one should expect when they get into the business. Do things right, hope for a little luck and the restaurant business can “show you the money.” But probably not Gordon Ramsay type money.

3. Scandals Can Sink a Restaurant

While it may be true that sometimes “any publicity is good publicity” it certainly isn’t true for folks in the restaurant game. People can be pretty picky about where they eat – and rightly so. Therefore, even the smallest scandal or negative incident involving a restaurant can keep people away – and without people that’s pretty much it for the restaurant. Obviously, any kind of food scandal is the worst when it comes to restaurants. People aren’t willing to take chances with what they put in their mouths, so even a little bad publicity about tainted food or poor hygiene will send people running for the hills (or at least to another restaurant). But it isn’t just food scandals. Scandals with people involved in the restaurant can also lead to its downfall – whether it be about the ownership partners or the head chef. Look how fast restaurants, tv shows and food products all distanced themselves from Mario Battali after the list of #metoo allegations came out against him. He was one of the most popular and successful chefs in the country. His name alone could open a restaurant and keep it filled for years. But after those horrible allegations his name was persona non grata for any business that wanted to stay in business.

2. Celebrity Endorsements

This one obviously won’t apply to everyone, since most restaurants won’t have the ability to get celebrity endorsements. But if you can, you most definitely should, as getting such an endorsement can provide as much as a 25% boost to your business right away. A great example is Blaze Pizza. The couple that started the business opened their first Blaze Pizza restaurant in 2012. Not long after that, LeBron James came onboard and invested in the company (reports have him owning 10%) and within a few years they had become the fastest-growing food chain in US history. By 2014 they had not 1, not 5, not 10… but 50 restaurants across the country – and have continued to grow. While King James might be a little out of reach for most restaurants, you don’t need the best basketball player in the world to still get value from an endorsement. There are lots of pretty popular food bloggers and social media influencers that are more accessible. And don’t forget to think local as well. While people all across the country might not know who they are, getting the thumbs up from local celebs, influencers, blogs, etcetera…will target the people most likely to actually visit your restaurant in the first place. Don’t forget to do a little research though if you do reach out to social media peeps. Read their posts, check out their content and make sure their style fits your brand. And also, make sure they don’t have any posts that could come back to haunt them – and you! Remember what we said about the negative power of scandals. A little due diligence goes a long way!

1. Holidays and Weekends are Work Days

While you shouldn’t be expecting to get rich by opening a restaurant (at least not right away), you also shouldn’t be expecting to have weekends and holidays off. The restaurant business is far from a 9 to 5 job. In fact, those holidays and those weekends are definitely going to be your biggest and busiest days at the restaurant – as it’s when everyone else is off work and ready to have some fun and go out. This is important to understand for youself, but also for your family, if you have one. For at least the first little while, until the business is running smoothly and you are financially secure enough to hire more people, the restaurant will be taking priority over pretty much everything else. Weekend trips, family dinners… don’t plan on any of them as you get your eatery off the ground. There’s a saying that goes, nothing worth having comes easy. And if that’s true then a successful restaurant is most definitely worth having – because starting one, and keeping it going, is about as far from easy as it can get.

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