Turning a restaurant around
Gordon Ramsay makes it look so easy. Learn to make an omelette, sear some fish and sauté some mushrooms, coupled with a lick of paint and some new furniture and a flailing restaurant is back in the black.
Unfortunately, it isn’t surprising that some of the restaurants Ramsay has worked with in Kitchen Nightmares have quickly gone under after he walks away. Why? Well, Mitchell and Webb summed it up pretty accurately (NSFW). You can change a menu and change the décor, but there are fundamental changes that need to be made if you either run or buy a struggling restaurant or café. First and foremost: can the chef cook?
Key approaches to turning a restaurant around
An often-overlooked aspect of a restaurant that is starting out or experiencing financial troubles is whether the food is what customers want. This can often come down to the chef that is either hired for or opens the business. They may have specialised in a cuisine and be determined to cook that cuisine regardless of other considerations. Alternatively, a restaurant owner may demand a cuisine that does not fit with the restaurant’s surrounds, the types of customers it attracts or wants to attract or the restaurant’s branding/image.
If you are buying into an existing restaurant, assess both the suitability of the menu to your neighbourhood and the costs associated with the menu. The online reviews of your business may give you a key indication as to where the business is failing, and this may be the quality or type of food that is being served.
One example: you may have identified a strong demographic in your particular neighbourhood. It makes sense to then cater to this demographic (for instance, Greek cuisine to cater to a strong Greek neighbourhood). However, be aware that demographics change as the real estate market changes, and your customer base may end up moving away.
Prioritise a menu that is simple, that utilises ingredients across the menu, promotes prep work to aid a smooth service, and is adaptable (this goes for the chef, too). Customers may have their favourites, but if your chef has the capability to produce delicious dishes, give them the freedom to explore seasonal dishes. This will help them remain creatively satisfied and keep your staff on their toes.
The food is your core product, far beyond the restaurant’s décor or your wine list. It is the number one thing to get right so don’t be afraid to start from scratch in this regard.
Do your staff seem happy and does this translate to their service? If not, ask them why in private. They are a valuable insight into how your business is functioning. While no business is perfect and your staff are inevitably going to direct their grievances up the chain, they will most likely have valuable opinions on where the business may be going wrong. This can range from a lack of training, a lack of support, micro-management, either a hostile or stale work environment…the list goes on.
If you have just bought the business, put together an anonymous survey that staff can fill out, coupled with one-on-one meetings. Remember not to discriminate; seek the opinions of everyone, from the head chef to the dishies.
A business that you have bought may suffer from a glut of staff during service hours, as their customer base may have dwindled. Consider investing in or training staff to a level where they can handle more customers without sacrificing on service quality, so you can cut down on your overheads.
Finally, how effective is the service? Is there a strong table turnaround? Having a regular rotation of customers in your restaurant, where there is a need for a dedicated member of staff who is skilled in managing this, is key for a restaurant to stay alive. Table turnaround is a reflection of how your business operates: strong communication will allow that member of staff to know exactly where customers are in their meals, to then anticipate when tables will be available. An effective kitchen and a versatile and clever menu will all work to increasing the rate of customer flow. Turning tables is one of the biggest juggling acts in the business but is a core principle behind profitability within the hospitality industry.
Lastly, is the principle of upselling ingrained in the restaurant’s service? What incentives do staff have to upsell customers (i.e. to order salads, a last round of drinks, a bottle of wine etc.) and is the menu tailored to give staff the opportunity to recommend various options that lend themselves to an upsell? Ensure that this idea is ingrained in your training of staff, starting with your management, and consider incentives such as an award (free dinner for two at your restaurant) for staff that achieve the highest upsell on a Saturday night.
The management of a restaurant, both front-of-house and back-of-house are fundamental to the success of a restaurant. Staff look to their managers to ascertain how they should act. In other words, whether they want to or not, staff will mirror their managers’ moods and approach to work.
As the new or potential owner of an existing restaurant, spend time watching how the business runs during peak and quiet periods. During this time, watch the relationship between staff and management. If in conversations/surveys with staff, they reveal that they do not feel comfortable bringing up issues with management, this will often indicate micromanagement. This results in staff feeling afraid of making a mistake, which affects their ability to carry out the most basic of tasks, affects communication and as such affects the entire business. Lastly, customers can tell when things aren’t right, and they will not want to return to a restaurant that doesn’t put them at ease.
If necessary, find new management. Don’t be afraid to make these changes as your new business relies on effective management for its success.
It is common within the hospitality industry for businesses to have a string of debts to their wholesalers. This is more common for restaurants that are looking to sell their business. Have your accountant/bookkeeper give the accounts of the restaurant a thorough assessment before buying the restaurant.
Is the flow of cash transparent? Be wary of businesses that have not kept up with the times and still rely on paper for some of their key processes. The existing or old owners may have claimed that they don’t need a point-of-sale system, but most restaurants should have a digitised system for their service. Tablets are a common and affordable form of digitising the service of the business, with a range of apps helping you stay on top of your cash flow.
Is there a bottle of 1990 Hermitage collecting dust at the back of the cellar? Has it been there since 1990? If the products you have coming in aren’t selling, then get rid of them. Your restaurant is there to sell quality produce to customers who want to experience it. If your restaurant is a quaint, budget but welcoming Indian restaurant, it is unlikely customers are going to want to experiment on some expensive and unorthodox natural wines. Certainly experiment, but don’t hang onto things that simply don’t sell.
A restaurant should be treated like any other business. It needs considered, strategic branding. If this is lacking in the business you have bought, engage a digital agency to formulate a clear branding guide for you or if money is tight, spend the majority of your money on a good graphic designer and build your website yourself with such websites as Wix or Squarespace.
Social media is also a fundamental tool for a restaurant’s growth. Word of mouth has always been key to the success of a restaurant, and social media is just another form of this. Instagram is an especially powerful tool for restaurants, as your food is your product and effective (regular, tailored and enticing imagery and copy) communication of your food on such a platform can boost feet in the door.