Why do most restaurants fail in the first 2 years? Even if they have excellent food? Even if they have the most fashionable interior designs? Even if they are located in the most visible junctions?
Having worked in diverse industries for more than 25 years I saw that a lot of small enterprises focus too much on their products, neglecting Financial Management and Marketing/Promotion. Most big corporations take Finance, Marketing and Management seriously to grow their businesses. They are willing to spend time and money to manage their finances, hire professionals to operate the businesses and aggressively promote their products. Small enterprises are not willing to pay for professional services. Finances are handled by owners who have no clue about accounting, operations are managed by staff who have no leadership and promotions are done by people who don’t know how to sell.
Restaurant business is no exception. Very often I met restaurant owners who put a lot of attention on the food but neglect financial calculation and marketing. The prices of the menu are lower than the industry standard thus leading to losses. I also met owners who scrutinize the restaurant design but forget the importance of service.
I firmly believe that being able to cook doesn’t mean one can operate a restaurant successfully. Restaurant operation is more than having a good cook. It involves a lot of planning, human resource management, marketing, financial management and a lot of hard work.
Opening a restaurant is easy but sustaining a profitable restaurant in the long term is another battle. There are 5 important elements that make a successful restaurant.
To be successful, a restaurant has to have:
- A good location with a comfortable dining area
Your restaurant has to be located where your targeted customers are. You shouldn’t open an upscale fine dining restaurant where the people living within 5 miles of your location earning less than $2,000 per month.
- Great food and beverages that keep customer coming back
Your restaurant should have food and beverages that distinct you from other eateries in the area. The menu should be designed with the intention of attracting people to dine in your restaurant. Don’t design the menu based on what you like or what the chef can cook. What you like and what the chef can cook can differ a lot from what customers want to eat in that particular area.
- Excellent customer service
Dining out is more than just eating. It is a whole experience of savouring the dish, absorbing the ambiance and being entertained. If you don’t provide excellent service, the whole dining experience will be bad and your customers will never come back.
- Accurate and strong financial management
Strong financial management is required in restaurant business. You should know exactly your food cost, operating expenses and targeted sales to cover your monthly expenditures. Cashflow management is very critical to sustain a smooth operation.
Even if your restaurant is running at a full house every day, if you don’t control your spending and price your dishes correctly, you will end up with loses every month.
- Aggressive marketing and promotion campaigns.
Any retail establishment should do aggressive marketing and promotion ALL THE TIME. Do you notice that despite its gigantic business and popularity, Mc Donald’s always advertises? You have to constantly market and promote your restaurants to make people “remember” you all the time.
Make full use of the available social networking websites to promote your products.
No business success is just pure luck. All successful businesses require careful planning, hard work and smart decisions. Master the 5 elements above and you’ll have a successful restaurant.
To know more about how to open your own restaurant in Malaysia, visit : http://startmyrestaurant.com.my/