Don’t join the ghosts of restaurants past!

by | Oct 26, 2016 | Articles, Competitive Strategy, Food service, Hospitality, Marketing Strategy, Restaurants, Retail

restaurant labor

Take an “inside-out” view with a priority focus on the market segment more important than all others: staff

Investing in staff just might help your restaurant avoid the graveyard of failures

You may have graduated top-of-your-class from the finest culinary institute, or you’re a home-grown chef whose killer lava cake and succulent rack of lamb are always in demand at family dinners. Those culinary successes may not translate into a successful (read: profitable) restaurant, though.

Industry experts say 60 percent of new restaurants fail within the first year, and nearly 80 percent fail before year five. Your restaurant launch needn’t be haunted by ghosts of failed restaurants past.

This is a team sport

Location has been often cited as the top reason for restaurant failures. No news here; we all agree, it’s necessary, but not sufficient for success. The other critical factor to consider and prepare for is labor.

Depending on the restaurant type, labor can account for 25 to 35 percent of total sales, according to industry reports. The costs associated with recruiting, training and paying benefits for workers in an industry with notoriously high turn-over can be seen as a burden. This view only ensures poor results.

Investment, not just expense

I see the workforce as a place to invest and as a source of competitive advantage, AND profit—not just as a cost.

We’ve often counseled our hospitality (and retail) clients to take an “inside-out” view of the business, with a priority focus on the market segment more important than all others: staff.

You needn’t have studied under the culinary masters of the world for your restaurant to succeed. Instead, consider incorporating these three tips for staff engagement.

  1. Communicate your vision and ask for feedback. Ask them for their perspective – they may actually have good ideas!
  2. Educate and involve everyone. Make sure that everyone knows their role and what is expected of them. (Side note: make sure everyone knows the menu and the service standards that apply to all involved, not just customers.)
  3. Monitor, Manage and Motivate. Have a reward program in place to motivate your team as well as a monitoring and management system to ensure that everyone is doing their part. (Pro tips: Manage labor expense as a profit center. Reward task performance, seniority and achievement of company revenue goals. The result should be less turn-over and improved service delivery.)

Opening and running a restaurant is not for the faint of heart, but it doesn’t have to be scary. Effective employee engagement is but one way to side-step the abyss that is restaurant failure. In our view, a fully-engaged, knowledgeable and attentive staff translates into a positive dining experience, repeat visits and referrals.

At the end of the day, your employees are the market segment more important than all others.