Avoid Restaurant Failure With These 6 Prescriptions - Hospitality Expert Witness, Howard Cannon

Sadly, most failing restaurants - regardless of style, type, size or location, have some very similar symptoms that lead directly to their undoing. There are, however, certain “prescriptions” you can use upfront, hopefully before you need them, so you can avoid your business's demise and won't have to risk going belly up.

Rx #1 – Get off the Mountain Top:

Get out of your office and onto the floor! Stop making up excuses for not running the kitchen or the dining room. Get off the “mountain top” and go where the action is before bleeding sales and anemic profits knock you off your perch. This tends to be a common ailment afflicting many failing restaurants.

These owners and operators are unfocused, disconnected, and, frankly, lazy. In the beginning, they were engaged in the day-to-day operating of the restaurant, but somewhere along the path, they veered off into, “I have arrived, and I do not need to run the place.” If an owner continues with this sort of “hands-off” approach, the restaurant will be hard to repair without some serious outside intervention.

Rx #2 – Keep Score:

Every time I hear anyone in a competitive endeavor say, “we don’t keep score” or “it’s not about winning or losing”, I immediately realize I’m in the presence of someone who will most likely never get ahead and who will most certainly deliver mediocre results. Show me a restaurant that doesn’t track numbers from sales to food cost, and from check average to labor percentage, and I will show you a restaurant that has a miserable level of performance and is either losing its shirt or leaving a ton of money sitting on the operating table.

Numbers tell the majority of the story. Management that doesn’t track numbers must be either replaced or the situation resolved.

Rx #3 – Hit the Numbers:

Set a standard for every number you track. Find out what others in your particular industry sector are doing. The National Restaurant Association and many other sources offer up all kinds of information about industry averages and trends.

Become a sponge for information so that you know what you are doing, what you want to be doing, and what you are capable of doing as it comes to nearly every line item in your business. Demand that everyone on your staff have zero tolerance for lost profits, and let the entire team know where you stand and what they can do to improve the restaurant's standing.

Rx #4 – Pinch Pennies:

Getting customers to hand you their hard-earned money is much more difficult than most people think. Even once they hand you their cash for that hamburger and fries, you need to do a lot of things right to turn those few dollars into a few pennies of profit for you. You must be frugal to the point of being cheap if you expect to make a profit in this business. Consider every penny that you spend for every item that you buy for a 90-day period. You will be shocked how much money you waste. Determine if the item is a “want-to-have” or a “need-to-have” and the actual return on investment for that item. Regardless of the economy, if you can’t pinch pennies, you won’t make dollars.

Rx #5 – Take a “Gut Check”:

Be honest with yourself about your enthusiasm for running the restaurant. You say the right things, but many times, you don’t seem to act on them. Your business demands passion, desire, and intensity, and your employees and customers deserve it. Take a “gut check,” and analyze whether or not your heart is really in running your business before it’s too late.

Rx #6 – Celebrate Making Money!

You are a for-profit restaurant, after all! Get deeply involved in all the different ways that you can honestly and ethically make money in your restaurant, and once profits are achieved celebrate the results. Get the entire team involved in your money-making initiatives. Employees with a passion for the business will certainly have ideas on how to cut costs, drive sales, and put more money in the bank.

By using these six “prescriptions” in day-to-day management of your business, your restaurant will receive the special attention and care it needs to stay healthy and profitable.