Ways to SAVE a Failing Restaurant

Ways to SAVE a Failing Restaurant

A business venture sometimes reaches a point where you have to streamline resources to cut expenses. Owning and managing a restaurant can be a daunting task. Statistically, around 90% of restaurant owners fold up within three years of operation which is critical. This means that restaurants in operation who tend to go over the three year mark will be financially sustainable at least considering all physical possibilities.

There are many reasons why restaurants fail. First of all, poor planning and bad location can contribute to the abysmal failure of a restaurant. Another reason why some restaurants fold up sometimes is recession. When a country is plunged into recession, it affects every sector, public and private and that includes business owners and restaurants owners and the people who come to dine out. Other reasons may include the inability of the owner to check his accounting/financial books to see the current financial state of his restaurant. Understanding the working parts of your business, especially the money coming in and the money going out, can save your business a whole lot from folding up and help you turn around your restaurant before problems starts to escalate.

Here are ways to give you a restaurant rescue:

  • Check the numbers

Like earlier explained, understanding the financial aspect of your current situation is important. Have a review of your bank financial statement. Avoiding scrutinizing your financial performance means more problems and that means you are likely to go bankrupt. Track the direction of your sales, cost of sales, and other large expenses to get a handle on what you really need to work on. Check the numbers and see if everything adds up so as to cut expenses. A restaurant can fail if there is so much money going out and too little coming in.

  • Analyze your menu cost

Food menu is the most important item in the restaurant. It can either make or break your restaurant. Determine how much you are profiting from every item on the menu to minimize cost. Apart from that, take into account the cost of each meal based on recent supplier prices and decide how much you charge your customers for each dish. Make sure what you charge covers the cost of what is used to produced such meal to avoid losses plus ensure a healthy margin. Each type of food has a different ideal food cost and some are slightly higher than others. For example, you will make more profit on breakfast items than any other item. However, it’s important you don’t allow food cost exceed more than 35% of menu price. If it does exceed, review your suppliers list, get in contact with new suppliers, and consider changing your menu to include higher-profit items if possible. Also, in the process of analyzing menu cost, ensure that your employees are not taking advantage of the free food and drinks provided for customers for their self consumption. Remember, all these can lead to the increase of cost of menu and foster unhealthy margin.

  • Cut Down On Labour Cost

If you are in the same shoe as those whose employees or staff are as numerous as the grain of sand, then you need to have a rethink and downsize the number of staff to the appropriate quantity needed. While some big restaurants require a high number of employees to help out with different duties in the restaurant such as managing payroll and the rest, its essential you streamline according to your budget. It is estimated that labour cost is slightly the most expensive cost after food cost. Managing your staff levels closely and effectively monitoring them ensures that you are not paying to have people who don’t do anything stand around. Streamline your staff and avoid over stretching your resources. You can require the assistance of extra staff to help you out incase of a busy day. Better still, you can run shifts, let some staff go home early and have others take over for the remaining period. Do ensure you have the required size of staff that will fit in. Above all, hire dedicated and honest staff because these are the people that help you succeed or ruin your efforts.

  • Clean The Tables

Basically, the aim is to ensure maximum satisfaction of customers. Making customers wait for a table is catastrophic and may lead to restaurant failure. It will drive away business and retard sales. Most restaurants have busy and slow period. It’s crucial to get customers in and back out again, during busy times so that no one has to wait for long to sit. Getting them to sit early and ensuring you stay on top of their orders will guarantee the restaurant more success. Clean and reset the table as soon as possible. The more tables you can turn during a rush, the more sales you will make in a day. In addition, ensure your inventory or store room is stock up incase drinks or other products are served are finished.

Maximizing these methods will lead to increased sales and cut down unnecessary spending on items. At the same time, ensuring your restaurant grows positively.

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