Intro to the Three Components of a Successful Restaurant
A successful restaurant, like any other business, thrives from a balanced approach. The three components that restaurant owners should focus on are Operational, Human Resources, and Financial. Each of these contributes to the overall success of a restaurant and should be considered as crucial. In this article, we discuss the basics of these components, some common issues we have helped resolve with our restaurant clients, and a few basic things you can consider, as a restaurant owner, to improve your own processes.
Operational
A successful restaurant operation is driven by the desire to provide the best possible guest experience. Afterall, a happy guest is a guest that will return to the restaurant. These return guests give your restaurant the best opportunity to grow sales. It is important to ensure consistency in both front and back of house by establishing standard practices that aid in guest satisfaction. As an example, having set recipes and plating guides will ensure that the food coming out of your kitchen looks uniform and always tastes great, which is key in delivering a quality guest experience. If a customer comes to your restaurant and orders the same dish they did on their first visit, the dish should look and taste the same as the first time they had it. There is nothing worse, as a customer, to come to a restaurant wanting a specific dish and having it not come out the way you remember it.
For the front of house, well trained hosts and servers can make a huge difference in guest satisfaction. Good hosts will recognize regulars, know how to turn tables and quote a wait properly. Otherwise, potential guests may leave your restaurant before they even have the opportunity to experience your wonderful food. It also goes without saying that servers play a key role in your guests’ overall experience. Your servers should understand the steps of service and know when their guests are most likely to grow impatient if not attended to properly. Guests do not want to wait to be greeted, to order a drink or a meal, or for their check drop. Being prompt in all of these steps greatly enhances guest experience and drive sales.
Perhaps the biggest point to drive home in regards to operation is to train your employees. It may seem like a hassle at times, especially during a busy dinner rush, but satisfied guests are more likely to return to your restaurant and your staff are key drivers in that experience. If your staff are not trained to deliver a positive guest experience, your restaurant is bound to struggle. Once trained, staff should also be held accountable to your standards of operation. If they are not meeting expectations, these issues should be addressed. Besides the benefit of improved guest experience, properly trained employees are more likely to stay with your business longer. This is because training and development helps employees feel like the restaurant cares about their growth and experience. The longer your employees stay, the less time your managers have to spend hiring, which gives them more time to focus on what really matters: your guests’ experience.
Human Resources
In the vibrant energy of restaurants, often times the most neglected aspect of restaurant success is Human Resources. This can be particularly detrimental in states like California, where there are many rules & regulations for an employer to follow. Standard and consistent HR practices can help reduce costs associated with employment actions. The first of which is ensuring that all of your employees, including managers, have received the appropriate Harassment Prevention training. This is particularly important in CA where all managers must receive two hours of Harassment Prevention training AND nonsupervisory employees must receive one hour of Harassment Prevention training every two years. This applies to all employers with 5 or more employees. These training must be conducted within 6 months of hire. After taking the training, employees should be provided a certificate of completion, which should live in their employee file.
Employees files are also important to maintain. This can become your greatest asset if an employee is having disciplinary issues. For instance, if an employee has decided they are not going to follow your uniform policy and shows up ready to work in their street attire and in their employee file they have a signed Handbook Acknowledge or Uniform policy, you can discipline them accordingly. Your employee file should function as a place where all performance issues and employment policies are recorded, performance improvement plans are established, and signed off on by both the employee and the manager.
One document that should not live in your employee files but you should have for every employee is a completed form I-9. This form certifies an employee’s eligibility to work in the United States. Hefty fines can be assessed against a business that do not have these forms completed correctly. Your I-9’s should live in their own folder (NOT in each individual’s employee file) in a lockable cabinet with your other employee files.
Perhaps the most important HR practice you can follow is Meal and Rest Break laws, especially if your business is in CA, where there are many protections for non-exempt (hourly) workers. One of the most common complaints we see from restaurant owners is how can they give their staff breaks in the middle of their shifts, which often falls in dinner rush. Unfortunately, the answer is to figure out a way to schedule them and pay penalties when breaks are not provided in a timely manner. In CA, the statute of limitations for Wage and hour claims is three years from the date that the most recent violation occurred. It is better to be proactive and schedule breaks and pay the required penalties for employees if meals or breaks are missed. Familiarizing yourself with Meal and Rest Break laws for your state and following them can help protect your business.
Financial
The third and final component of a successful restaurant is financial management. Numbers don’t lie; It is cliché and also absolutely true. The financial implications of your business must be considered; for example, if your business is consistently over budget or a particular menu item you love isn’t selling, you should not ignore these trends. Instead you need to evaluate and decide how to adjust. Even if your restaurant is profitable, there are always potential areas for improvement when you look closely at your profit and loss statement. If the data tells you that your labor cost is really high as a percentage of sales during a particular shift, you may need to re-evaluate how many servers you have on the floor.
The most important thing you can do for your restaurant’s financial success is to have a budget. A budget can work as your guide to profitability. The most expensive part of a restaurant is prime cost, which is cost of goods and labor costs. In successful restaurants, this number should be 60%. This is the starting point for your budget. All other costs come out after this, and anything left over becomes your profit. If your prime cost is high, it is extremely difficult to make money. Evaluate your budget and your prime cost each month to ensure you are positioning your restaurant for success. Without the proper financial measures put in place, there is no way to identify problem areas or track improvement. Both of which are key to the success of any business.
KEY TAKE-AWAYS
Running a successful restaurant is a balancing act between operations, HR, and finances. It is important to look at each one of these aspects to ensure your business’ success. Operationally, guest experience needs to be the primary driver. Consistency should be ensured by training employees and establishing standards and systems for every position. From an HR perspective, you should consider your employee files, I-9’s and meal and rest breaks. Financially, a restaurant owner should have a budget and consistently evaluate their profit and loss statements and other financial information. These items can help your restaurant become more successful.