Owning and running a restaurant is not for the faint of heart. It’s really hard work. You put a lot of hours in and the profit margin… well, it’s slim to none if you’re not careful, especially when you start out. I’ve coached thousands of restaurant owners over the last 20-plus years, and I’ve seen all kinds of startup mistakes. If you made these mistakes when you opened your restaurant, the good news is you can fix them now.
Number one, not knowing your numbers.
What do I mean by that? Well, you start a restaurant based on an idea written on a cocktail napkin and a general idea of what you think it’s going to cost to start up your business. You submit the startup budget that outlines the capital you’re going to need and what you can afford to finance. That’s where most restaurant owners stop. They don’t take the next step to develop an operating budget. But it’s so important because it’s your plan for success. You can use the operating budget to run scenarios of best case and worst case. You can evaluate the location based on its lease, what it takes to open it up, your price point, the neighborhood, all these variables. Then use it to decide what the high and the low points are. If you can’t make it work on the low points, you must really think hard about the location for you.
Number two, not understanding your main job as a restaurant owner.
See, most people think, hey, I’m going to open this restaurant, and I’m going to be a great chef, and people are going to come in and I’m going to wow them or comfort them with my food. Maybe you are a server, a bartender, some position in the restaurant industry and you said, man, I can’t wait to open my own place, and I’m going to show people how hard I work. I will teach my team to do as I do, not as I say. Or maybe you’re one of those people who said, hey, I don’t know anything about the restaurant business, but I think it sounds fun to retire and open a restaurant.
What happens is you get into your business, and especially if you are a restaurant person, you tend to do all the jobs yourself. You’ll flip a burger to save $15 an hour. You’ll bus a table to make sure you get the guests seated. You’ll work the front and all the jobs as if you were a line employee.
The truth of matter is you’re losing thousands upon thousands of dollars when you open your business that way because you’re not paying attention to your expenses, your labor, your cost of goods sold. You’re not doing what an owner is supposed to do as a restaurant owner. Yes, when you open up, the first six months to a year requires a lot of work from you. But as soon as you have your act together and you’re a bit established, your job is to be the leader of that business. Your job is to train your managers and let them run the day to day. Your job is budgets, to have your plan for success, to move everyone forward. Your job is to lead your team. It is not to work a line job.
Number three, not understanding the usefulness and importance of a strong management team.
This is critical. And all too often restaurant owners try and manage, work the line, do all the things at the same time. In fact, while I said you don’t work the line, I don’t want you to manage it either. In fact, I want to fire you. I want you working on the business, not in it.
The most frequent argument I hear in response to this is you don’t have the right people. It’s true if you haven’t been building that team. You need to identify, train, cultivate, and develop the right people. The most successful restaurateurs I’ve ever worked with know they not only have to learn the systems, lead the systems, but they have to have others manage those systems. Managers are critical to your success.
If you truly want to open a restaurant and make it successful, maybe you’ve already had some level of success, but you’re not making the money you deserve and you’re a prisoner to your business, then you need managers.
If you’ve made these mistakes starting a restaurant, you can fix them. You just need some help. When you fix these three mistakes, you can leave your restaurant because you have built a team of people who know how you want the restaurant to run. With these trained and responsible people in place, you can give yourself time away. What would you do if you had time away from your restaurant? Would you sleep better? Would your relationships improve? Would you feel more relaxed? We own our own businesses so we can experience these things, and you deserve it.
David Scott Peters is a restaurant expert who teaches restaurant operators how to cut costs and increase profits with his trademark Restaurant Prosperity Formula. He’s taught thousands of restaurants how to use operational systems and create a hospitality-based company culture to skyrocket their profits.