3 Common Financial Pitfalls You're Making in Your Restaurant

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Unsplash/Sandra Seitamaa
Clear drinking glass on table in a restaurant.
Finances first

Financial issues are the biggest hindrance for even the best of restaurant owners. Things may be working well at the front of house, but back of house can sometimes tell a different story, which often doesn’t float in the tough hospitality market. Keeping a restaurant thriving and not merely running can be a daunting task for restaurateurs, especially when faced with sloppy accounting and inadequate accounting systems.

From tax errors and issues with accounting to inconsistent reviewing of reports, these tips will help operators eliminate these mistakes and turn this coming year into their financial best ever.

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Person holding pencil near laptop computer.
Confused accounting practices

While it’s understandable that, as a restaurant owner, you’ll have little time to manage and keep track of tax errors and sales figures, choosing the right accountant is essential to keeping your finances in order. If your financial issues aren’t being processed punctually, it won’t be long before you’ll see your profits begin to suffer.

On that note, if you have a great accountant but are completely unaware of your sales figures and profits, cash flows can easily spiral out of control. Even if you’re experiencing a period of great sales and high profits and your business seems to be plain sailing, it’s always worth checking in to ensure there aren’t any underlying products that you weren’t previously aware of. While the creative side is often more appealing to restaurateurs, it’s the numbers that are going to keep your business afloat long-term.

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pexels/Elle Hughes
Two restaurant employees prepare food in the back of the house.
Overlooking people problems

Within your team, it’s impossible to expect everyone to be able to deliver an outstanding level of customer and back of house service constantly. It’s likely that your staff will all have different levels of experience, capabilities and attention spans, therefore may require more training or even a disciplinary in some cases.

It’s best to keep a tight leash on poor performance. After all, these members of staff are likely to be letting the team down and decreasing the service as a whole - which is likely to stand out to your customers. What’s worse, it’s you that’s paying them for it. So, if people in your team aren’t lifting your brand, it’s time to address the issue. Giving honest feedback and giving them the chance to become better is a great way to boost team morale, which will have positive effects on your customer service. While it’s great to have loyal staff that have been with you from the very beginning to see the brand grow, it’s essential to consider the effort that they’re putting in versus the amount that’s in their pay packet.

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Poor back-of-house processes
Poor back-of-house processes

Operating without innovation is like opening a gateway in the market which facilitates your competitors to surpass you. So, as a restaurant owner, you should consistently be asking yourself if the processes you have in place are completely optimized for best practice. Staying in the back office is a bad habit that can let processes slip, and after all, the best way to identify any process errors is to undertake them first-hand.

Poor communication for fear of upsetting a colleague is one issue which may cause your restaurant to fail. Ultimately, as the restaurant is a brand that you created, it’s essential that you feel confident enough with your team to express the brand’s values and ensure that they’re upheld. In doing so, you’re more likely to hit the niche in the market that your restaurant targets and provide excellent customer service to achieve success on the whole. Poor communication ultimately results in weakness, so it’s essential to talk clearly about any expectations in performance and standards.

With our tips, we hope you’ll be on your way to optimizing your front and back of house practices. Remember, it’s a tough market, so constant innovation and development is required to stay ahead of your competitors and avoid any financial issues which may hinder your brand from doing so.

Keith Harrison is a content creator and writer for Jolly Good Loans, an online personal loans encyclopedia.

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