A Challenging Task

Foodservice industry figures show that dining out is becoming popular and, year-on-year the frequency of diners opting for eating out has been increasing. This has resulted in several entrepreneurs entering the restaurant business only to discover that it is not such a profitable segment. This is, however, because they have not studied the market carefully and are not aware of the necessities of starting a successful restaurant. To become a restaurateur having a booming and lucrative establishment one has to take several aspects into consideration. Ashok Malkani takes a look into this business to help you create a recipe for success. While starting a restaurant is exciting, it is also time consuming and, to launch it successfully, it is necessary to know all the pros and cons.    

When the service in a restaurant is not up to the mark or when a restaurant manager tells you that immense profits are raked in daily you are tempted to open an eating out place of your own. But owning a restaurant is a flashy business. f r o m a distance it seems extremely easy. All you have to do is invest money but there are several aspects one has to keep in mind. If one looks around, one finds that while some restaurants have diners flocking the place, there are others who find it difficult to make ends meet. What are the reasons for this? Is it merely the taste of the food served in these places? 

Shail Barot, Director, Revival Restaurant, avers, “In my opinion, today almost every good restaurant is capable of churning out tasty food. However, I don’t think it should stop at just that. There are a few other things that are necessary for a successful restaurant. 

  • Location is everything in the restaurant trade which greatly influences its success and so, you’ll need to choose this carefully. The location should be such that your restaurant receives enough footfall, but at the same time it should not have sky high rents or overwhelming competition.
  • What makes your restaurant stand out f r o m the crowd? All successful restaurants have a differentiated offering – a USP that is carefully targeted to their intended customer base. If you’re too similar to other outlets, what will make customers come back to you? Once you have established your USP, you’ll need strong marketing support to promote your unique offering that will help fill your tables. f r o m your restaurant sign and window display to posters, emails, promotions and more, marketing is an essential facet of your business that must not be ignored. More importantly, the latest tech trends can allow you to capture customer information and build up clear customer profiles. Integrated loyalty / order ahead apps, online booking platforms and guest Wi-Fi data capture, all allow you to identify your customer base and market more successfully. If you don’t have in-house experience for this, then employ an agency to help you get the word out there and shout about how great you are.
  • This may not be the most glamorous side of running a restaurant, but having health and safety policies in place and enforced, together with an official hygiene rating, is the mark of a successful establishment. Customers want to know that they are eating somewhere clean and safe.
  • To be a success in 2019, restaurants need to have a solid online presence. At a minimum, this should include a website and active accounts on social media sites like Facebook, Instagram and Twitter. Post pictures of your most delicious dishes and get customers to spread the word online by offering incentives. Let them check out your menu ahead of time and book online. Most importantly, encourage happy customers to review their experience online – all the marketing in the world can’t replace genuine, word of mouth recommendations online.
  • Always maintain your online reputation, even the best restaurants can’t get it right all the time. But the most successful establishments will acknowledge when they get it wrong, admit this graciously and offer a solution to appease dissatisfied customers.”

Gagan Sial, Director, Rolls Mania, Mumbai declares, “The major reason to get a full packed house in a restaurant now a days is the memory of an experience that a customer has in the place. Restaurants have a big list of things to be considered to be a full house, where even a small glitch will make your customer unhappy. Some of the aspects that they have to consider are: the pricing of the menu, marketing of the place, and mouth publicity, which should be the highest as it will get a better repeat rate & new customers as well. Every city has legendary places so they will keep getting crowded as they have been there since decades.”

Menu Designing 

Menu is considered to be one of the major aspects of attracting customers. Thus attention has to be paid to designing the menu. 

Gagan believes, “The menu should be designed in such a manner that everybody can understand it as it caters to the masses. A menu with too many items does not necessarily mean that it is a successful menu. Every item in the menu should be available for the customer.”

Shail explains, “An effective restaurant menu is a mix of a well-planned layout, well-written descriptions and correct pricing for food. Good menus avoid crowded layouts, overly wordy descriptions and unnecessary graphic designs. Menu items should reflect your restaurant’s theme. Updating your restaurant menu is also important to remain on top of food costs and food trends.

The ideal restaurant menu offers a balance of classic dishes and new food trends, while balancing the right food cost to maintain and gradually increase profits. A restaurant menu design is a reflection of a restaurant’s concept and intended audience.

Once you’ve decided on what foods you will offer, do the maths for the correct food cost and assess how large your portions will be. Another way to ensure profit is to create a balance of expensive and inexpensive items, and limiting the use of market price items, which have the greatest fluctuation in prices.

Restaurant menu designs, whether formal, casual or playful, should match your restaurant’s concept, location and theme. Your menu font and colour scheme should also reflect your restaurant theme. 

A menu description should be vivid and enticing enough to make a guest’s mouth water. Always explain what the major ingredients are in a particular dish and use ethnic names to add a bit of authentic flair to the menu description, as long as its apt. Overall, a good thumb rule to follow while writing the descriptions is to keep it short and simple.

Generally, the size of your restaurant will dictate how large your menu is. The bigger the kitchen, the more menu items you can offer. If you try to offer a large and complex menu out of a tiny kitchen (which can be done, though it isn’t easy) you may run into serious problems during lunch and dinner rush hours. Your restaurant kitchen should be between 15-25% of the total space in your restaurant. Any smaller, and you run the risk of limiting how much and what you can serve during a shift. Any larger and you are wasting prime real estate that could be used for customer seating.”

Inventory management

Speaking about menu planning, one also has to manage one’s inventory. 

Shail says, “Effective inventory management for restaurants relies on several elements that work together as a system. This system, if executed well, provides guests consistently with great food and to restaurant operators, the means to help achieve their intended financial results.

The parts of the system are:

Ordering: Successful operators understand and teach their staff that the goal of a restaurant’s ordering system is to keep a minimum number of products on hand without running out of items before the next scheduled delivery.

Receiving & Storage: Receiving, rotating and organising all items on a restaurant’s shelf serves an important role in successfully managing inventory. Upon delivery, making sure that every item on the invoice is received and every item is of utmost importance to running your budgeted food cost percentage. Even if the restaurant flawlessly manages to execute the ordering with little-wasted food, any item(s) that are paid for and not received will leave money on the table.

Food Prep: Food preparation is the next part of an effective inventory management system. It plays a direct role in food quality, freshness and hitting targeted food cost percentage. The proper use of a Prep Sheet as part of an inventory management system has great impact on profitability by keeping the optimum volume of prepared foods on hand; too much and you’re throwing away food and spending labour unnecessarily to prepare it, too little and you may run out of an item which impacts the customer experience, the shift, and ultimately sales and profits.

Inventory: The purpose of conducting food inventory is to get the total amount of all sellable food items in a restaurant at any given time, and is a critical piece of one’s success in inventory management. Inventory should always be done outside of normal operating hours, either before opening or after closing, so no items are missed. Inventory sheets must contain updated pricing as commodities such as vegetables, dairy and meats may have weekly price changes. This means you must update the price of raw products as well as any recipes that they are used in.

Cost of Goods Sold & Food Cost Percentage:

Beginning inventory is the amount of food or supplies that is in the restaurant to start the month (which is also the prior month’s ending inventory). Purchases are all the inventoried items that were bought between the beginning and ending inventories. Ending inventory is the total amount of food or supplies counted at the end of the financial period (for the day, week, month, etc.). Food cost percentage is then figured by taking the COGS and dividing them by sales for the determined time period. “

Gagan states, “Briefly inventory management would involve   

  • Ensuring that the supply chain is perfect. 
  • Taking time to check for non perishable products.
  • Checking perishable products everyday & ordering fresh.
  • Keeping track of goods to and ordering in a way where there are no shortages or losses.”

Internal Thefts

But while keeping inventory of goods, one finds that no matter how many strict rules you implement there are often internal thefts. Pilferage is something that seems virtually impossible to avoid and this could result in the profits of the restaurant. .  

Shail avers, “Employee theft is something that most restaurant owners encounter at one point of time or another. No matter how well you think you know your employees, there is always a possibility of theft. Employee theft in restaurants takes many forms, including giving away free food and drinks to customers without authorisation, and stealing food or alcohol for themselves. Many employees only steal because they know they can and their chances of getting caught are slim. If employees know you have a system in place to trace theft, then most will respect that and not try to steal.

As a restaurant owner, it is hard to be everywhere at once, therefore it is important to have a good tracking system for food and beverage sales. Tracking food and drink orders through a POS system, you can cut down on the amount of ‘freebies’ that staff might give out without your knowledge. Once an order is placed and sent to the kitchen or bar, the KOT/BOT cannot be changed without the manager/owners approval. Of course, a POS system used for security purposes only works if the kitchen staff and bartender know not to give out orders without a ticket. Prevent food theft by closely monitoring orders, usage, and waste. Set up a system where, at the end of each shift, inventory is accounted for and waste should always be written down. If the kitchen staff knows they are accountable for the food inventory, they will be careful about keeping track of it.

Alcohol will vanish like magic if left unattended, and so the best way to keep employees f r o m stealing alcohol is to keep it locked up. Only the restaurant owner, manager and perhaps bartender, have access to the supply. Like food, you should keep a running inventory of alcohol and check your system if a certain type of alcohol is consistently running low. If there are no sales to account for the alcohol use, you can assume that employees are helping themselves to it.”

Gagan asserts, “Internal theft can be prevented by having a proper cloud based POS system & Wifi connected cameras where you can see the outlet f r o m anywhere in the world. ‘No Bill No Pay’ should be visible to every client as this reduces the chances of internal thefts. Respect your employees where they get a feeling of an ownership so that the internal thefts can be eliminated. A rewards system also works wonders to boost the morale of the staff & keep them working hard & avoid thefts.”

Recruiting and Training 

To prevent internal theft as well as to ensure that the customers get a par excellence service it is necessary to recruit the right staff and train them appropriately. 

Shail discloses, “Many parts of the country are experiencing staffing shortages, especially in the hospitality sector. Skilled employees, who can turn around your entire restaurant experience, not only in the kitchen but also in the front of the house are hard to come by. There are a few essentials that I keep in mind when I conduct interviews for recruiting as well as training my current staff. They are: -

Recruiting: There are many wonderful culinary colleges and Universities in this country. Conduct interviews at these colleges and take a few students under your wing. Start them in entry-level jobs. Coach them, mentor them. You will probably end up with some very loyal employees. Another advantage is that you won’t have to undo any bad traits they may have picked up at other jobs. You will be teaching them the way it is done in your kitchen. Many young chefs and owners have forgotten that for most chefs older than 40 years of age, this is the way they grew in the profession. They started at the bottom and climbed the ladder.

Promote f r o m within: Your dishwasher and prep cooks probably know the operation of your line a lot better than you think. Your line probably has several who are ready to become sous chefs. Your current employees know your systems, policies and procedures as well as your menu. It is great idea to move them up and let newbies take the novice spots.

Hire for attitude, not skills: Someone with a great attitude and work ethic will make a good employee even if they don’t have the technical skills you want. It is easier to teach someone technical skills than a good work ethic. Hire a new person with little or no technical skill but a great attitude for the lowest positions in your place and let the person work her / his way up.

Training: It’s important to not overlook the immediate benefit of a hospitality degree f r o m a credible University. Education in the form of instruction can be essential for many of your restaurant employees. All of your employees will need instruction on how your restaurant operates, your restaurant menu, your target guest, staff processes, and how they are expected to act. Written instructions can be useful when it comes to education. A formal training will have a training plan for restaurant staff or a system for explaining everything in the restaurant.

Good restaurant staff training includes demonstration. A good demonstration involves the owner / trainer performing tasks that the trainees must learn. Trainees observe proper techniques to replicate later.

Training for restaurant staff should also include shadowing. Shadowing allows employees to learn f r o m each another and for your best staff to help build up your new or underperforming staff. In the instance of on-boarding new staff, shadowing gives the new employee a chance to observe and learn the internal workings of the restaurant before having to do it on their own and understand how exactly a task is best performed. This also allows staff to train one another, which can improve skills at both ends.

In a customer intensive industry, your staff should be attentive to guests and also outwardly display the personality and professionalism that your restaurant expects. A good staff training program will be a 50:50 split between those two skills, integrated with knowledge of the menu and restaurant.”

Gagan adds, “As we are a service industry the most important thing to be looked for is soft skills of a person. It is vital to follow a standardized training procedure for all the employees and it is also important to give regular training upgrades to get them familiar with the new techniques and procedures of the food industry.”

One should be alert to the obligations and problems in launching a new business. The idea of owning a restaurant can lead to inexperienced owners closing down the business within a very short period. To avoid being one of them you have to know the most common reasons why restaurants fail and be able to recognise bad signals and not only  pay attention to them on time but also make the right decisions.    

There are several other aspects to starting a successful restaurant business which will be discussed in the next issue. 

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