The restaurant business is notorious for being a risky industry. According to a study by Ohio State University, the majority of new restaurants won’t stay open for a year. Furthermore, research by Business Insider found that about 80% of restaurants close within five years. However, some restaurant owners manage to thrive and even grow their businesses into established and popular venues that last for decades or even generations. In this article, we will discuss some strategies for surviving and thriving as a restaurateur.
Section 1: The Importance of Accounting
One of the main reasons that restaurants fail to thrive is poor accounting. Many restaurant owners don’t know their profits and losses or labour and food costs. Even after running their business for a few years, they may have never adjusted their menu prices to make up for rising costs. Investing in restaurant accounting software can help restaurant owners track different kinds of revenue and expenses, provide better information to base decisions upon, and produce reports that make it easy to spot trends quickly.
Section 2: Managing Cash Flow
Cash flow management is a primary indicator of success or failure for any business, including restaurants. While most restaurants won’t enjoy a positive cash flow every day, there are ways to prepare for unexpected expenses without having to balance an urgent repair against meeting payday. For example, opening up a line of credit to provide funding for restaurant businesses can help manage operating expenses while investing in business growth. New online lending platforms offer faster approval and funding, making it easier to access financing.
Section 3: Customer Retention
It’s cheaper and easier to keep a regular customer than it is to court a new one. Repeat customers bring reliable revenue and are more likely to recommend the restaurant to friends and family. Focusing on the basics of great customer service and good food is a first step, but many restaurants go beyond that to grow their customer base quickly. For example, restaurants might offer special promotions for customers who sign up for a mailing list or offer periodic discounts to motivate diners to choose their establishment over others. Encouraging diners to act as brand ambassadors who bring in their friends and coworkers can also drive repeat business.
Section 4: Constantly Striving for Excellence
While a restaurant’s first year in business may be exceptionally risky, surviving the first few years may not mean a restaurant is in the clear. The day-to-day demands of keeping the doors open can make it tough to keep up with the basics. However, increasing profits over time is a good sign that the enterprise has been successful. In this competitive business, restaurant owners need to constantly strive for excellence in all aspects of their business to reach their biggest company goals.
By implementing the strategies outlined in this article, restaurant owners can better position themselves to survive and thrive in a challenging industry. From improving accounting methods to managing cash flow, focusing on customer retention, and striving for excellence, success in the restaurant business is achievable with hard work and dedication.