Brian Will, Serial Entrepreneur & Industry Leading Business & Sales Management Consultant
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Many aspiring entrepreneurs dream of owning and operating their own restaurants, driven by their passion for food and hospitality. However, the reality is that running a restaurant isn't just about serving delectable dishes and providing exceptional service; it's also a complex business venture. In this blog based on the The Dropout Multi-Millionaire Podcast, we'll shed some light on restaurant operations by exploring common reasons for restaurant failure and providing guidance on overcoming these challenges.
We must begin by shedding light on the most common obstacle in the restaurant industry: the owner.
Many restaurant operators have backgrounds as chefs or managers, excelling in what's termed as "location operations."
However, their prowess in the culinary or service aspect often fails to translate to the business side of the restaurant operations.
It's vital to recognize that a restaurant is, at its core, a business.
Just as businesses in various industries sell a diverse range of products or services, restaurants sell food. This is a crucial distinction to make when navigating the multifaceted nature of restaurant operations.
Believe it or not, restaurant owners do not need to be present at their business at all hours of the day for their business to succeed.
Successful restaurant owners thrive on structured systems, well-defined processes, and established procedures. These systems extend to the restaurant's accounting department, where critical core metrics are diligently tracked.
By keeping a close eye on the metrics, restaurant owners can gain valuable insights into the financial health of their business and identify issues to make informed decisions without the need to be physically present in the restaurant constantly.
Remember– your restaurant business can’t survive if it falls apart when you’re not there.
Many restaurant owners remain oblivious to their financial numbers. This lack of financial awareness often leads to poor decision-making because it forces owners to be reactive instead of proactive.
If you know anything about restaurant operations, you know that finances are always fluctuating, so from weekly food orders to daily sales, track your numbers like a maniac. Your Profit and Loss (P&L) statement is your magic crystal ball. It will allow you to look into the future of your business and fix a financial crisis before it begins.
There is a lot of content out there claiming that restaurants can only expect to make between 2% and 10% profit, but that’s just impossible. Let’s break this down:
2% profit of a million dollars is a $20,000 in profit. Why would you run a million dollar operation for just $20,000? Your risk of loss is not only high, it is almost guaranteed.
You should be striving for a profit margin of at least 15%.
Take another look at your P&L and figure out how to make that happen, or hire a coach to do it.
To elevate restaurant operations and maximize profitability,seek assistance from a seasoned professional who has already owned and operated a successful restaurant.
A coach or mentor can provide valuable insights on optimizing operations, identifying and managing core metrics, and meticulously overseeing finances down to individual percentage points.
With their guidance, restaurant owners can boost profits while streamlining their time and effort investments in their business.
Achieving success in the restaurant industry demands more than just passion for food and service. It necessitates a firm grasp of the business side of restaurant ownership. This means understanding the numbers, maintaining healthy profit margins, and implementing efficient systems and processes. With the right guidance and a focus on the business aspect, restaurant owners can build a sustainable and profitable enterprise in a highly competitive industry.
If you’re ready to break free from the status quo and join the ranks of the mavericks, the rebels, and the renegades who refuse to conform and instead build multi-million dollar businesses, subscribe to The Dropout Multi-Millionaire Podcast wherever you choose to listen!