3 Mistakes New Restaurant Owners Make

Opening a restaurant is a dream for many food-loving entrepreneurs. Deciding on the décor, designing the menu, hiring an excellent staff, and creating delicious foods are just some of the things new restaurant owners look forward to in launching their new business. However, it can be easy to get caught up in these obvious aspects of restaurant ownership and totally forget about some of the other less exciting aspects. A thorough business plan is important in any business, but is especially important in the restaurant business where startup costs are high. It is no secret that many restaurants quickly go out of business, but the industry does earn billions of dollars in profit annually. You can get a piece of that pie! While running a profitable and successful restaurant is challenging, it is totally possible as long as you avoid making the following mistakes:

Not Marketing Effectively

Many people automatically assume that effective marketing requires large amounts of capital. As a result, they may not prioritize marketing due to other seemingly more important needs when opening their restaurant. However, in the new social media and Internet age, marketing does not necessarily require large amounts of skill or capital. A widespread social media presence is one marketing aspect that requires little investment but can have a huge reward. It is vital for a new restaurant business to have engaging Facebook, Instagram, and Twitter pages. Building a user-friendly and informative website may require a little more time and money, but it is still extremely important as this is often what people look at before deciding to come into your restaurant. Finally, good old-fashioned marketing tactics such as promotions and rewards programs can really help to build customer loyalty in the beginning stages of opening your restaurant – this can also be done through social media! You can even purchase ads on social media platforms such as Facebook that specifically target potential customers in your geographic area. Another recent marketing trend involves using “influencers” to promote your business within their large list of followers. To sum up, effective marketing strategies are easy to overlook in the initial stages of opening a restaurant when more obvious needs may take priority. But marketing is also an area where you can see a huge return on your investment and it needs to be a priority in order to have a good opening quarter for your new restaurant.

Forgetting The Customer

Obviously pleasing the customer is the most important aspect of running a successful restaurant. After all, the customer is always right! However, this can definitely be a difficult task. There is no lack of unreasonable people in the world, and owners and managers need to have excellent people skills in order to handle problems and complaints effectively in person. It is important to train your staff, and even yourself, on how to diffuse difficult situations with customers and handle their concerns professionally. But what about when people do not bring up issues in person, and instead leave a scathing review on social media or Google for the whole world to see? Reacting to these kinds of criticisms appropriately is also extremely important. Responding to the negative review, apologizing, and reaching out to the customer are ways to rectify the situation. Offering them a discount to return to the restaurant and see the improvements that you have made based on their comments is another good way to address criticisms. It is also possible to take a more proactive approach to criticisms by offering comment cards on-site as well as sending out surveys to previous customers to get information on their experiences. It is also very beneficial to simply just take a walk around and talk to your customers during their dining experience to hear their thoughts and feedback. Overall, engagement with customers – both pleased and displeased – is important to running a successful restaurant. Addressing criticisms in person and online is necessary in order to rectify mistakes and show good faith on your part.

Underestimating Initial Costs

When you decide to open a new restaurant, you assume it’s going to be expensive, but do you really know exactly how much it’s going to cost and when you can expect to actually start making money? Unfortunately, there is no clear answer to this question. It can take anywhere from a few months to a few years depending on your restaurant. In fact, it is not uncommon for you to lose money during your first quarter and therefore, it is necessary to have an allowance set aside to cover any potential losses. It is recommended to have three months of operational costs set aside in an allowance fund to cover these expenses. Not only will you have to deal with regularly replacing and reordering things such as cutlery, glasses, and takeout containers, you will also need to be prepared for unanticipated costs such as broken equipment, higher staffing costs, and extra marketing costs to get people inside. Other costs that are sometimes overlooked but can add up quickly involve licensing fees, permitting fees, legal fees, taxes, and insurance costs. Due to all of these initial costs, it is extremely important to secure enough financing to cover these expenses during your initial opening period when you are unlikely to turn a profit. The best option for this is through acquiring restaurant loans. While it is true that running a profitable restaurant business can be difficult, with the right strategy and effort it is definitely possible to run a profitable restaurant after the initial startup period.