The upfront costs for new restaurants can be huge, which is worrisome because most restaurants fail within the first five years of business. Finding ways to keep your costs down and be a more nimble business can help restaurants survive in an extremely competitive market.
Working with over 40,000 foodservice clients has given us at BlueCart invaluable insight into the business operations of all sorts of restaurants. These insights illustrate what really matters when it comes to running a restaurant and so we put together a toolkit of resources designed specifically for the restaurateur.
This toolkit of resources can help you keep costs down and choose technologies that positively impact your business.
Instead of focusing on food items and food quality, the toolkit covers the below 8 departments of your restaurant, where little tweaks can produce significant improvements.
- People
- Reservations
- Point of Sale
- Procurement
- Customer Awareness
- Numbers & Analytics
- Scheduling
- Equipment
Let’s get started! And no, this isn’t just another list of apps!
#1 People
Tools:
- Harri
- Hire people directly out of culinary school - Visit the Culinary Institute’s Employer Services
Why it is so important: You can have the best apps, most beautiful decor, the latest pos system and amazing food, but if you don’t surround yourself with great employees, success will always be very difficult to achieve. People make the difference in terms of operations, reputation, repeat business and so many more things. Do not underestimate the power and value of human capital in a restaurant.
Things to know: Try hiring people with a blank slate and teach them your methodology. This is best done with people who haven’t developed bad habits and are enthusiastic to learn the ropes. If you can hire people eager to learn you will get more output and you will both be happier. Don’t always go by their resume. Restaurant jobs are much more about the fortitude of a person than their food or business intelligence. These people are going to work a ton and be exhausted. They need to always be performing at a high level because, at the end of the day, people go to restaurants for the service more so than for the food.
#2 Reservations
Tools:
Why it is so important: By using an online platform to handle reservations, restaurants are better able to manage covers, follow up with no-shows and increase utilization.
Things to know: Opentable is the established player in this space, but Resy and Reserve have come on to the scene and are making waves. Opentable has the largest network of diners but also charges on a per-cover basis, on top of a flat monthly fee. Resy and Reserve do not charge on a per-cover basis, but also don’t have the same network reach as Opentable. With Resy and Reserve, however, there is a perception of exclusivity, so if you’re a restaurant that is already popular, one of those platforms might make more sense. If you are looking to boost awareness, Opentable might be your best choice.
#3 Point of Sale Systems
Tools:
Why it is so important: Tablets and cloud computing have unleashed a new set of capabilities on POS systems that can drive customer engagement and help a restaurant’s bottom line. No longer is the POS just a cash register-- It’s another touchpoint with your customers and an opportunity for you to delight them.
Things to know: Make sure you determine how many components of your business you want integrated with each other. Cost of goods sold, sales data and inventory are just a few to consider. Micros and Aloha are older, more robust systems that usually carry a larger up-front cost. These systems are feature-heavy and stand on their own, providing little room for integrations with other technologies. Toast and other tablet-based POS systems are compatible with more operating systems and offer more flexibility when it comes to cross platform integrations.
#4 Procurement
Tools:
Why it is so important: Food procurement is important for lots of reasons, but taking it digital is the key to making everyone’s job easier. Instead of doing the painful task of ordering at the end of your shift, Bluecart puts all of your suppliers and products in one centralized place. Order in the walk-in, at the bar or from the comfort of your home. Set daily, weekly and monthly budgets individually or across your team. Browse BlueCart’s featured network of suppliers or add your own, all in one easy-to-use platform. Still calling out numbers, clipboard in hand? Take it digital with shelf-to-sheet ordering and inventory all on your phone.
#5 Customer Awareness
Tools:
Why it is so important: Google alerts let you automatically monitor the internet for mentions of and about your business. With razor-thin margins, restaurants need to do everything they can to capitalize on popularity bursts and respond to the market. Google Alerts and Yelp are just two sources of trending industry information that can be used to make your business smarter. Want to change your menu, see what your competitors are doing and what people are saying about it? Look up the most popular dishes and model your menu off of those items. Or, pinpoint common complaints from your target customers and provide something that clearly addresses their concerns and satisfies them.
Things to know: A rule of thumb: for every bad review you need 10 good reviews to make up for it.
#6 Numbers & Analytics
Tools:
Why it is so important: Cost of goods sold (COGS) is one of the most important drivers of profitability for a restaurant. On average, one third of a restaurant’s revenue flows directly into COGS! “Food & Beverage Cost” is the ratio of the cost of ingredients (inventory) and the revenue that those ingredients generate when dishes are sold (F&B sales). Different food items will have different food costs (unless every item has the same cost and sale price) and the most successful restaurants often have a balanced blend of food costs across all their menu.
Things to know: The Food & Beverage Cost Ratio is often misunderstood. The important thing to remember is that food & beverage cost is not just about the cost of the product vs. the sale price of the product. You need to also take into account the cost of the inventory that is sitting in your kitchen. That food could be sold, but it’s not yet, and so that cost must be incorporated into the calculation.
#7 Scheduling
Tools:
Why it is so important: Taping a schedule to the door of your walk-in won’t cut it anymore. Having an online repository for schedules, HR forms, training documents and more will reduce HR headaches and help employee satisfaction by keeping everyone in the know and on the same page.
Things to know:
Payroll is just as important as food and beverage cost. If you add payroll to your F&B costs, you’re talking about 70+% of your expenses. So it’s not a surprise that payroll has a big impact on your bottom line. While general scheduling may be easy, adjusting your schedule when a chef calls in sick or a host quits can be problematic and stressful. Using a platform to manage scheduling can make these unexpected changes easier to handle.
#8 Equipment
Tools:
- Metro Restaurant Auctions
- Amodeo Restaurant Auctions
- Craigslist
Why it is so important: When you open a restaurant, one of your initial capital expenses will be acquiring kitchen equipment. The first question will be: should you buy or lease? This will depend on your financial situation, the roadmap for your restaurant, and the level of risk you can tolerate. For example, buying your own will require you to fix something when it breaks (trust us; things will break) whereas leasing includes “maintenance agreements” so you’re protected when something happens. The long term costs of leasing can be quite high, but less risky in the short term.
Things to know: If you are planning to buy equipment, definitely look at the restaurant auctions. Since most restaurants either “make it” or fail within the first few years, the restaurant auctions are filled with relatively new equipment available for significant discounts.
And that’s a wrap! Is there an app, best practice or online resource that we should add? Let us know in the comments below!