When walking past a full restaurant, you may assume that factor is the only one involved in restaurant success. However, much more goes into having a successful restaurant business. A business owner must be well-informed on all aspects of owning a business before it can be successful.
Start with the basics by reading restaurant management books to learn how to become a restaurant manager or owner. This information is crucial for opening a restaurant, opening a coffee shop, opening a food truck, opening a bakery, or opening a ghost kitchen.
Restaurant Success: What Is a Successful Restaurant Business?
A successful restaurant business has an ideal location, enjoyable atmosphere, great food, and excellent service. However, this is only the beginning for restaurant success. A lot of behind-the-scenes or back of house work goes into providing guests with an exceptional and consistent dining experience.
An example of a restaurant that provides an exceptional dining experience is a Michelin star restaurant. These restaurants and Michelin star chefs are rated with Michelin stars based on their excellence over a period of time. Look into the Michelin star guide and answer the question, “How does a restaurant get a Michelin star?”, to better understand. This is crucial for restaurant success.
The factors that go into having a successful restaurant business include:
- An excellent location
- A solid business concept
- Restaurant technology
- Great financial standing
- An experienced chef
- Reliable staff
- Loyalty programs
5 Tips for Having a Successful Restaurant Business
Competition within the restaurant industry is intense. Focusing on a few important factors when running a restaurant will keep your business afloat and lead to restaurant success. Simply paying attention to your restaurant profit and loss statement won’t be enough for restaurant success, despite its own importance .
Here are five tips to follow in order to have a successful restaurant business:
- Have the 3 Essentials: Location, Chef, and Business Concept
These three essentials go hand in hand. The chef and location of your establishment should fit with your business concept. Keep in mind that a good restaurant location includes its accessibility. This means your restaurant should be able to accommodate all diners, including those with mobility needs.
When it comes to the business concept, you may choose to go for a more specific or broad concept. This depends on the food you want to serve. Two examples are fast food and fine dining. The chef comes into play here as they will work with your business concept to develop a menu that’s thematically aligned.
- Utilize Restaurant Technology
While competition is increasing in the restaurant industry, businesses are adapting to the newest restaurant industry trends to differentiate themselves. This helps restaurants sufficiently anticipate customer demand and achieve restaurant success. Trends to be aware of include supply chain management trends, beverage trends, food trends, and restaurant technology trends.
Many diners are interested in having options. This includes the option to use an online ordering platform, modern restaurant payment technology such as contactless payments, and make online reservations.
This kind of new technology in restaurants streamlines restaurant operations. A restaurant or bar POS system reduces the likelihood of human errors and extra paperwork. This will allow you to manage daily tasks more efficiently. These include inventory management, staff scheduling, cash flow, and invoicing processes. You may also want to consider utilizing social media.
- Reliable Staff
Part of what makes a restaurant profitable is hard-working staff. Reliable and happy employees come to work regularly and boost worker morale. This is reflected in the customer service they provide to guests.
Restaurant staff includes bar staff, wait staff, the restaurant manager, and the types of chefs you may have. Chefs include the sous chef, executive chef, and chef de partie. Happy and reliable staff is one of the key elements of restaurant success.
- Good Numbers
When running a business, paying attention to the numbers is crucial. Starting off with the right amount of capital is the first step to running a successful restaurant business. Paying attention to profit and loss statements and cash flow is next as these indicate your performance.
Learn about the following restaurant performance indicators:
- Cash Flow. This refers to the amount of cash that goes in and out of your establishment on a monthly and annual basis.
- Retention Visitor Rate. The retention visitor rate is the cost of acquiring a new customer compared to an existing one.
- Cost of Goods Sold (COGS). The COGS refer to the cost of creating each menu item that you sell.
- Revenue Per Available Seat Hour. This is calculated by dividing the money you’re making by the number of available seats you have during operating hours.
- Prime Cost. The prime costs refer to the cost that it takes to operate your establishment. It includes labor cost and COGS.
By understanding these performance indicators, restaurant managers will be able to determine the current state of the establishment. These are also crucial for restaurant success.
- Loyalty Programs
Attracting new clients is crucial for any business, especially when you want restaurant success. It’s also important to retain existing customers as this is oftentimes less expensive. Modern restaurant tech, like a POS system, allows you to have an integrated loyalty program for your existing customers.
This software allows you to add customer profile points once they place their orders. It also rewards customers with promotions, discounts, and other restaurant incentives. Such programs improve the customer experience and help get the business off the ground. It’s part of what makes customers loyal and keeps them coming back.
What Is Restaurant Management Software?
Restaurant management software refers to systems that encompass operational and marketing components that are necessary when running a business. Such software handles payment processing, which is handled through payment processing software, day-to-day problem-solving tasks, and order management. All of this is done while streamlining operations and marketing tasks. Look into “What is on premise and off premise?”, to better understand your options.
Choosing the right software for your establishment may lead to restaurant success, but it requires proper evaluation of the offering. The software should be easy to use, fast, and within the budget. The features of the restaurant management software will depend on the needs of your establishment.
Benefits of Restaurant Management Software
Restaurant management software maximizes profits, reduces costs, including food costs, and offers excellent customer service. This is part of why such software leads to restaurant success.
Benefits of restaurant management software include:
- Quick access to financial information
- Improved customer service
- Reduced restaurant expenses
- Remote data access
- Improved staff communication
- Efficient staff management
- Improved sales tracking
1. Quick Access to Financial Information
A restaurant management system will capture transactions digitally. This avoids manual errors and includes order details such as time-stamps, sold items, and the employee that completed the transaction. Keeping track of finances is crucial for restaurant success.
2. Improved Customer Service
It’s possible to integrate Customer Relationship Management (CRM) software into your restaurant management system. This allows you to record customer information such as their transaction history, name, and contact details. This helps tailor your niche market and learn about their order preferences. Happy customers tends to mean restaurant success has been achieved.
3. Reduced Restaurant Expenses
Most businesses wouldn’t mind cutting costs and that’s what these systems offer with inventory control processes. They reduce and avoid inventory variance. It’s also possible to connect to a marketplace online to access different vendors like the Order One platform by Revolution Ordering. It also helps manage overhead expenses.
4. Remote Data Access
Each business owner will have remote access to their system, along with all data. They’ll have insight into employee performance and real-time sales transaction information. This way, managers and owners will be able to monitor what’s going on in the establishment without having to physically be there. With remote access to your business, you may achieve restaurant success.
5. Improved Staff Communication
These systems make communication between wait staff, the executive chef, the cashier, and all other employees seamless. Order information is recorded on handheld devices and transmitted to the kitchen and cashiers, so they have it. Communication is key for restaurant success as it keeps everyone in the know.
6. Efficient Staff Management
Managers will have the ability to create employee schedules using these systems based on peak business hours. It also allows employees to request time off and change their shifts with other employees.
7. Improved Sales Tracking
All transactions will go through the restaurant management system. This includes payments, orders, voids, expenses, and promotional deals. All sales data and inventory will be accurate. It’s also possible to integrate notifications for gaps in order volume or stock levels. This kind of tracking is essential for restaurant success.
What Is a Customer Loyalty Program?
A customer loyalty program is a system that rewards repeat customers with discounts and incentives for future purchases. Incentives often include exclusive access to certain services, events, and menus.
Businesses utilize loyalty programs to attract and retain customers. They encourage repeat visits and purchases by rewarding loyalty with points. These points are redeemable for rewards, and it makes it possible to track customer spending.
Customers receive a code, similar to a UPC number or a restaurant QR code, that is significant to them. They scan this code at the cash register to accumulate points for their purchase. Repeat customers tend to lead to restaurant success.
Benefits of a Restaurant Loyalty Program
Restaurants that implement a loyalty program provide another reason for customers to come back. They earn rewards with each visit and/or purchase.
Four benefits of loyalty programs include:
- Improves customer retention. HubSpot research indicates that restaurants increase their restaurant profit margin through customer retention. A loyalty program entices customers to come back and may result in restaurant success.
- Increases sales. Restaurants may see a 25-95% increase in profit through customer loyalty, according to a Harvard Business School study. Loyalty programs provide incentives to customers that visit and spend money at your establishment regularly.
- Loyal customers attract new customers. Word of mouth marketing is a tool that is used to attract new customers. In fact, it’s oftentimes more trusted than eCommerce marketing or B2B marketing efforts. Satisfied customers are more likely to share their positive experiences with their peers.
- Improves analytics. A digital loyalty program provides customer insights. It’s possible to use these insights for future marketing efforts, product offerings, and menu improvements.
What Are Restaurant Technologies?
Restaurant technologies refer to tools, equipment, and software that simplify daily operations while increasing the chance of profitability for food establishments. These tools improve the business's processes and promote excellent customer satisfaction.
In the increasingly competitive hospitality industry, restaurants have to incorporate the latest tools and technologies in order to survive. This includes hospitality software. These days, technological innovations are more common than ever so adapting to them is key for restaurant success.
5 Restaurant Technologies to Use In 2022
These days, restaurant technologies simplify all aspects of the industry. They automate certain operations, increase efficiency, and increase customer satisfaction.
The five restaurant technologies to use in 2022 include:
- Online ordering. Online ordering for restaurants has been a crucial feature to have since the start of the COVID-19 pandemic. Customers browse through digital menu ordering options and place their orders. Each restaurant online ordering platform on online ordering apps will allow customers to include specifications regarding their orders and preferences.
- Cloud-based POS systems. These point-of-sale systems utilize cloud technology to store and move data. Common systems include handheld, touchscreen POS systems, and self ordering kiosks. Quick and efficient systems like these may result in restaurant success.
- Customer Relationship Management (CRM) software. This tool manages customer data while making it easy to personalize services and marketing efforts. CRM tools are able to track order history, food preferences and food services, contact information, and personal data.
- Inventory management software. Inventory tracking is easier with an automated inventory management process. This kind of software cuts costs and restaurant monthly expenses, reduces food waste and minimizes food surplus.
- Loyalty programs. Every food establishment should have a restaurant business plan that includes the details of a loyalty program. These programs attract and retain loyal customers while increasing engagement.
Restaurant POS System Definition
The definition of a restaurant POS system is a point-of-sale system that processes transactions at a restaurant. Modern POS systems incorporate cloud technology and offer innovative features including loyalty programs and CRM integration. This is compared to traditional POS systems that only accept orders and provide receipts for the transaction.
It’s possible to improve restaurant management functions with the use of POS systems. This is because of features such as inventory management, customer relationship management, smart reporting and analytics, and loyalty program integration.
Integrating third-party applications is also possible with POS systems. These integrations allow for table reservations, online ordering, and innovative payment methods. Such payment methods include eWallets and contactless payments like ACH payment, eCheck, and similar restaurant payment technology.
5 Benefits of a Restaurant POS System
POS systems simplify restaurant operations while allowing business owners and managers to keep up with demand. Due to modern technology, these POS systems provide multiple benefits for food establishments.
Five benefits of a restaurant POS system include:
- Inventory tracking. Keeping track of inventory is crucial for a restaurant. It’s possible to do this with a POS system as it provides accurate and real-time information regarding product movement. This increases efficiency while reducing shrinkage and food waste. The inventory control manager will also have access to the stock levels from remote locations due to cloud technology. Keeping track of inventory is essential for restaurant success.
- Accurate business reporting. Analyzing business performance is crucial, especially in the restaurant industry. Modern POS systems offer business reporting tools such as those that monitor inventory levels, credit, sales, and top-performing items. Data is received faster, easier, and more accurately.
- Reduced wait time. No one likes waiting and POS systems reduce wait times. Most full-service restaurants have separate food preparation and serving areas. It’s possible to place customer orders in different areas of the restaurant through handheld devices and self-ordering kiosks. Once the orders are placed, they’re automatically received by the kitchen and serving staff through synchronization. This makes order processing quick and efficient.
- Error control. Human errors are reduced with POS systems. No more handwritten orders that cause confusion and lead to poor communication efforts. Restaurant POS integrations lead to less food waste and reduced wait times.
- Loyalty program integration. These programs allow establishments to retain loyal customers, generate sales, and attract new clientele. The POS systems store customer information and make it easy to apply loyalty discounts to the bill and monitor loyalty points.
Why Does a Restaurant Need to Have a POS System?
In order to achieve restaurant success, the establishment must have an excellent location, offer fast and efficient service, as well as excellent food. POS systems also play a role. Standard cash registers are still efficient, but mainly for small businesses with one to three employees. It’s also ideal for businesses with little to no inventory.
Modern POS systems improve daily restaurant operations such as inventory management, ordering, and checkout. Automating and integrating different processes is possible through such software. These processes include timekeeping, employee payroll, and sales reporting. With a POS system, restaurants are able to operate faster and deliver top-notch service.
Aim for Restaurant Success
When it comes to operating a successful restaurant, there are many factors to consider. Start with a thorough business plan and hire the right staff. Follow that with proper cash flow management and the business will be on the right track.
Proper planning and execution will result in long-term restaurant success. It’s also important to always keep customer needs in mind. By doing so, restaurant owners will stay on top of ways to modernize their establishments, processes, and follow trends to improve customer satisfaction.