This episode covers the Restaurant Myths that we see that are causing financial damage to so many Restaurants and some of these are killing Restaurants.
These are the show notes for the episode. To get the most out of the episode, listen to the podcast on either iTunes or your favourite Android podcast player. (I use Podcast Addict 🙂 )
This episode covers the Restaurant Myths that we see that are causing financial damage to so many Restaurants and some of these are killing Restaurants.
We’ve discussed myths before, particularly marketing myths in Episode 64 and Episode 65 – Restaurant Marketing Myths. These are the generic Restaurant Myths, not just in Restaurant Marketing, but Restaurants in general.
Have a listen and see if you are falling for one of these myths.
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The Numbers will take care of themselves – No they don’t.
You need to be tracking your Restaurants finances and financial metrics. You can’t just hope to be super busy and make money from that. Most Restaurants are less profitable than they hope, and many make much less money than they think out of each of their menu items. Have a financial plan and work towards executing it.
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The fitout is really important – it’s not more important that everything else.
Too many Restaurants spend all of their startup budget on the fitout, leaving nothing for ongoing costs. What kind of return are you hoping to get on your fitout. It is pretty important to get this right, but there are a lot cheaper, safer and less risky ways of doing this. Restaurant owners spend a lot on fitout because it is a part of the restaurant owners dream. You need to be as hard-headed and practical as the market will be with your Restaurant.
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We’ve worked out the Restaurant opening budget and everything is great – No, it probably isn’t!
You need a significant reserve. If your opening and fitout budget is $200K, you should have a significant bugger. We see blowouts in fitout budgets, delays in council approvals, delays in liquor licensing, dealings in kitchen equipment install and a range of other issues. On top of that, what if the Restaurant gets off to a slow start? You will have no money to build up that loyal core of customers. Many restaurants have a strong first week, but it takes 8 weeks to have a busier week than the first week. If that means losing money, which it normally does, it means that you need that cash buffer to survive.
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Everyone is doing (insert latest trend here) – I should too – No you shouldn’t!
Remember when everyone was using Groupon? So many Restaurants, so of which were already really busy and profitable, signed up with Groupon because they were told that everyone else was doing it. Not every Restaurant is the same, and everyone has a different business plan, different strengths and weaknesses and so doing what everyone else is doing is not a great idea, often for many of the Restaurants doing it. Think and act independently, based on your passion, vision and business plan.
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