62 – Restaurant Rescue – How to turn around a failing Restaurant Part II

Restaurant Rescue

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Processes

How do your team know what it is that they are meant to be doing and how do you ensure consistency across visits for customers.  Work out where the problems are and create a system around that procedure.  This is a part of winning back more of your time.  There will be less questions for you and less time fixing up mistakes.

Restaurant Business Plan

Lets review the Business Plan that you had before you opened and update it with the reality that is your restaurant.  Look at the numbers and start to think about how you are going to make them work.  Once you identify your current numbers and what you need, that will start to create some of the action steps that you need to take.

KPIs (Key Performance Indicators)

What are the numbers that are important for your Restaurants?  Customer numbers, average check size, food costs, delivery vs pick up orders.  These come out of your Business Plan and help everyone on the team understand how they are tracking.

Finances

You need to understand the finances because if you don’t you are never really going to have control over your restaurant, you’ll never be able to manage it.  What are the levers that you can pull to increase profitability.  Understanding the finances can help you with things like negotiating the lease.

Menu

Your menu is an important sales tool for your Restaurant.  How hard is your menu working?  Have you ever costed the menu?  Too many restaurants don’t cost the menu and go out of business as a consequence.  COST THE MENU!  Do it today.  How many items are on the menu?  How long do they take to prepare?  How much of the throughput of the kitchen do some items take up?  Marketable, costed items that can be prepared quickly are critical to the restaurant.

Marketing

Last but least, marketing.  You need to fix the other issues before you look at the marketing.  If the food is not great, you don’t want more people coming in.  You want your product and experience to be great before you start marketing.  What is the USP, what is your story and how are you telling it?

Have a listen to the low cost and no cost ideas to help you build the restaurant that you always wanted.


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Podcast Transcript on Episode 62 How to Conduct Your Own Restaurant Rescue and Turn Around a Failing Restaurant

JAMES ELING: Last week, we covered off on the audit, writing down the things that you think are the problems going through and having a look at the appearance of the place. We talked quickly about the appearance of the restaurant. We talked about the culture and the team. In this episode, we’re going to delve into a few more tangible issues that you probably have got in your restaurant.

(LISTEN: Episode 61: Restaurant Rescue – How to Turn Around a Failing Restaurant)

Remember, as you go through this restaurant rescue process what you’re looking for is the low-hanging fruit. What are the biggest problems that you’ve got that you can solve in the easiest way? They’re the ones that can start to give you a bit of time back they’re going to start to save you a bit of money. It’s the time and money–they’re the resources that you need to be able to get more time and more money to be able to build the restaurant that you’ve always wanted.

Processes – procedure-alise them!

So, the next one is the processes and systems. We’ve built a really strong culture. We’ve built a really strong team, but do they know what it is that they’re meant to be doing? Do they have processes in place? Do you have a standard way of preparing a meal? Do you have a standard way of serving it up? Do you have a standard way of taking an order? Do you have a standard way of opening the restaurant up and closing it down, of doing the accounting, of managing the inventory?

 What are those processes and does everyone know it? This is a really fundamental part of the equation for your restaurant. Because a lot of the time when people don’t know what they’re doing, they’re going to ask the boss and you’re the boss. That means there’s someone is encroaching on your time. You haven’t told them a clear way that they should be doing their job.

In a well-managed restaurant, you’ll often see a checklist. When you’re closing up, do this and this. If you are preparing this meal, this is what it’s supposed to look like, here is the recipe list. Well-run restaurants have all of that sort of information in there.

What’s the easiest thing to that’s getting screwed up the most often? For a lot of restaurant owners, it’s closing up shop at the end of the day. It might be because they have lots of issues with people closing up at night. That’s why it’s only the restaurant owner who closes up. Procedure-alise that. Go ahead and write down everything that you need to do when you are closing up. That means that you can then get someone who you can trust, give them that list and they will do a good job of closing up for you. That’s one less thing that’s on your plate–one less monkey on your shoulder.

Have a think about the systems and procedures that you’ve got. This permeates the whole business. It’s going to be part of your onboarding process for staff. It’s going to be part of the KPIs. It’s going to go into the accounting for the business. [It’s] Really important to start getting some procedures and systems in place–and staff love it. They find it a lot easier to work in a restaurant that’s well procedure-alised because everyone knows what it is they are meant to be doing.

Restaurant Business Plan

The next area that we’re going to stop at is a pretty important one and that is your business plan. You do have a business plan, don’t you? I hope you do. You should have had a business plan. Your business plan is going to cover a whole heap of things and a lot of it is going to be metric-based.

So, we are going to have a hundred people on average, a hundred a night and they’re going to come in and they’re going to spend $25. That gives us $2500 day. Our food cost is going to be 34%, our labor cost is going to be 30%, and our overhead is going to be 30%.

  • Do you have that kind of spreadsheet kind of capability there?
  • What is your unique selling proposition?
  • What is it that’s going to get the people in?
  • What is the marketing plan?

You should have a marketing plan as a part of your business plan.  We’re more focused on the big numbers–we’re going to get this many people in. How are you going to attract staff?  Do you offer delivery? Do you offer take-out only?

As you look around the restaurant today and you see the number of chairs you need to be thinking–is this achievable? If it’s not achievable, the beautiful thing about the planning process is that if you now know it’s not achievable, you need to change one of those things. We need to start coming up with a menu that’s going to allow us to turn the tables three times or we need to increase the prices or we need to decrease our labor cost. What are the inputs in that?  We’re going to spend quite a bit of time as we talk about how to come up with a business plan because so many people miss the components that you need to be having in there.

Where are you going to be sourcing the ingredients from? Where are you going to store it all? How many days inventory are you going to have? These boring questions, they start to impact on things like, what happens in the kitchen which can be really important. [I’m] Just saying it’s a restaurant after all. People who have gone in and then they’ve realized after we opened. We realized we didn’t have enough fresh spice so we can’t do the kind of things that we wanted to do. [I] Should’ve had a business plan. [I] should’ve thought about that before you actually signed the lease.

Now, we’re doing a restaurant rescue. You want to be having a look at the business plan because you’re obviously going to change your business plan to what it is that you’ve got. I think that that’s one of those things that you need to start thinking about. But it’s going to give you some ideas about the kind of numbers that you need to be hitting.

KPIs (Key Performance Indicators)

So, the next thing that we want to be looking at is the KPIs. What are the important KPIs for your restaurant? Too many restaurants don’t know the number of people they need to get in just to cover costs. They don’t know what it is. I think that this is really scary. When you start to have KPIs then you’re going to start working towards those KPIs. “Wow! We need to get this many people in this week. We’re never going to get that many people in.” Well you need to do some marketing or we need to have our food costs of this. But look at how much stuff we’re throwing out. My God! Look at how much stuff we’re throwing out. Okay, now you’re going to start thinking about waste, what are the tactics you can use to start decreasing waste?

A very simple thing that we’ve seen work really well for some restaurants is to offer discounts for pick-up over delivery. If you’re doing the deliveries yourself, everyone knows what a big pain that is. In your business plan this is one of those things, we’re going to have delivery drivers who are going to do X number of deliveries blah, blah, blah. Everyone can see it’s painfully obvious that a pick-up order is so much more profitable than a delivery order. So, you want to be driving people for take-out. Have you thought about that? Do you offer some sort of incentive? Because places like Domino’s, they have massive incentives to get you to go and pick up the pizza from them rather than make them come out and deliver to you. These are the kind of questions that your business plan is going to start asking. And the thing I think is really interesting about your business plan in the process of a restaurant rescue.

Look, a lot of people I’ve sat down with people and we’ll have lunch and we’ll say right, okay, let’s just go over the business plan. And you’re sitting there, the business plan, it’s either a one-pager or, it’s even worse, it’s just nothing. You know what’s awesome, let’s do the business plan now. When you do the business plan before you take over the restaurant it’s all pie in the sky stuff–it’s all made up. The beautiful thing now, though, that you’re going to know you’re going to know what the revenue is. You’re going to know maybe how many people are coming in every day. You’re going to know what your food costs are. You’re going to know how efficient your staff are. You have some really concrete information that you can use to start looking at the business plan. It’s about constructing that business plan because then you can look at it and go right this is where we have a problem.

Finances

Now, this leads us on to the finances. You really need to understand the P and L (profit and losses) now. You need to understand the impact on the P and L of various issues. What is this system of receiving food into the freezer? When you get a delivery what is that process? How often do you run a stock take? Now, if you don’t have that process then, there are a lot of restaurants out there who have never run a stock take and they’ve got multiple people going into the pantry. Multiple people who may or may not be lifting all sorts of interesting culinary items. God forbid! You’ve got a bar with hard liquor, how many of those bottles are walking out of the place, who knows? We’re not doing any inventory. We’re not doing the stock take. This could be problem number one.

So, we go back, we look at the processes for our stock take then you start plugging those number into your profit and loss. You need to really understand this. I think that this is a fundamental part. We’re going to spend a bit of time on finances as well. I really want to increase the financial literacy of restaurant owners because I think it can really be powerful. Once you can understand the levers that you can pull, like, do we really need that extra person on the shift today? What are the things that we can do to manage our food costs better? Can we go out and negotiate with our landlord, and say, “Look things are really tight, maybe we don’t want to see the next 3% increase.” And I’m starting to see people who are negotiating rent decreases because the landlord knows that if you walk out he might go 18 months without any rent. So, for him a 10% decrease in rent, that might really help him. You might want to have a listen to our episode with Robbie Doyle on leasing tactics because there’s a few things in there.

Menu

Now the next thing that we want to look at is the menu. The menu, this is a multi-faceted approach. So, the first thing that we’re going to talk about when it comes to the menu is: Does it appeal to people? Is this something that’s Instagrammable? What is there that when you’re reading through the menu, so, someone is either out the front or they’re on their website and they’re reading through the menu and they’re going to go, “Oh, wow! Get out of here I’ve got to eat that tonight. This is where I’m going.” I’m going to eat there the food looks so much more appealing there. So, you need a couple of those items in there that are going to really draw people in there.

Now, the next thing is, you’ve costed your menu, haven’t you? No, we’re running a restaurant rescue, so obviously not. Cost your damn menu! People are happy to pay money if the food is good. The important thing is if you increase your prices by 20% all of that flows through to the bottom line. So, it can make a massive difference to the profit. Have a think about that and make sure you cost it.

Now the next thing that we want to think about with the menu is, how does it actually go? What is the impact on the business of the menu? So, how many items do you have across the menu that you need to keep? How long will they sit on, in the fridge for or how long will they sit in the freezer for or how long will they sit on the shelf for? What is the shelf life for? What is the wastage of them? How many of them can you prepare in advance, so that you can smash them out? What is the velocity through the kitchen of these menu items?

The worst thing that you can do is drive a whole heap of people into a restaurant that hasn’t been rescued. So, and you see this in bar rescue, they have these stress tests, you don’t want to be doing the stress tests until you’ve got everything. And you know they always fail in those stress tests. “Oh well, we need more training, we need more of this, we need more of that.” What you want to be doing is going through making those small changes and leave marketing ’till last. Unless of course the worst thing that you’ve got is marketing.

If you do have some great processes, if you are making money out of every customer who comes in, you just don’t have enough of them, then of course start with marketing. Run a Facebook campaign, get a website do all of the basic marketing things but when you get to the marketing in last, start having to think what is your process. We’re coming back to processes, what is the process around your Facebook marketing? If you’ve got a strong culture and you’ve got a good process then you’ll be able to delegate the Facebook marketing to a lot of people. Now, they may not all have access to the company credit card that does the ads but they’ll be able to put up some pretty cool content.

Your website, have a look at your website.

  • Have you got the Facebook Pixel in there?
  • Are you running WordPress?
  • Have you got Yoast installed?
  • Have you thought about the niche?
  • Have you thought about your ISP?
  • Are you targeting all of the keywords that you need to be targeting?
  • Have you got a booking system that’s going to collect your emails?
  • How often do you send emails?
  • How many contacts have you got in your emails?
  • How many people are in your Facebook Pixel group?
  • What are your go-to marketing strategies when it’s really quiet?

So, there are a few things in there that you can be thinking about that from a marketing point of view. You can really get some easy wins on the board. This is why the things that we find that are really, really quite cool is when someone comes to you and you know that they’ve got a good product then you can really start smashing out some effective marketing. You want to start early unless it’s completely desperate you want to build up to it. Because sometimes it takes a little bit of time to work out what’s going to resonate with your target audience. What is the meal that they’re most interested in? And sometimes, getting the ingredients for the secret sauce that can take a little bit of time. You don’t want to be leaving your marketing to the last minute. You don’t want to be spending all of your marketing budget in the first thing as you’re doing that restaurant rescue.

On the bus, one question that I would ask is, everyone that you’ve got in your team would you rehire them all today if you had to? Because if you wouldn’t rehire all of them, there’s probably some things you want to work on.

Have you thought about your vision? What is it you want to do about your restaurant? We talk about the vision thing from a culture point of view. What are the values that you want to share then you can start hiring for those people? When you’ve got your culture right you can start really building a really strong team, making sure that you’ve got the right people. Making sure that you’re giving them the skills and the training that they need to be able to do their job. Have you got the processes in place to enable the team to be able to do their job? Processes and systems, makes it really easy for them to make it replicate-able. I don’t want to come along and have a dish one day that’s absolutely magnificent and then awful the next time. That’s because you’ve got two different chefs preparing it two different ways. It just sends a really random message and it’s going to make it difficult for you to retain long term customers.

Have a think about your business plan. Can you make your business plan work? When you start to think about the business plan this is when you’re going to start thinking, “Maybe I should just pull the pin.” Maybe it’s time to walk away if you’ve got too many things against you. Like if you’ve got a really big culture problem and if you’ve got no systems whatsoever. You’re looking at the business plan and you’re going to have to go from apparently bringing in on every job for the five nights that you’re open. City people and your figures are saying it needs to be a hundred and thirty. Maybe you’re thinking I’m just not going to be able to do it. You might, sure you might. Have six months’ worth of runway left to be able to stomp up those losses. Would you be better off just walking away now and keeping that money? It’s something to think about.

The KPIs: What are the key performance indicators in the business that you want to be working on? How many people do you need to get in? What food costs are you going to be aiming for? Lots of things to think about with that. That will feed into the finance. You’ve got to understand you’re paying now each of the line items there. Start going through them. Start trying to take control of those line items and getting an understanding of the levers that you can pull that are going to affect the profit and loss of your business.

Then we talked about the menu. Menu is so important. I keep saying it’s [the menu] one of your main sales people. So, you need to be thinking about things like the marketability of the items on the menu. The profitability of them, make sure you’ve got them costed. The throughput in the kitchen and the inventory that you need to keep creating the menu that you’ve got. Some restaurants have way too many items on the menu. It’s one of the things when people come in a restaurant consult the first things they do is going to cull menu items to make it easier on the kitchen, easier on inventory and easier to market.

Then lastly, we think about marketing. I think it’s really important that you understand that people aren’t just going to walk into your restaurant and go, “Wow, this is the best place ever!” And they’re going to tell all their friends all about it–that really never happens. You need to be thinking really hard about what it is that makes you unique and how you’re going to tell that story. What is the story of your restaurant? 

Let’s go all the way back to culture. What is it that you’re trying to do? You started this restaurant with a specific goal in place. To be the best family restaurant in the town because you’ve got a family and you’re really passionate about that and you want to be a place where people are going to bring their family. Some time off for the moms, a place for the kids to run around and enjoy themselves and these are the five things that you do to make this really the best family place in town. That marketing message really does resonate.

When we talk about marketing really all of these is what your story and how are you going to tell it? That’s the thing I think makes a really big difference. It’s really hard if you don’t have a story to be able to try and create one. And you see that with a lot of restaurants they’re trying to be something that they aren’t really. It’s hard to tell that story. As I mentioned at the start of the previous podcast. I know that there’s a lot of people who are in this spot and it’s a pretty dark and horrible place. It is a lot of work to turn some restaurants around. Go back to what it was that you wanted to do when you opened the restaurant and if you can still see that little tiny bit of that pin prick of light at the end of the tunnel, just go for it.

We’re going to go through and we’re going to delve into each of these steps over the next course of the podcast. We’re going to bring out, we’re going to get some experts in who can help you with each of these areas so that you’ll be able to really get an understanding of how you’re going to build a really good culture. How you’re going to build a recurrent team? How you’re going to put processes in place? Hang in there, it’s tough but there’s a lot of people out there who are in the exact same boat as you. All of the time you can turn around I think the biggest thing is that you’ve got to accept the fact that your restaurant is failing. I think that’s a really difficult thing for most people to do. To realize that fundamentally they are failing at something but it’s the first step in really turning it around.

If you are having problems, feel free to hit us up on Facebook and LinkedIn. We’ve been getting a lot of people talking to us on LinkedIn. I’m doing product support over LinkedIn, had some bugs popup in one of our products, we’re getting some support requests from LinkedIn which is awesome so thank you for that. But yeah, happy to continue the conversation in a one on one manner because I think it’s really important this is what we’re here to do. We’re here to build the restaurant you always wanted to build.

That’s about it. So, I hope you have a really busy day and we’ll talk to you soon. Bye.

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