Owning a restaurant can be a great financial investment. There are a number of benefits to owning a restaurant. You get to provide great food to your community, good restaurants are in high demand, and there is a lot of opportunity for financial success. The first five years are integral to the long-term success of your restaurant. Below you will find the most expensive mistakes for new restaurant owners so you can avoid the common pitfalls.
Most Expensive Mistakes for New Restaurant Owners
There isn’t a shortage of restaurants, but finding a great quality one that stays in business for the long term is rare. Many new restaurant owners make a number of mistakes. Consider the following to ensure your restaurant lasts.
Mistake: Failing to Learn
You should not trust your gut instinct when it comes to the restaurant business. This can be costly and impact the long-term financial health of your business. Avoid this mistake by doing market research to understand the local area. Get to know the preferences and habits of the locals to ensure you meet their needs. Understanding your target audience is integral to your restaurant’s financial health. Many business owners conduct a “SWOT” analysis which breaks down the strengths, weaknesses, threats, and opportunities of your restaurant.
Mistake: Avoiding Customer Service Demands
You have one opportunity to make a first impression. Not only does the food at your restaurant need to be great, but you also need to provide excellent customer service. Customer service includes friendly and attentive staff, a clean and comfortable environment, and fast service. The motto that the customer is always right is imperative as you navigate running your restaurant.
Mistake: Not Being Financially Prepared
You may want to jump right in and just get started. However, it is important to be financially prepared before you open your restaurant. You need a six-month cash reserve before you get started. This should be on top of your startup costs as you’ll need to spend some of your budget on new equipment, marketing, insurance, and licensing (to name just a few!).
Mistake: Failing to Track Your Finances
Failing to adequately track your finances can be fatal for a new restaurant. It is necessary to invest in affordable accounting solutions as it can make a huge difference when it comes to the success of your business. Invoices, salaries, inventory, monthly expenses, and taxes are all necessary business components to track. Choose online restaurant bookkeeping solutions to ensure your expenses are properly tracked.
Mistake: Considering Your Restaurant Location
Convenience and ease are something every customer wants. Thinking that your customers will move mountains to get to your restaurant is a terrible mistake. You need a convenient location with ample parking to ensure that your customer can pull right in for dinner. Consistent customers who regularly visit your establishment are necessary to stay in business for the long haul. Be sure that they can easily get in and out of your restaurant.
Mistake: Failing to Train Your Staff
Training is necessary for everyone from the managerial staff to the receptionist. Understanding the connection between your customers and your staff is integral. Building that rapport can build long-term relationships that can dramatically impact your financial success. Training your staff in their unique position, in addition to the overall policies on providing the best customer experience can help you weed out the good employees from the bad. Hiring the right employees and training them properly is a non-negotiable when it comes to a successful restaurant.
Mistake: You Have to Spend Money to Make Money
Thinking that you have to spend money to make money can be a fatal mistake when it comes to your restaurant. Countless restaurants have gone out of business by spending too much money on something that had little to no return on their investment. Just because something costs you a lot of money does not mean that it will garner you great returns. This is why conducting your SWOT analysis and understanding your local area is necessary. This can help you determine where to allocate your financial assets to ensure that your investments are a success.