Common mistakes made in opening a Restaurant or a Cafe (Part - II)

1) Grand opening to soon

Of all the stores that I have opened, I have always gone with a soft opening approach. What this means is that I like to get my shop in order before I announce to the world "hey come look at me." I have attended meetings with very senior and a lot more educated strategist than I, who all criticise this soft opening approach and hammer home to me the importance of marketing from day one.

These individuals are educated by textbook, and although I understand the power and the importance of marketing, I also understand the timing. Only a Restaurant operations consultant or the staff of a newly opened Restaurant or Cafe can fully understand the mayhem that takes place with the opening of the new establishment.

Although it might be more costly to operate on a lull for a few weeks to sort out teething problems, when I do launch, I will be very sure that my establishment puts on a great performance and sends whatever punters that do come through the door, who I have welcomed, away with tales of success and high standards. Not in relaying a calamity of teething problems. You do not get a second chance to make a first impression. My marketing campaign also starts on day one but my first few clients are my staff whom I need to impress and secondly for them to impress me. Mess it up on day one and a good chance is you won't see these guests again, or any of their friends.

2) Don't focus on what you want or assume you know what other people want

A really simple but often overlooked set of questions to every business owner. Who is my customer and where is my customer?

Don't get bogged down in what you like, because what you like doesn't matter. Once you have decided on your area, conduct focus groups and research to get a sense of what people in your area want, or may not be available. Know your customer.

Alternatively if you have a chosen concept and offer which is unique, be sure you choose an appropriate location to market your product and are aware how much people will spend to have it. Too many times people miss the mark by not following the basics of supply and demand.

3) Location. Location. Location

Not just a term shouted from the rooftops by real estate agent's but an actual golden rule of retail. You will have a general idea and a desire for a location that's on your mind and throughout your search you may find suitable premises but the rent plus outgoings might be a bridge too far for you. This can be a scary moment to commit to signing a lease agreement that could tie you to that premises for upwards of seven years, I can acknowledge that.

I have worked in a two star Michelin Restaurant that was located in a very strange position, down a backstreet laneway, one that you would never dream to look and find. This is obviously a very niche market and can usually attract food enthusiasts on the search for such a dining experience, armed with a food guide or having already researched. Not a leisurely stroll where you are committed to pay such vast amounts for a dining experience. Not your spur of the moment lunch!  With that in mind convenient access and high visibility are critical. To attempt to save money on rent in an average location often results in average turnover and can lead to over extended budgets allocated to advertising in order to get noticed. Of course you must do your due diligence and know that you are paying a reasonable or ' market rent ' per square metre for your location. A little extra spent on rent can ensure turnover, turnover can ensure freshness, maintain consistent staffing levels and increase motivation.

4) Maintaining longevity in staff

Anybody with deep enough pockets can launch a Restaurant or a Cafe and attract staff to work in a new polished environment where the mice have yet to be separated from the men. Although chaotic at times, it will be a honeymoon period for some.

As any Restaurant or Café advisor will tell you. The first few months will be critical and also expensive allowing for overstaffing. When things settle down and you have built a solid client base and you are now operating at appropriate wage percentages, you will be at the mercy of your staff.

This industry tends to have quite a turnover of staff; it's just the type of person it attracts. The trick to your longevity will be consistency and the only way you can maintain consistency, will be with consistent staff.

For this, one must be realistic about your standards and your ability to maintain and govern them. Of course the variables are limitless but it is worth noting that what you launch yourself as, must be maintained. Keep this in mind at the menu development stage.

I have worked at a 3 chef's hatted Restaurant, Restaurant Of The Year and Best New Restaurant only to be followed by the loss of a Chef's Hat and eventual closure. It's demise. Reaching a certain standard and its inability to maintain it.

5) Appealingly to all

‘Jack of all trade's, master of none.’ I have discussed the point of uniqueness in greater detail in a separate blog but it requires mentioning briefly here as a point of concern and a major factor leading to the failure of many new restaurants or cafes.

You cannot appeal to everybody and if you try you will have confused customers and an over complicated kitchen. This will also leave you with no unique identity in the marketplace. It's best to find a gap, or a niche market and then put all your focus and energy into delivering to this space, with undivided attention. Having pages and pages of menu listings and multiple chicken dishes for instance will not allow you to stand out and be noted for your uniqueness and signature items. It will only confuse your customers. Again, know your customer.

At Copper Pantry Restaurant and Cafe Consulting Firm, my aim is to teach you from the mistakes I have made. Please check out my other blogs and drop me a line if you have any queries. Good Luck.


Common mistakes made while running a Restaurant or Cafe (Part - I)

Like any new business venture, many decisions need making. Opening a Restaurant or a Cafe is no different and because there are so many decisions to be made it's not hard to make some mistakes along the way. Here is a Hospitality Consultants Guide and some tips to avoiding common mistakes while opening a Restaurant or a Cafe.

1) Underestimating the finances required. Cash flow management.

It's not enough to have just a dynamic concept and great food. Most restaurants fall behind before the doors even open, so it's vital you plan correctly your budgets and cash flow and have allowances for add-ons.  It's very common for new Restaurant or Cafe owners to inadequately predict start-up costs required and fail to understand that things don't always go as planned. These might include construction delays, design changes and additional costs raised from local inspectors or building authorities.

Other less obvious costs may include licenses, permits, insurance premiums, pre-opening payrolls, bank guarantees and other associated borrowing expenses which are usually missed completely or grossly under estimated. Unless you are experienced in this field it is advisable to seek some experienced professional guidance in identifying and projecting finances required. Even with experience many professionals tend to add up to 15% contingency to allow for overruns which will enable a smooth launch.

2) Entrepreneurial explosions = clouded vision.

It's not enough to have a romantic dream of opening your own Restaurant or Cafe. You will require a clear vision as to your chosen demographic and food style. Also necessary is a realistic mindset in understanding the leadership skills that are required to work to achieve this in a very stressful environment, with long hours, egos and at an often-chaotic pace. Six absolute characteristics you will require are grit, empathy, strong communication skills, integrity, business savvy and finally, some more grit.

 3) A well-founded sales projection.

So let's say you overcome your first hurdle and the doors swing open. What now? It may take time to build your sales and even if your sales take off from day one your labour and food costs could be very high for the first few months as your staff find their feet. Teething problems are a given but run out of cash and you're finished.

A well-founded sales forecast is a must and even then the most professionally run outfits will allow a deficit for up to 2 to 3 months in cash flow. After the Restaurant or Cafe doors open.

4) Documented manuals/systems. Menu consulting/development.

Execute correctly your documents and working manuals and you are at least on track to having a foundation of which to work on.

As well documented in all of my teachings, consistency is the key to success and longevity. On any given day in a successful Restaurant or Cafe there will be thousands of tasks performed. This is the attraction of buying a franchise or license model, even though this requires ongoing expenses, it has a certain element of guidance and consistency, especially for inexperienced operators. What you're hopefully paying for is a well-documented system, which still requires implementation but is a good head start, (with the presumption of course that this model has been proven.) As I always say, to assume, is to make an 'ass', of 'u' and 'me'. Always do your due diligence if considering a franchise or license agreement or use a Restaurant consultant.

If you are not considering this option then think carefully about how you plan to lead a team by a vision solely placed in your head. The longer you operate without carefully documented manuals and guidelines the longer your Restaurant or Cafe will stay stuck in the often chaotic opening phase, a phase you want to put behind you as soon as possible. Failure to plan is a sure plan to fail. Find out more - Menu Consultant Melbourne.

5) Working in the business and not on it.

Managing a Restaurant or Cafe and running a Restaurant or Cafe are two separate tasks. Obviously at the beginning stage you will like and need to be hands-on in training, designing systems, customer service/feed back and overseeing the critical launch phase.

The core of your business is always your product and ensuring the product remains consistent. It is also important to have systems in place to allow you to distance yourself from the hands on tasks like serving tables and helping in the kitchen. Eventually your focus should be more managing the business by monitoring cash flow, planning marketing activities, evaluating your menus, administration, liaising with book keeper for wages and other associated running expenses. If you're doing the menial tasks of the day-to-day running of the business who is working on managing the future success of the business?

At Copper Pantry Restaurant and Café Consulting, my aim is to teach you from the mistakes I have made. Please check out my other blogs and drop me a line if you have any queries. Good Luck.


Uniqueness in your Restaurant or Cafe - A Major factor that contributes to the failure of Hospitality Businesses

Hospitality is a tough business, as any Restaurant or Café advisor will tell you. Everyone knows this, yet everyone looking to get into it also ignores it.

It is a fact that opening a Restaurant or Cafe could be one of the worst investments you could make. That's a big statement coming from someone who works in a Hospitality Consulting. I'm afraid it is the truth. Most restaurants fail.

You might ask then why anyone would want to be in such a business with such a high failure rate. Answer- The rewards, when executed correctly. Just like any other high-risk investment, the rewards are high. If you manage to get the formula correct and open the right kind of restaurant in the right location you could see higher than average profits, some of the more successful establishments, exceeding profits of 30% on sales. This could mean you can pay off your investment quickly and have lots of residual cash flow.

What is this magic formula you might ask? Unfortunately there is no clear answer to that question. Some highly experienced business people struggle in this unique industry and some very talented chefs have also failed due to a complete negligence to understand even the basics of business.

Simply put: Food is just like any other commodity. You buy or produce at a certain price, you then add your touch or not and sell at hopefully, a higher price, allowing for all your expenses in between. And I mean ‘all’ your expenses. Quantifying them, now that’s not so simple. (Refer to my costing blog)

There are many reasons for such a high failure rate in this equation. This blog will concentrate on one. Uniqueness, Or lack of.

You need to provide your customers with a reason to come to you and not spend their hard earned cash with someone else. Your claim to great food great service is not unique. Every other restaurant or cafe owner will make the same claim. Of course great food and service is very important but what will truly allow you to stand out from the rest is to tap into emotion.

50% of every buying decision is driven by emotion.

Think Mercedes, stands for affluence/pride. L’Oreal ageing cream, stands for hope/happiness. Jenny Craig, stands for health/fear. All strengthened by emotional connections.

If you make an emotional connection with your customers you will be remembered long after the pleasures of taste or efficiency. To create nostalgia or be remembered as very accommodating or nurturing, you will create an emotional connection. Your food and service can support a unique selling point, they just will not be the unique selling point.

No product can help to build a meaningful connection without looking at three aspects.

1) Who? It isn't just enough to pick a demographic of let's say 18 to 49 years of age. To emphasise such diversity, this could include, people who have never had sex but also people who could be grandparents. Judging on an emotional front as well as practically, their views about what they eat and the effects it has on their wellbeing are worlds apart.

2) Why? Why will your customer care about your product? It is not enough to announce your hero shots. You must be explaining, or better still demonstrating the effects and the value of your product to your customer. Without showing, you're just talking to your graphic artist.

3) How? How can range from, how does it work, to how does it compare to your competitors. Your customers will often establish a relationship with you by relating it to something they already know.

Lastly, (I cover this in greater detail in my image blog)

Are you effectively communicating your products personality and benefits through your choice of imagery and have you provided a strong enough environment to create an understanding and connection with your customer?

In today's world, visual perfection has become the norm.

We can go deeper in detail and show the effects theatrics could play in your food offer but for now we at least we can plant the seed so you can determine what it is you truly want to be known for. And how you can create an emotional connection with longevity.

At Copper Pantry Restaurant and Café Consulting, my aim is to teach you from the mistakes I have made. Please check out my other blogs and drop me a line if you have any queries. Good Luck.

Best Dishes

Sean McBride

sean@copperpantry.com.au


Food Costing - Menu Development in a Restaurant or Cafe

As any Hospitality consultant  will tell you, in relation to menu development, the secret ingredient for monitoring food cost is consistency. Having a consistent, 'practical system’, which enables you on a weekly basis to match your sales against your cost of goods (' COGS' = Money spent on produce and packaging to service sales.)

Having control over your menu costing and in turn your food cost percentages is a very empowering exercise and an early warning system to alert you to theft or waste.

Many blogs speak of doing a weekly stock take. Although this is the ideal scenario, actually completing this after a busy weekend and many unforeseen issues that may have arisen throughout the week. Physically calculating remaining stock down to the last kilogram on a Sunday night is not very practical in the real world and as such gets neglected or done half heartedly which of course is a Pointless exercise.

Having guidelines of percentages for running a restaurant or a cafe is very important. These percentages can vary however. For example, you might have high wages because preparing most of your food from scratch will result in reducing your food cost percentage but more labour. Or you may have more packaged items bought in and therefore lower your labour costs but a higher COGS. You will need to plan and know what each percentage should be in advance before attempting to truly realise your gross profits, net profits and fixed versus variable expenses.

Therefore, having a system where you can modify each dishes true and current cost on a spreadsheet, is a must for any modern day Restaurant or Café. I always use my costing formulas and at the push of a button can determine my exact, ‘ current market value ‘ menu costing.

Once you have the cost of goods including packaging for your dishes, you can then use a very simple equation to work out what you're selling price needs to be to determine your ideal cost of goods percentage. COGS / .33 will give you a selling price that represents a 33% COGS.

My aim is always 30% but I shall round to 33% to simplify dollar amounts in any equation.

Example: COGS or price of a dish = $5 to prepare (including packaging)
Then 5 / .33 for instance = $15.15. The Sale price required to achieve a 33 % COGS.

To keep track of this system I like to keep a journal (similar to set up below.) It's practical, fast and can easily be transferred at the end of the week to a spreadsheet if required. Pulling out your laptop in the middle of receiving goods is not very practical.

Journal
Date    Supplier name    Inv #    Amount GST

12/3/17    St George        Inv123    $ 110 None

And so forth, each entry, each week. By the end of the week you'll have a Total cost of goods. I also like to keep the items with a GST component in a separate column so the GST component can be allowed for and deducted accordingly. As this is money you can claim back on your quarterly BAS. (Business Activity Statement) so therefore is not a true expense.

Should any unusually large deliveries be received on a given week this can be divided over coming weeks to allow for a realistic COGS figure at the end of each week.

At the end of each trading week once you have a figure for total sales (minus GST of course.) It is then easy to divide your cost of goods by your total sales.

Example: Total sales minus GST = $10,000
(COGS) = $3,300

Cogs / Sales = cost of goods %
Then multiply by 100 and you get 33% cogs in this example.

As previously discussed you should have an ideal figure in percentages for your COGS, wages, rent etc.

Once you have agreed on your ‘ideal’ COGS figure, you can then monitor on a weekly basis and try and stay within a 1% variance of this figure, up or down. Some weeks your food cost might be slightly higher for a variety of reasons but what we are looking at here is an average COGS. If your menu consultant and menu costing is done correctly and your variance is greater than 1% continuously, you know then you have a problem. This could be a change of price in cost of goods received and not accounted for, over-portioning, poor food handling techniques, bad goods receiving procedures, or many other problems, including theft. This way you will know sooner rather than later and it is always easier to address a new problem than a deeply ingrained, old one!

As previously mentioned the ideal scenario is for a weekly stock take covering all items, which can number in the hundreds. That equation would look like this.

Starting inventory + purchases - ending inventory = COGS.

If you are monitoring and documenting each invoice and are able to isolate each week's spend. And you have done your menu costing and continue to hit your ideal COGS then you do not have a problem.

I personally have very strong opinions about treating a restaurant or Café as an investment and showing up each week to empty the safe. The system I mention is a very practical and convenient system for getting a quick snapshot of the figures required. This continuous assessment and some relatively cheap cameras installed for monitoring staff can give you all the answers you need.

How ever, if you are running a business as an investment or you are reading this because you have an ongoing problem regarding sales to profit ratio and don’t know how to address, then you most certainly need to dig deeper and implement a system of stock control, coupled with a correctly costed menu and proper food handling techniques. Possible, but only if executed correctly!

At Copper Pantry Restaurant and Café Consulting, my aim is to teach you from the mistakes I have made. Please check out my other blogs and drop me a line if you have any queries. Good Luck.

Best Dishes

Sean McBride

sean@copperpantry.com.au


Consulting for a Restaurant or Cafe in a CBD location

Complexities of operating in a busy CBD location.

Yes the hours are appealing, early finishes mostly, with no weekends and high volume. But running a Cafe, Salad Bar or Coffee shop in the CBD can be harder than running a quality Restaurant.

Why? Because you would usually hire a semi-qualified Chef or Waiter in a Restaurant, who will hopefully already have been to college or TAFE and hence would have basic food handling, coffee making or front of house skills.

Not to be taken for granted in a Cafe. Your standard CBD location will usually have a narrow window of trade, mainly between 11.30 am and 3pm (slacking off slightly after 2 pm). Unless you have a strong morning trade, most of your takings will be at lunch and as such you will not have a full team on site from early in the day. Maybe a few full time staff in for the long haul, career wise. Because of this you will probably rely more on casual Staff (more on this another day, as knowing what type of casual staff to employ can save you thousands on advertising and staff turnover when hiring the right type of candidate).

Your average casual staff member willing to work a 3 1/2 hour shift for minimum wage, with a possible one hour commute either side- will not come very qualified and unqualified staff in a highly stressful environment handling your food at peak trade is a recipe for disaster. Therefore training, down to the finest detail is very important. Important for your customers in terms of efficiency and consistency but also for your staff, because nobody wants to work in a manic environment. The more control you have, the happier your staff will be and the less likelihood of them leaving. And your customers will like to see familiar faces, it reassures them. This however, requires consistent monitoring.

Also you must make allowance for staffing levels for any variance in trading caused by anything from the seasonality of your offer to the very natural fluctuations the CBD throws up each year at given times. Over staffing is expensive and bad for moral with too many bodies standing around.

This is also why training is so important, a simple task of sweeping the floor can be completed...

(A) Swiftly with minimum interference to productivity allowing for a presentable store to your customer and a good working
environment for your staff.

(B) Not completed at all, allowing your staff to work in a manic, unpresentable unhygienic environment.

Or

(C) Completed any old way, creating more mayhem and looking like a scene from The River Dance with staff jumping around trying to get out of the way of each other and slowing down the whole process of lunch or dinner service.

Again small details but essential to know before attempting to enter this intense narrow window of busy trade. And one that has seen many casualties. You will have a short window to take your money so if you respect your customers valuable time and desires your best to give them your utmost focus and have your house in order during these hours.

This of course is just one example of how a simple task can affect your busy service time.

"It's the little things ..."

At Copper Pantry Restaurant and Café Consulting, my aim is to teach you from the mistakes I have made. You are not the first to attempt this and the answers could be the difference between success and failure.

 

Please check out my other blogs and drop me a line if you have any queries. Good Luck.

 

Best Dishes

Sean McBride

sean@copperpantry.com.au