Building a successful restaurant goes beyond serving great food and offering stellar service. To ensure ongoing growth and long-term success, it is essential to establish a solid foundation rooted in operational excellence, employee engagement, and sound financial management. Whether you are looking to maintain consistency, adapt to changing trends, or prepare for expansion, each aspect plays a vital role in navigating the challenges of the hospitality industry. By focusing on improving operational systems, understanding market trends, and knowing when to scale, restaurant operators can create a business that thrives today and into the future.
Establishing a Strong Foundation for Ongoing Success
Operational Excellence:
- By now, you should have a good idea of what works and what doesn’t in your restaurant. Take this time to evaluate your systems such as POS software. Operational efficiency is influenced by the systems you put in place for your business. Streamlining your technology can influence workflow and improve revenue. Consider switching to a POS provider like Toast or Square to take advantage of tools and deals that save your restaurant money. A good POS system can optimize your inventory, breaking down the cost of each item to provide a clear picture of how to accurately price your menu. Inventory management is essential to reduce food waste. Other factors to consider are the inclusion of multiple payment methods, table-side ordering methods, and built-in scheduling software.
- Consistency in food quality, service, and atmosphere is a key component of a healthy business. This can come in many forms, including a commitment to a decided standard of cleanliness. Additionally, the layout and overall ambiance of your restaurant cannot be overlooked. Continuing to promote an environment where customers want to return to and evaluating aspects of your operation to note areas to improve.
- Customer experience is built on the importance of creating an exceptional dining experience by collecting and utilizing customer feedback. As your business grows, repeat customers and word-of-mouth marketing are a vital lifeline for a restaurant with big ambitions. Online reviews are just as important, attracting both in-person and virtual traffic to increase engagement with your restaurant.
Employee Engagement:
- Long-term success is built upon a hardworking team. Once open for enough time, operators should take time to audit their employee handbook and training materials. Evaluate where your staff is successful and where they could improve. Consider having a session where you go back over the handbook with your team. Encourage active communication with your team, viewing this session as a “town hall” to express any comments or concerns they may have. Healthy communication is one of the foundational ways to keep a restaurant in check. Fostering a positive workplace culture is paramount in this communication, especially if you plan on expanding.
Financial Management:
- Now that you understand the mechanics of your restaurant, evaluate what is working and what’s not. Are you spending too much on labor each month? Look at what stations you have staffed and when. If your mornings are slow but nights are overcrowded, consider restructuring how many servers you schedule during the day. Work with your hospitality finance expert to determine if you are within your operational margins. Regularly review profits and adjust prices accordingly by working with your accountant to review your P&L and balance sheet.
Adapting to Evolving Trends and Consumer Habits
The Importance of Staying Updated:
- Regularly evaluating market shifts and evolving customer preferences can keep your business afloat in a wavering industry. Identify relevant trends in foods, drinks, and dining experiences such as plant-based, sustainability, and the rise of delivery services. Hospitality accountants like Paperchase can work with clients to identify burgeoning trends. Use these tools to embrace innovation while staying true to your brand.
Technology and Customer Interaction:
- Implement digital tools like online reservations, mobile ordering, and loyalty programs. The hospitality industry, especially QSRs, has entered a period where convenience is a top factor when consumers are considering where to shop. The prevalence of order-ahead interfaces and delivery apps like DoorDash and Uber Eats are a major trend that restaurateurs should take advantage of. According to a poll launched by Square, 85% of business owners plan to invest in technology in 2025.
How to Know When to Expand Your Restaurant
Several factors inform us when it is time for an operator to consider expanding to a new location. From assessing your financial stability to analyzing market demand, it is best to have a team of hospitality finance experts at your side to make the right decisions. Paperchase offers a range of CFO and Fundraising services to help you know when it is time to take your hospitality establishment to the next level. LEARN MORE HERE.
Signs of Success:
- A restaurant is primed for expansion when it experiences steady growth in customer base and revenue. Consistently high cash flow will allow you to manage the operation costs associated with expansion and future investment plans. Your hospitality accountant can help you determine if you have enough capital reserves to cover initial costs and potential unforeseen expenses during the expansion process. Organize all documents that could inform profitability such as your P&L, cash flow statement, and balance sheet.
- Another sign is strong brand recognition and customer loyalty. Does your business have a consistent enough client base open in another part of town? If you are expanding across states, what niche does your restaurant fill in another part of the country?
Market Research and Operational Readiness:
- Complete market research by determining if there’s demand for your concept in other locations. Assessing local competition and market saturation is also essential. Keeping an eye on both global and local economies is a good rule of thumb for any business owner looking to expand.
- Timing is crucial for emerging restaurateurs and certain times of year are more conducive to a move. For example, a restaurant may not have enough cash flow to make a move during a slow season like winter, but summer may also be too busy. Consult with your financial manager to ensure readiness. From here you can develop a scalable model for both physical locations and operational procedures. Follow these tips to avoid overextension and risk, ensuring tangible growth for your restaurant.
The Expansion Process: Managing Growth
Franchising:
- Franchising involves allowing other entrepreneurs (franchisees) to use your brand, systems, and intellectual property in exchange for an initial fee and ongoing royalties or percentage of sales. Essentially, the franchisee operates the restaurant as an independent owner but follows the business model and standards set by the franchisor (the parent company).
- Franchising allows restaurants to expand more quickly because the franchisees provide the capital for opening new locations, reducing the financial burden on the parent company.
- Within the shiny exterior of franchising, there can also be cons, such as a lack of control and dilution of brand identity. While franchising reduces capital requirements, it also involves setting up a robust support system for franchisees, including training, marketing, and ongoing operational support.
Company Owned Locations
- In this model, the restaurant company directly owns and operates the new location, bearing full responsibility for capital investment, operations, and profits. While this is the riskier model of the two, it is often favored by operators who want to keep control of their brand and image.
- Company-owned operations run the challenge of trying to maintain the same quality and customer experience across locations. Additionally, hiring and training new staff to keep consistent across locations can get complicated. Operators should consider working with scheduling software with a streamlined workflow between locations to mitigate discrepancies.
- Managing multiple locations requires streamlining communication and operation across sites as well as balancing oversight with the need for autonomy in each location. This may require creative cash flow strategies such as the established location financing the newer one until it can bolster enough revenue to stand alone.
Conclusion
As the restaurant industry continues to evolve, establishing a strong foundation for operational efficiency, employee engagement, and financial stability will help ensure your restaurant’s continued success. As you continue to expand, embracing technology, refining customer experiences, and carefully considering expansion strategies, can help you stay ahead of the curve and effectively manage growth. Whether you choose franchising or to stay company-owned, it’s critical to assess your business readiness, market demand, and financial capacity before taking the next step. With careful planning, strategic investment, and ongoing evaluation, your restaurant can continue to flourish as you manage your success and meet the demands of both your customers and the dynamic hospitality landscape.
