Why Do So Many Restaurants Fail in the First Few Years of Operation?

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Management of Food & Beverage operations is not just a game of numbers. It involves so many different aspects of management - from leadership to people management (HR), marketing, financial management and much more. However, according to a frequently cited study by Ohio State University on failed restaurants, 60% do not make it past the first year, and 80% go under within five years of opening. Where is it all going wrong?

Getting a few of the basics right

Knowing who your customer is will determine many of your operational outcomes. Consider how many restaurateurs get the location of their business wrong - why? Because they are not thinking about who their customer is and working back from that. Look at your location from your guest’s point of view in terms of parking, accessibility, visibility and more.

Don’t try and be everything to everyone! Once again, if you know your customer and you know your restaurant’s positioning or offering, you cannot go wrong. Don’t over complicate your menus or keep the same menu going year after year. If you’re a steakhouse restaurant, be a steakhouse restaurant and not a ‘we offer everything’- because you will never keep everyone happy. Be good at what you know and do it brilliantly.

Understand the money aspect - all of it. Keep up to date with pricing changes, know how much money is coming in and how much is going out, know how to control your food cost, how to manage labour costs, rent, budgets, and forecasts. You need to know it all. Whether or not you signed up for a financial role, you’re certainly going to need to know all about the finances if you don’t want your restaurant to fail. It’s no good having a 34% food costs if you’ve let your wage bill skyrocket. Get a handle on each and every financial aspect of your business.

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Manage people properly - your staff are a big asset and they need proper skills training in order to carry out their jobs effectively. Continual training, updating on information, new trends, new skills etc. is what will help your team to stay motivated and interested in what they do. When you fail to invest in your team, your team start to lose interest and focus. Additionally, don’t understaff your restaurant to save money - you’ll end up putting extra pressure on existing staff who will begin to resent that. Hire wisely, staff up correctly and train your team constantly.

Keep your eye on the food - new menus are great and if you’re offering a seasonal twist on a menu or special, chances are, you’re already saving money on your food cost. Whatever food you’re serving, make sure the quality, freshness, and appearance are always excellent and make sure these things are consistently excellent. Being good is one thing, being consistently good is another! Keep ideas simple, ingredients fresh and quality consistent.

Stay on top of operating systems, services for equipment and machines, promotions, social media and reviews…the list is endless. F&B Operations is a tough game - are you prepared to work hard to achieve great results?

Get results with IHS’s Online Campus

IHS’s Online Campus offers an intensive 10-week course: Management of Food and Beverage Operations which examines how the food and beverage operation is planned, implemented, and evaluated. Students learn how to build business through effective marketing strategies, how to satisfy the food quality and nutritional demands of guests, and how to increase profits by maximising service, productivity, and the use of technology.

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Graduates receive the IHS Short Course Certificate as well as an AHLEI award and the course carries credits towards the Higher Certificate in Food and Beverage Management if certain conditions are met. It’s the perfect course to elevate your food and beverage operation skills in any top class F&B establishment.

Having an academic grounding coupled with expert insights into managing F&B operations with confidence can really set you apart in the food and beverage sector. Online study provides flexibility and convenience for F&B personnel who are already working in the industry and wish to improve their skills and knowledge.

If you would like to know more about Food and Beverage Operations, get in touch today by ringing 0861 44 33 00 or email us online@hotelschool.co.za for further information.