Not a lot of people are brave enough to take on the challenge of investing in a restaurant, especially when they realize that about 60% of those investments end up failing. Sure, you’ve done enough studying to minimize the risk of your restaurant business failing, but you’re here now.
Sometimes you feel that your recent struggles are attributed to uncontrollable factors like recessions and bad seasons of the year. Someone you know might also have told you that the first three years of the business is a definite struggle and that everyone goes through it.
But the signs of a failing business are there. You can’t help but think about the possibility of your restaurant closing. Well, you at least must know that not all business endeavors are bound to fail. While the percentage of restaurant failures is high, it is something you can prevent from happening.
Here’s a couple things you can do to save your restaurant business from sinking:
Review the Numbers
One of the signs that you are about to fail in your restaurant business is when you are always juggling funds in your bank account. It means you must find time to revisit your financial performance. You must accept that a failed investment in a restaurant business could be caused by the lack of money coming in and too much of it going out.
What you should do is review your finances. Start by tracking the direction of the sales, the cost of sales, expenses, bills to pay, and others.
Read Customer Opinion
If you have a website and social media presence for your restaurant, it means you have your fair share of feedback and reviews from your customers. If your sales are low, you’ll learn about the reasons why when you read actual reviews. Although some of the feedback might be painful and stressful for you, you should swallow it. You can’t fix things when you don’t know what needs fixing.
You probably already know by now that food costs are a critical factor in the success of a restaurant. You determine profitability based on it. Figure out how much money you’re making on each item on your menu. One probable reason why you’re not making substantial profits is maybe you’re not even aware if you’re charging each meal appropriately. Make sure your POS system has accounting functions and an easy way for staff to enter orders.
You must cost out every meal based on the current prices of your supplier. Be sure you include the cost of producing the dish as well as a substantial profit margin in determining the price of your food. You may never have expected that the only thing preventing you from making money out of your restaurant business is the wrong prices.
There are so many things that may contribute to the failure of your restaurant. But most of them are those you can control or prevent from happening. Aside from a hands-on strategy, you also must pay close attention to your finances. After all, the success of the restaurant business is not all about great tasting food.