Hey Hot Potatoes,

Welcome to the latest edition of the Hot Potato Newsletter. This week, we look at the common mistakes restaurants make when opening. Hopefully this knowledge will help improve aspects of your business' performance, whether you are setting up a new business and wanting a strong start, or refining current operations and improving efficiencies.

In today’s email: Common mistakes restaurants make when opening (and how to avoid them).

Location

Source: Tango

The location of your premises plays a big part in determining the success of your business.

Key Points:

1. Footfall: It's important that wherever you decide to locate your establishment, there has to be a steady footfall, which is defined as the number of people entering an area, shop or building in a given time. Footfall can consist of locals living in the area, people working around the area, students or even tourists. A steady stream of people passing your shop increases the likelihood of them converting into customers.

2. Ease of Access: Whilst location is important, another factor to consider is how easily accessible your restaurant or cafe is to the general public. Even if your premise is in a busy area, it might be tucked away and out of sight, making it difficult to be seen and attract walk-in customers. What about getting there? Is parking an option for drivers, and are there good public transport links?

3. Competition: You need to understand whether or not an area is saturated with competitors and if there is a big enough gap in the market for your offering. In an ideal world, you want to be the only one or one of few who are offering the same cuisine or experience. With that being said, competition is not always a bad thing, it confirms there is demand, can encourage you to think out of the box to ensure you stand out and make you strive to be the best at what you do!

Your location has the ability to make or break your brand’s success. It’s important you do your research prior to committing to a site or area; perhaps speak to local property agents to understand if there is already an appetite for what you offer or if competitors are already present. It's worth visiting the area yourself to check it out, and when you do, count how many people walk past you over different hours in the day. You can even compare what a weekday looks like compared to a weekend. This will give you a rough idea on potential footfall. It is also worth considering using a dark kitchen like Karma Kitchen or a pop up venue (appear [here] is a great app to find one) to trial your concept in an area and see how customers react to your offering.

Mismanaging Finances

Source: Orderly/ Oracle

You might have a great concept and offering, however keeping an eye on your outgoings is just as important as tracking your income. Visibility into your finances is key.

Key Points:

1. Complicated Menu: A menu with a wide range of dishes that require a lot of different ingredients can drive up costs. Having a simple menu requires fewer ingredients and means you can benefit from economies of scale, saving on costs and helping your food order forecasting.

2. Menu Pricing: Are you charging customers the right price for your dishes? Being overly generous to your customers and charging too little will eat away at your margins and profit. Alternatively, steep prices can deter diners. You need to find the right balance between your costs and revenue. Does the price on the menu match the quality of food served and the experience your customers get?

3. Staffing: Staff are important but a big overhead in your business. It's important you have enough staff, but are careful not to overhire and increase your overhead costs unnecessarily.

Restaurants are subject to a large number of outgoings, from rent to staff to business rates to utilities and everything in between. It’s a lot to manage. That being said, there are a number of tools you can use to better manage your finances such as Xero and Fyle. A good tip is to make sure you’re always checking to see if you can get a better deal on your suppliers, and a platform like Rekki can help you find new suppliers. If you only need extra staff during peak periods, Stint can help you manage the extra demand.

Poor Training and Operations

Source: Catering Insight

Your staff are an integral part of your business, they are the face of your brand and keep the cogs in the wheel turning. Failing to give them proper training and management support can lead to a detrimental impact on the business.

Key Points:

1. Lack of Training: Without adequate training, your employees can feel lost, unmotivated and service can become very disjointed. This results in a poor customer experience, making it unlikely customers will come back, leaving your staff feeling even more frustrated.

2. Poor Management: Strong, structured and positive management is needed to make sure the ship sails smoothly and in the right direction. To guarantee a high quality customer service is consistently provided, your expectations and standards need to be set from day one. The absence of good and strong management can leave a restaurant feeling very disorganised.

3. Neglect of Operations: Without the right operational structure, tools and processes, a hospitality business can find it hard to navigate effectively. Operations includes anything from staff training, to restaurant management tools (bookings, deliveries, order and stock management etc), to menu design. Fine tuning every aspect of your operations is vital to hospitality success… don’t neglect them!

Having the right structure and support in place for both your staff and operations is essential to building a strong foundation for your restaurant or business. There are tools out there like Attensi that can help deliver different types of training to staff, from onboarding to upskilling to leadership development. I’d also recommend using a tool like Toast as it helps manage all aspects of running the day to day operations, and when you have this nailed, your team is more likely to be aligned, meaning service will run smoothly.

Not Embracing Customer Feedback

Source: Mozrest

The saying "the customer is always right" might not be universally agreed upon, however customer feedback, both positive and negative needs to be heard.

Key Points:

1. Ignoring Reviews: Failing to listen to your customers feedback whether it's positive or negative is a recipe for disaster. How are you supposed to improve if you don’t know what you’re doing well and what you’re doing badly? Make sure you trawl through review platforms like Google and TripAdvisor and keep an eye out for consistent themes or positive reviews that could be used as testimonials.

2. Not Utilising Negative Feedback: Whilst it might be a bitter pill to swallow and a knock to the ego, not taking on board negative feedback won’t help you improve. See it as an opportunity to learn how to be better at what you do.

3. Lack of Data on Your Customers: In this day and age, it's important to know who your customers are and what their needs are too. Capturing feedback from your customers allows you to gather insights and data on them, helping influence future decisions, whether that's menu options, opening hours or making you aware of issues you otherwise wouldn't have noticed e.g. the background music being too loud.

If you don’t listen to customers and take their feedback on board, your customer base will quickly dwindle down, resulting in a loss of repeat business. Make sure you are scanning reviews and responding to both the positive and negative comments so that your customers feel heard. There are many platforms out there like SevenRooms; it is primarily a restaurant reservation platform, but also provides a huge amount of data on your customers. This can allow you to tailor marketing efforts to your clientele and create a far more personalised experience.

Today we’ve explored some of the most common mistakes restaurants and hospitality businesses can make. Hopefully with the knowledge in this edition, you’re wiser on how to avoid them.

Next week we kick off our first ‘Hot Seat’ Edition, where we chat with the founder of a super exciting hospitality brand. We will be hearing about their journey and what they have learnt since joining the hospitality industry.

Thanks for reading and don’t forget to subscribe to stay updated weekly on all things hospitality!

Bon appétit,

Max Shipman, Editor-in-Chief, Hot Potato

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