In the previous article, the causes and some of the solutions to the “Three-month Death” in the F&B industry were discussed. This time, suggestions will be made for merchants to better manage their own restaurants from three aspects: the lack of sustainability, financial problems, and external factors intervention.
1. Business was Good, but not Sustainable
Business was good but not sustainable, meaning that former customers are not willing to come back. With limited “inlets” for new customers, the lack of repeat business leads to a lack of continuity.
Case 1 : Customers don’t want to come back
Reason 1 : Product problems
Inconsistent taste. Customers were once happy with the taste of your food, but are reluctant to come back because it is inconsistent.
Solution : Solve the problem of consistency of taste in the back. But it should be noted that customers are satisfied with your original taste, and do not completely change the dishes or tastes because of the inconsistency. This is equivalent to starting from zero again and sacrificing all the old customers.
The taste is bad. The business was once good because of good marketing, but customers dislike the taste after trying some and won’t come back a second time.
Solution : Target to improve the taste of some of the original staple dishes/pot bases and develop new staple dishes/pot bases. Make sure not to completely replace the previous main dish – although it is not up to you, people at least have an impression of it. Take the opportunity to launch a new marketing campaign to attract visitors to the restaurant while taking care to lock in customers with top-ups.
Reason 2 : Management issues ①The output rate is not keeping up. The lack of operational management skills directly leads to the restaurant being unable to take on the customers attracted by doing marketing, which leads to all sorts of chaos – not being able to keep up with orders, not being able to keep up with serving, not being able to keep up with clearing tables, and cleaning. There are people queuing in the shop, but several tables are confiscated from the shop…
Solution : Start with solving the management. If the system does not work, improve the system; if the people do not work, set standards; if it still does not work, then change; if the ability to implement does not work, then strengthen the process of supervision
Do not pay attention to the customers’ consumption experience. This results in an empty good taste and good decoration, but customers do not enjoy the corresponding consumption pleasure and the experience, which leads to the customers not wanting to come back again.
Solution : This problem starts with the management to solve. Please add a business awareness called customer experience. There are various ways to do this, but in short, the service should be based o one goal: to make sure that the customer leaves feeling satisfied. Ensuring that aloof the services are treated equally on the surface and differentiated under the table is important to make repeat consumers feel dignified and surprise those who might make a repeat purchase.
Case 2 : Customers don’t want to come back often
The few repeat customers do not come back often enough to support your flow.
Reason 1 : Niche categories and special customer groups
Some categories, by their very nature, do not have a high repurchase frequency.
Solution: If it is the class of the category that causes customers not to come often, you should find a moderate frequency of repeat customers according to your break-even point. If you can’t do it once every two months, try to do it three times a year. Once you have a target, then launch a targeted marketing campaign and try to lock in customers through top-ups.
If it’s because the category is not well accepted by the local customers, it’s hard to change the “unacceptability” of the nearby flow because your restaurant is already open, so it’s advisable to either change the category or stop and quit.
If you must sell a food product that is not popular in the area, it is important to find out the consumption tendency of the surrounding population. For example, young people near universities are generally more likely to try new products.
2. Sudden Death Caused by Financial Problems
Solution: Determine what costs are involved in opening a restaurant and be prepared to fund it.
Shop transfer fee: You know what I mean.
Restaurant rent. The vast majority of restaurants are now rented on a one-to-six basis, so you must have at least seven-month rent ready.
Staff quarters rent. When renting staff quarters, you need to consider the problem of not mixing male and female staff, and generally need to rent two suites to start.
Renovation costs: The more mature the store you take over, the less money you have to spend on renovation. Special reminder: the less time spent on renovation, the earlier the opening time.
Equipment purchase costs: If you are not superstitious, it is recommended to purchase second-hand equipment. There are a number of second-hand markets in provincial capitals, which contain a lot of 90% new catering equipment, all disposed of by catering owners who did not survive the early stages of their business. Spend a couple of days poking around carefully, and you can save up to half the cost of purchasing equipment. Remember to have someone on-site to supervise the seller in case he refurbishes the equipment with junk.
Seasoning purchase costs: The cost of seasoning is easy to overlook, but it’s not a small amount of money for a small business owner. When you join some brands, the buyers will often require a one-time purchase of hundreds of thousands of Malaysian Ringgit in seasoning costs, for example, certain hot pot restaurants will require franchisees to purchase a one-time three-month supply of seasoning. Even if you are opening your own small restaurant, the first seasoning purchase costs may be tens of thousands.
Ingredient procurement costs: According to your own main menu, set aside sufficient ingredient procurement costs, and include the cost of ingredients required for taste testing before opening. The above hard expenses are forgotten by the bosses generally, but the next few expenses, those new bosses should pay extra attention to!
3-to-6-month reserve: As a new restaurant owner with no recognition or industry resources to accumulate, the probability of income in the first few months of a restaurant’s opening will not generate much. And in the most extreme cases, there is basically no income for the first three months.
Therefore, it is important to prepare a reserve of 3-6 months to cover staff salaries, various purchase costs, property fees, utilities, etc. If this money is not prepared in advance, the restaurant will not be able to open once the income does not keep up with the expenses. At the same time, the small owner’s mentality will be affected – after all, no one wants to shell out money that is not in the budget.
Please note that this is the most convenient solution to the so-called “Three-month Death” and is the most straightforward and simple. Leave enough money in reserve for 3 months, and your restaurant won’t die in 3 months!
Publicity and marketing budget: This is used to cover the costs of various marketing channels and media, as well as gifts, discounts, and disguised discounts after opening. In today’s world, it’s almost impossible to save this money, so write it into your budget as well. With this money on hand, your restaurant won’t suddenly close due to financial problems.
3. Instant Collapse Caused by Powerful External Factors Intervention
External factors such as epidemics, street renovations, etc., can’t be resisted. We all call on caterers to practice their “internal skills” to deal with this but to be honest, it’s a waste of time to talk about “internal skills” when a new owner has just opened a new restaurant. Therefore, just try to add a little more consideration to these aspects when choosing a location, as these are, after all, very unlikely black swan theories, so don’t worry too much about them.
Essentially the external causes of man-made disasters, such as health incidents, a mass exodus of employees, etc. are the result of your incompetence as a restaurant owner. Start with the three elements of catering to solve these problems and avoid them from happening again.
If you want to make money in catering, either you have figured out the way of catering and follow the rules, or you are particularly lucky and no matter what you do, the customers will buy it. However, in reality, the majority of restaurant owners have neither, and finally, left the industry with reluctance. So it is best to plan ahead and prevent problems before they happen.