Challenges when operating your restaurant

Challenges when operating your restaurant

Opening a new restaurant, especially if it has been a life-long dream, can be very exciting. However, operating your restaurant doesn't come without its challenges. Low barriers to entry characterize the restaurant industry, so at any given moment, anyone can enter the market, making it highly competitive. According to research, a staggering 60% of new businesses fail within the first year, and only 20% make it past the five-year mark.

So as a restaurateur, how can you ensure that your restaurant business will be amongst the successful ones? To help you out, we have collected below the five main challenges you may face when operating your restaurant.

Challenge #1 – Capital

challenges operate restaurant

One of the main challenges facing restaurateurs is the lack of capital since most new restaurants do not create enough profit within the first year. Enough money is needed so that your restaurant can fully establish itself and to cover potential leasing costs, hiring staff, buying inventory, machines, and furniture - the list goes on. A good rule of thumb is to have enough money to run for one year while also having a rainy day fund to be able to cope with unexpected costs. If you are starting your restaurant with an opening loan, it is essential to be frugal with the money, so that it can last you as long as possible, and safeguard your restaurant's success during inception.

Challenge #2 – Management

Having the right management skills is crucial to operating a restaurant smoothly and profitably. A restaurant manager, whether externally hired or the owner will need to know how to analyze their business and keep track of day-to-day operations such as sticking to budgets, tracking sales goals, and inventory-related tasks. Some key qualities of a good manager are to be organised, responsive, as well as having excellent communication skills to give clear directions to staff and set a good example. Having a clear structure within your restaurant and delegating roles so that each employee is aware of their tasks and responsibilities will make managing the business more organized.

Challenge #3 – Unique Selling Point (USP)

challenges operate restaurant

A Unique Selling point is a feature of a product or service that distinguishes your restaurant from your competitors and makes it more appealing. Offering delicious food and excellent service is not enough in the highly competitive restaurant industry as these are only meeting your customers' expectations. Customers need to know why they should specifically choose to come to eat at your restaurant and not the one next door. What is unique about your customer experience? Perhaps it is the romantic atmosphere or speedy service you offer.

Challenge #4 - Hiring and Training Staff

challenges operate restaurant

The restaurant industry is known for its high employee turnover rate, yet finding the right employees who are trustworthy, proactive, and reliable is crucial for your restaurant's success. The quality of customer service, the overall customer experience, as well as securing loyal customers rely heavily on having the right staff. A well-planned process of finding and training staff will reduce costs over time. Training your staff regularly and giving them the necessary tools to deal with difficult and unexpected situations is crucial. It is also important to inspire them so that they align with your restaurant's brand vision and unique concept, as they are at the forefront of delivering your restaurant's customer experience.

Challenge #5 - Marketing

challenges operate restaurant

Today's world is increasingly online, and your customers are spending a large amount of their time scrolling through social media channels such as Instagram, Twitter, Facebook, and other websites. It is necessary as a business to be where your customers are hanging out, therefore having a good marketing plan in place is crucial. For starters, an appealing and responsive website can drive customers toward your restaurant. Check out our post for best website designs.

In addition, to engage more with customers, you can share their pictures from your restaurant on your social media. Leverage their user-generated content from your restaurant as it is an excellent marketing method, and, what's best, it is entirely free of charge - remember to credit the source though. Last but not least, listening to and responding to customer feedback and online reviews of your restaurant can boost your business. By showing existing as well as potential customers that you value them and are willing to consider their feedback, you are well on your road to creating a loyal customer base.

These are just a few of the main challenges prospective restaurant owners may face when setting up their business. By being aware and prepared will set you well ahead of the game, and as a result, you will be on your way to running a successful restaurant. Are you a restaurateur and have experienced other challenges that we didn't mention? We'd love to hear your experiences in the comments below.

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