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How To Run a Restaurant

How To Run a Restaurant

Picture of Nate Lozier

Nate Lozier

This article serves as a overview of many of the key areas of effective restaurant management.

Running a successful restaurant involves far more than a passion for great food. The most successful operators, big and small, also have a keen understanding of the many components of the restaurant industry – marketing, operations, labor, and tech to name a few – staying up to date with current trends. Before we delve into the intricacies of how to run a restaurant, let’s first take a look at the state of the industry today.

Navigating the current economic landscape, two critical factors demand attention: inflation/food costs and rising labor costs. The perpetual ebb and flow of these elements can significantly impact a restaurant’s bottom line. As the cost of goods sold (CoGS) rises, restaurateurs must manage pricing strategies to maintain profitability without compromising on quality.

Meanwhile, labor costs have increased significant in the post-pandemic era, becoming the primary (i.e. highest) overall cost for many opeartors. Evolving labor laws, coupled with the heightened awareness of fair compensation, have led to shifts in the workforce dynamic. Striking the right balance between attracting and retaining skilled staff and managing labor costs requires a nuanced approach. Addressing these challenges head-on is crucial for the sustainable operation of any restaurant.

The relentless march of technology has also made a large impact within the restaurant industry, as operators now spend double the percentage of their gross revenue on tech as they did prior to 2020. The adoption of cutting-edge software has become a defining factor for success. From digital ordering systems to advanced reservation platforms and contactless payment solutions, technology is shaping the way customers experience and interact with restaurants. Navigating this digital landscape is no longer a choice but a necessity for those aiming to thrive in an increasingly tech-driven market.

In this article, we’ll walk through the major components of running a restaurant, investigating the key areas of store operations, labor, accounting, and technology.

Restaurant Management Part I: Store Operations

Restaurant store operations encompass the day-to-day activities essential for running a successful restaurant business. This includes managing inventory, ensuring food quality and safety, overseeing customer service, handling financial transactions, and much more. Effective restaurant store operations involve a seamless integration of various tasks, from procurement to customer experience, aimed at delivering a high-quality dining service while optimizing efficiency and maintaining financial viability.

Restaurant Inventory Management

Food inventory management is a critical aspect of running a successful restaurant. The average restaurant has hundreds to thousands of items in its inventory, and effective management extends far beyond merely counting items on shelves.

These processes include reviewing metrics regularly and leveraging tech tools for precise purchasing. Regular manual counts, daily inventory counts for key items, and daily reviews of CoGS all  contribute to accurate tracking. Recording and addressing waste, educating staff on inventory control, monitoring inventory days on hand, managing shelf life, and using recipe costing and menu engineering tools are crucial components of successful inventory management.

While some operators may attempt to use a point of sale (POS) system for inventory management, it falls short due to its inability to analyze various aspects of inventory, such as loss due to spoilage, spills, preparation errors, customer complaints, or theft. That said, integration between inventory management software and POS is an important step to streamline management of both systems

By consistently reviewing food inventory data, comparing actual versus theoretical usage, and utilizing restaurant reporting software, establishments can not only control but reduce their food costs. Continuous monitoring and analysis of restaurant inventory reports empowers operators to make informed decisions, and ultimately increase their profitability.

Sales & Operational Reporting

Leveraging sales and operational data is a key component of running a successful restaurant. A robust restaurant management solution can provide a number of reports that offer valuable insights to enhance both day-to-day operations and long-term strategies. While some metrics are standard across the industry, others are often neglected but can significantly impact a restaurant’s performance.

Sales reports are foundational, allowing businesses to track performance across multiple locations or over time in a single location. Weekly reviews by location provide a high-level overview, enabling historical performance analysis and immediate feedback for store-level managers.

Food-related operational reports, particularly those related to CoGS, also play a crucial role. Here are some crucial areas of restaurant reporting that should be a recurring task for any restaurant manager.

Restaurant Customer Service & Experience

Exceptional customer service is a cornerstone of restaurant success, and adept managers play a pivotal role in ensuring a positive and memorable dining experience for their customers.

One key aspect of effective customer service management is cultivating a customer-centric culture among the staff. This begins with thorough training sessions that emphasize the importance of attentiveness, responsiveness, and any brand-specific elements.

Soliciting feedback and actively listening to customer concerns are also instrumental in making real-time improvements to service quality. While anecdotal feedback of diners in person is always important, an increasing focus has been placed on online reviews, as review sites have far surpassed word-of-mouth as the avenue in which customers find restaurants.

Moreover, an effective manager (of any business) places emphasis on staff morale and empowerment. This is particularly important in the restaurant industry, where staff turnover is high. Happy and motivated employees aren’t just more likely to deliver exceptional service, but stay with you. Ultimately, restaurant managers who prioritize a customer-first mentality, foster open communication, personalize experiences, and invest in their team’s well-being are well-positioned to navigate the challenges and cultivate a loyal customer base.

GUIDE

How to Reduce Food Cost Percentage In Restaurants

Restaurant Management Part II: Restaurant Labor

Restaurant labor management involves the strategic oversight of staffing resources to ensure optimal operational efficiency and financial sustainability. It encompasses a number of tasks such as staff scheduling, workforce planning, and payroll management, all aimed at balancing labor costs with service demands. Successful restaurant labor management requires a delicate equilibrium, considering factors like employee retention, customer experience, and adherence to labor regulations, ultimately contributing to a harmonious and productive work environment. Leveraging technology for scheduling, time tracking, and performance analysis has become integral to modern labor management practices in the dynamic and competitive restaurant industry.

Restaurant Management Guides

See why more than 40,000 restaurants use Restaurant365

Hiring For Your Restaurant

 In a job market where restaurant candidates have abundant choices, crafting an enticing job posting is crucial. Start by highlighting your unique benefits, such as company culture, career growth opportunities, or diverse workforce, to stand out. Explicitly state salary and benefit details to attract applicants who know what to expect upfront. For roles like servers, provide a range per shift along with included components like wages and tips.

Don’t rely solely on job description templates; modify them to align with your brand. Add personality and uniqueness to your postings to excite potential applicants. Lead with benefits, as this wasn’t always the standard in the past. Craft specific listing headlines using keywords candidates might use in their search, avoiding generic compound headlines.

Diversify where you post your job openings beyond major job boards, leveraging your website’s careers page, QR codes, and social media. Consider investing in hiring platforms for efficiency, as they allow you to post across multiple boards with a single click and streamline the application and onboarding processes.

In the highly competitive hourly labor market, consider text messaging recruitment for speed and convenience. Texts are also responded to more quickly and frequently than calls and emails. Schedule interviews promptly, ideally within 48 hours of receiving an application, as many candidates may accept the first offer they receive.

Lastly, hyper-organize your onboarding process, either through an onboarding solution or a structured manual process. Speed and efficiency are paramount, and digital applicant tracking systems can streamline the transition from candidate to employee without the hassle of paper documents.

Restaurant Training & Onboarding

Onboarding, often perceived as a tedious process, holds immense importance as it shapes the initial experience for both new hires and managers in a restaurant setting. A well-executed onboarding plan extends beyond mere compliance and training, presenting an opportunity to seamlessly integrate employees into the restaurant’s culture and values. It plays a crucial role in enhancing confidence, engagement, and the swift transformation of new hires into productive team members.

To streamline the onboarding process, it’s essential to prioritize paperwork. Creating a comprehensive checklist for new hire documents on the first day, including the offer letter, I-9 Verification of Employment Eligibility, W-4 Tax Withholdings, and other relevant forms, ensures a smooth start. This step helps meet legal requirements while establishing a foundation for a positive onboarding experience.

The employee handbook, often considered a formality, plays a significant role in fostering understanding and cohesion among team members. Beyond outlining policies and procedures, a well-written handbook defines the restaurant’s identity, aligning everyone toward common goals. It serves as a tool to protect the business, ensuring engaged employees and satisfied customers, ultimately contributing to growth.

Introducing the restaurant’s culture is another pivotal aspect of onboarding. Taking the time to articulate the brand’s values and differentiators creates a sense of belonging for employees. When team members grasp the significance of their role within the larger framework of the company’s goals, it fosters connection and commitment.

Initiating the training process is equally important, encompassing various aspects such as technology proficiency, customer service standards, health and safety protocols, and soft skills. Leveraging online learning for these lessons proves to be a convenient and cost-effective approach. A well-structured training program ensures that new hires are equipped with the necessary knowledge and skills to contribute effectively to the restaurant’s operations. In essence, a thoughtful onboarding process sets the stage for employee satisfaction, engagement, and overall success in the restaurant industry.

Restaurant Employee Scheduling

Creating an effective restaurant employee schedule is crucial for the success of your bottom line and great customer service. The process involves managing a number of factors, including staff availability, time-off requests, labor compliance laws, and operational needs that can vary substantially.

Start by understanding labor laws, especially restrictions for certain employees, such as minors. Track time-off requests and usual shifts for consistency. Consider all the roles at your restaurant that need coverage at different times to meet customer demand. Post the schedule well in advance to comply with predictive scheduling laws that allow employees to plan accordingly.

With so many moving parts and parties, many restaurant managers use restaurant scheduling software to automate tasks and streamline the process. This software allows staff to access schedules from anywhere, submit availability, and make shift requests. It also helps managers approve or deny requests and make real-time adjustments, reducing errors and empowering staff.

Employee scheduling software for restaurants also increasingly allows operators to make data-driven decisions for their business. For example, integrating restaurant operations software with sales data to determine the optimal number of employees per shift.

As with sales forecasting, labor forecasting is an equally important to make future predictions. Using historical sales trends alleviates the guess work of what you can expect to sell. Sure, a large party might walk in right at closing and you will need someone to stay late, but typically, your historical trends will be a good indicator of your labor needs.

Restaurant Payroll

Restaurant payroll is a complex process, especially considering the varied compensation structures in the industry, such as salaries, hourly wages, and tips, each governed by different regulations. A restaurant payroll program is essential to simplify these tasks, offering a seamless experience for employees and freeing up resources for management.

Selecting the best restaurant payroll program should address several challenges when it comes to operating a restaurant. Firstly, it should contribute to an improved bottom line by cutting overhead expenses and empowering team members. Enhanced data integrity is essential, with payroll solutions that integrate seamlessly with time tracking, scheduling, and accounting systems, reducing inefficiencies and errors.

The program should also provide enhanced visibility and communication, allowing employees to access schedules, request shifts or time off, and enabling employers to analyze workforce trends to make informed labor spend decisions. Time savings is a significant benefit, as an integrated solution eliminates redundant manual touch points.

Mobility is another key aspect, with the program offering mobile paystubs and payment options through popular consumer apps, catering to the needs of a diverse workforce. Specifically for the restaurant and other tipped industries, tip tracking capabilities ensure compliance with IRS reporting requirements.

As with the other systems restaurant workers use on a daily basis, automated and integrated payroll systems contribute to employee satisfaction. This ease of use also increases retention, building trust and brand advocacy from employees.

Restaurant Management Part III: Restaurant Accounting

Restaurant accounting presents challenges that are distinct from other businesses. While manufacturing may share similarities, the variability in ingredients and menu items makes restaurant accounting a complex process. No two dishes are identical, with slight variations impacting profitability when multiplied by sales volume. The dynamic inventory, subject to rapid changes and limited shelf life, further complicates financial management.

Restaurant accounting requires a specialized approach, transcending traditional accounting methods by investigating key metrics and custom financial reports that are specific to restaurant success. Given the industry’s slim profit margins, many of these metrics focus on reducing controllable expenses, which is imperative to success and growth.

Automated financial reporting, integrated with POS systems, ensures accurate and timely data collection. Daily analysis of balance sheets, profit and loss (P&L) statements, and comparative analyses by location empowers proactive decision-making. Meanwhile, operational reporting focuses on optimizing food and labor spend through real-time access to key performance indicators.

Modern restaurant accounting is essential for overcoming many of the restaurant industry’s unique challenges. Whether you manage your accounting in-house or work with any number of restaurant accounting professionals, embracing technology and leveraging specialized accounting tools can streamline these processes and enhance overall efficiency. These advancements empower businesses to navigate complexities, make informed decisions, and ensure sustained profitability.

Conclusions

The post-pandemic landscape has left an enduring impact on the restaurant industry, reshaping the expectations of both employees and consumer alike. To navigate these changes to the industry and run a successful restaurant, managers and ownership need to be vigilant and up to date on trends that impact their profits and potential for growth.

The pervasive influence of technology in the restaurant industry is undeniable. The adoption of innovative software, encompassing digital ordering, reservation platforms, and contactless payment solutions, is integral to enhancing customer experiences in today’s tech-driven market. Navigating this digital landscape is not merely a choice but a vital necessity for those aspiring to thrive in the evolving restaurant industry.

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