How to Turnaround a Struggling Restaurant

To turnaround a failing restaurant or beverage operation, there are many areas that have to be functioning perfectly to make money or in the very least break even.  However, there are two elements in particular that can cause serious financial headaches:

  • Food costs
  • Wage costs

Food Costs

When a menu is designed, the cost of each and every dish must be taken into account.  How much do the raw materials cost?  How long does it take someone to make the dish?  Can the dish be given a selling price that is going to make the correct amount of profit to cover all the other business costs?  Does the dish represent value for money for the guest?

If the menu has been designed with cost and profit in mind, then this is a very good start.  Issues can come when chefs and members of the team start producing the dishes.  Struggling restaurants will find that chefs are perhaps over portioning, throwing food away, allowing food to go off in the fridges due to over ordering, allowing pilfering and so much more.

Food costs must be managed with precision on a daily basis, as it is too late to change anything by the time management accounts are produced half way through the following month.

Turnaround Solution

As restaurant turnaround consultants, we work closely with the owners, chefs and front of house teams to ensure that all the different areas of excessive food costs are controlled.  Simply getting food costs right can turn a restaurant around.

Wage Costs

Every hour counts!  Ensuring you staff your operation efficiently can be a real challenge.  Many operators leave the rota management to new managers or supervisors as it is such a boring, unexciting and tiresome part of running a food and beverage business.  However, the wage costs can very easily get out of control if checks are not made on rotas and the volume of business very carefully forecast.

As with food costs, wage costs need to be managed on a daily basis otherwise by the end of the month as the owner you will have to find funds to pay the staff, due to the revenue not covering the expense.  Ensuring that the right people are on salaries and others are on hourly wages is vital to the success of the business.

Turnaround Solution

At Harris Restaurant Consultants wage costs are the hot topic of the moment with zero hour contracts and the minimum wage being focussed on by the press.  There are some steps that need to be taken to control wages:

  • Forecast sales for a period and clearly understand how much you should be spending on wages per day.
  • Employ a mix of hourly paid and salaried staff.
  • Clearly define the pay structures in the business.
  • Write rotas yourself or in the very least review them before they are published.
  • Employ team members that can multi task.
  • Ensure that the interview and selection process is robust so you get the best possible staff to complete the tasks you need them to.
  • Constantly review the wage cost position.

If these two potential financial drains on a business can be controlled, then the business will most definitely have two strong foundations in place from which to move forward with confidence.

Harris Restaurant Consultants have a team that specialise in restaurant turnaround and rescue.  For an initial review contact us through the website or call on 020 7480 5611.

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For advice about your restaurant please contact Restaurant Consultant Mark Harris

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