The first line is the main line for restaurant business survival !
Updated: Sep 26, 2020
Here i am referring to the first line in an income / Financial statement which is "Revenues".
I have noticed over the years that many Operators / Restaurant owners at a point start experiencing a drop in their revenues and this can be contributed to many reasons but to name three for now (Competition , concept life , inconsistency in service and products delivery ) .
1- Increased competition with many new trendy concepts that speaks the bloggers and social media lovers' language that has taken a big chunk of business from other restaurants that offer simply good food and good service which unfortunately is no longer enough to sustain a business in our days.
2- Concept life , where restaurant experts know that a concept has something called life cycle where after the maturity stage a restaurant , business starts declining .
3- Inconsistency in food and service delivery that can happen due to many reasons , we can name few , one of these reasons is staff turnover , if a company doesn't look after their staff and start having high turnover in back and front of house , this will lead to inconsistency in food preparation as well as inconsistency in service delivery . Another related point as well is when a management decides to replace higher qualified staff members with less qualified if not saying unqualified staff just for the sake of saving salaries and reduce payroll . This will have direct impact on customers loyalty and existing staff motivation who will see the damage that such decisions does to the operation before management feel the impact when it reflects on their financial figures.
Saying all of the above is still not yet my point , which i would like to address in this article but is only the introduction .
When board members / operators / restaurant owners start addressing the declining revenues with their unit heads / staff , often , and before addressing the main issues such as the three points mentioned above , they tend to start looking at other lines in their financial statement such as expenses, cost of sale , staff payrolls and so on and order to start controlling these expenses and bring them in line with industry norms or last year figures at least ,Ok ! until here it is normal that they ask to consider taking such actions ! but Hold on ! as industry expert i can confidentially share that the most difficult part in our business is to keep bringing-in the revenues consistently right ! ? Therefore i can say that operators start to address the expense lines and ask their teams to reduce expenses as much as possible , which might start by menu items substitution or reducing portions that can directly impacts quality and customers satisfaction !
decisions can also go to cutting some of the staff benefits , thinking that this will save some bucks but i can say that this will impact your staff satisfaction !
Also as mentioned in point 3 above , operators start next to consider replacing relatively higher paid staff with less paid or never replace at all in order to make some savings !
As a result all these actions combined will have detrimental impact on the business sooner or later and revenues will even go lower and company starts having cash flow issues and this leads to terminate the business module and closure soon...
At this point i would like to take you back to the title of this article and my main point that i want to address :
As a passionate restaurateur i wish all operators / boards and owners accept to address the most difficult part of improving their business which is to maintain consistent top line and this means that they might need to take some big decisions such as consider : renovation , relocation , updating concept and make it more appealing by possibly invest in technology , make a study of what competition does and try to make even better , just to name some of the tough options that many owners tend to avoid , as mostly, they don't want to invest or inject money once again to help their business , and some prefer to try their luck with the other way as mentioned above which is to consider reducing expenses …,
Therefore, i had to highlight the importance of remaining focused on line 1 which is the line of revenues and is the main and most effective way for business survival , stay focused on top line and rest will come as a natural result of good control and consistent management and happy customers.