Industry Standard Best Practices in Restaurant Financing

When it comes to moving your restaurant brand forward, the ability to get financing is typically the make or break factor. Getting lenders and investors to fund your business can be somewhat of an art. It requires being able to have a clear concept of your plan, the ability to illustrate its potential profitability to others, the awareness of potential challenges that may arise as your restaurant expands, and the ability to respond to them. Here is an overview of each of these industry standard best practices in restaurant financing in greater detail.

Have a Clear Concept of Your Overall Strategic Plan

Having a clearly defined strategic plan is a key piece of your overall financing packet. Detail how capital is used, the positions and duties of the team that is required to make it work and the profits and losses that result from the effort.

Make a point of documenting both your short and long term objectives, along with any supporting materials needed to demonstrate that you know what steps are needed to make those objectives a reality. Gather all of your financial statements, your strategic plan and supporting materials together so that everything lenders need to know to make a decision is available to them in an organized, user-friendly fashion.

Illustrate that Single Unit Economics Are Intact

Being able to demonstrate how funding will work at the unit level is an important part of your overall financial plan as well. It’s a good idea to include a case study of single unit economics in your financial documents as supporting evidence. You need to be able to show that your economics are solid and your concept’s likelihood of success is high. Banks want to know what the money they lend you is going toward and what they will be able to expect in return. The more replicable you can demonstrate that your single unit results are, the more attractive your brand will be to lenders and franchisers alike.

Be Aware of Challenges to Your Niche and Long-Term Viability Issues

A final best practice we’ll cover here is the ability to articulate your awareness of potential challenges and long-term viability issues that exist. Challenges to your business could include competition, traffic trends, your ability to promote and price your products successfully, and anything that might go haywire along the way. Challenges to your ability to fulfill your lending agreement will include the potential for interest rate changes, property lease increases or expiration, store remodeling and upgrading requirements, ability to meet loan maturity dates, etc. Lenders need to know that you’re aware of these potential challenges and have a plan in place to deal with them. Think these things through and be able to talk freely about them with your lenders.

In sum, getting financing to expand your restaurant’s brand has a lot to do with coming to them with a clear plan of where you’d like to go, how you’re going to get there and why it will be profitable for them. Ensuring that you have these industry best practices in restaurant financing in place, before you approach lenders, will go a long way toward ensuring the ultimate success of your restaurant’s brand expansion.

Restaurant Best Practices for Email Marketing Engagement

When you consider that 91% of all U.S. consumers use email every single day, and that emails prompt purchases 3 to 1 over social media, there’s no doubt that email marketing remains a powerful tool for restaurant businesses. That said, there’s an art to sending emails that your restaurant customers will actually open. Here are a few tips for creating engagement with your consumers through your email marketing campaign.

Tailor Restaurant Emails to the Individual Customer

The first and most important aspect of a successfully engaging email campaign is making your messages custom-tailored to the specific individual you are messaging. This is more than just including his or her name in the subject line. This customization also includes different messages and layouts based on factors such as age, gender, purchase history, click-through behavior and location. A recent survey reports that segmenting emails increases open rate as much as 39% and decreases unsubscribes by an average of 27%. Today’s email programs make it easy to segment your marketing messages, and given the advantages of doing so, there’s no reason not to include this level of targeted marketing in your email campaign.

Design Your Emails for Mobile & Social Compatibility

A second major factor that makes or breaks customer engagement in terms of emails is whether or not the email is mobile-friendly, easy to use and easy to share on social channels. Avoid large graphics that don’t render well on smartphones—especially if those graphics contain key details of your advertisement. Make your content clear and to the point. If there is action that can be taken (getting the customer to click-through somewhere) ensure that the bugs are worked out, the process you’re asking them to do is seamless and simple and that your message is easy to share with their friends. Even better—offer an additional incentive for sharing the offer with their own contacts.

Analyze Your Metrics to Fine-Tune Your Restaurant’s Email Marketing Campaign

You’ll hear it everywhere you look in the business world: analyze your metrics. Email marketing is no different. The only way you’re going to be able to tell which messages are working for you is to analyze your data. Use the information that you garner to fashion even better, exclusively targeted messages to your customers. Find ways to alter your approach to those segments that aren’t performing as well. Remember that open rates are just the beginning of understanding your numbers. Technology now enables us to follow the effectiveness of our email offers all the way to restaurant visits.

There’s no doubt email marketing can be a great way to drive revenue and customer engagement while having a high return on investment. Ensure that the emails you send are relevant to the consumer and sent at a frequency that makes sense for what you’re offering. Remember that being inundated or bored are the top reasons people leave mailing lists. Keep your messages targeted, timely and valuable to the consumer. Engagement is key to email marketing success.

Transforming Your Good Restaurant into a Successful Business

One of the most common occupational hazards for restaurant owners is getting so caught up in the day to day minutiae of operating their restaurants that they lose sight of the big picture—which should be turning their restaurants into successful businesses. The skills that are required to run a successful business are not the same as those required to run a good restaurant, and it’s for that reason alone that many new restaurant businesses fail. They may have a great idea, but lack the business skills to transform that good restaurant idea into a great business.

Being the “CEO” Vs. the “Employee” Restaurant Owner

One of the biggest reasons that restaurants fail to thrive is that the owner is too busy doing the tasks of an employee to make the strategic decisions required to move the business forward. While the “employee”owner is likely working right alongside his or her staff in the daily restaurant operations, the CEO owner is spending his or her time analyzing data, looking for opportunities to improve efficiency and profitability and implementing operational standards and procedures to ensure that an excellent result can be replicated, every time. What’s more, the employee owner is so intimately involved in the daily decisions and details of the restaurant that its successful operation is dependent on the owner’s presence on premises. The CEO owner strives to use the systems created to allow the restaurant to run independently of his presence without a hitch. Daily operational details are in the hands of capable employees and the owner is free to keep his eye on the big picture of growing a successful business.

Aside from the obvious benefit of being able devote more of your attention to the business aspect of your restaurant when you take the position of being a “CEO Owner,”setting up a self-sustaining system also ensures that your restaurant won’t be totally dependent on you to be there all the time. Translation—you’ll be able to have a life outside the restaurant!

Get to Work “On” the Restaurant, Not “In” It!

There are three main areas that the strategic restaurant owner focuses on to ensure a successful business: operations, financial and marketing. Operations includes all the functions necessary to prep and serve your products to your customers and all of the activities that occur every day in the restaurant. The goal here is to set up systems for standards and procedures that will allow the ordinary people you hire to produce excellent results by having very good systems to follow. Without a system, it’s challenging for staff to create a consistent and predictable experience for your guests over and over again. Consistency and predictability go a long way in the eyes of the public. The benefit of setting up operational standards and procedures that can be replicated perfectly time and again can not be overstated.

The financial area includes dealing with accounting, cash management, cost control and both operational and financial reporting. Marketing and advertising includes general marketing and promotional campaigns, positioning your brand, public relations, community involvement and projecting the right image.

The Possibilities for Growing Your Restaurant Business Are Unending

Again, the point is not to be involved in the day to day operations of these operational areas; the owner’s job needs to be “strategic overlook.” Instead, focus on analyzing your data, looking for opportunities for greater efficiency and profitability and developing systems that will allow those great results to be replicated again and again. With more time to plan the success of your business, you’ll have the opportunity to explore new marketing initiatives, new lines of business, the development of multiple locations, or whatever it is that you want to do to grow your restaurant into a successful and profitable business.

Potential Challenges to Restaurant Operators in 2014

Each year brings a new set of challenges to restaurant operators. While it’s impossible to predict every challenge a business might face, there are some that we can predict with a fair amount of certainty. Here’s the list of potential road bumps for 2014.

Health Care, Hourly Wages, and Garnering Valuable Knowledge Effect Restaurants

The Patient Protection and Affordable Health Care Act, popularly known as “Obamacare,” is set to take full effect in January, 2014. Most analysts are predicting that the act will create a two to four percent increase in costs to businesses with more than 50 employees. If your margin is more than 30 percent, this won’t have much effect, but since the foodservice industry’s average pretax profit is less than five percent, this could cause challenges and a focus on improving your profit margins is going to be critical to success.

The living wage debate flared up strongly in 2013, and is unlikely to go away any time soon. The odds that strikes, demonstrations, and discussions around increasing minimum wage will continue into 2014, is pretty good.

We have a ton of information at our disposal, but sorting what is valuable from what is not can be a major challenge. Vendors who can supply “Big Data” overviews and insights will surpass those who cannot garner such comprehensive information in 2014 and beyond. 

Restaurants must Deal with Increased Commodity Prices and New Consumer Trends

No one can predict how weather and climate change will affect growing conditions in 2014. Commodity prices are always an unpredictable, uncontrollable cost to restaurant operators. You can bet that the prices won’t be dropping though, so the best you can do is make certain that your controllable costs are optimized to give you the best leverage possible in the face of these uncertainties.

How diners are choosing and using foodservice is vastly different than it was even five years ago. There is a new set of expectations involving everything from what consumers want to see on the menu to which devices they can use to interact with your restaurant. Restaurant operators who wish to succeed in 2014 and beyond must keep a keen ear to these new trends and expectations and make regular judgment calls about whether or not to follow suit.

Building Leaders Rather than Employees for the New Age in Restaurants

You can’t predict your company’s future, but you can give it the best chance for success possible by hiring and developing people to be leaders rather than just employees. Picking people based on competencies that were valued ten years ago isn’t going to do much for you now or in the future. To best succeed in 2014, ask yourself what competencies are going to be needed now and in the future and start focusing on hiring and developing your employees into the leaders that they will need to be in this day and age.

Your company will have a better chance for success if you plan for contingencies and educate yourself to make the best choices for your business as possible. Being average is easy, but being awesome takes some work – so make a plan for how you are going to address upcoming challenges and get started now!

Hiring and Recruiting Strategies for Restaurants

In today’s world of employment, restaurants must rely on a combination of both high and low tech strategies to recruit and hire employees. Along with tradition methods of managing, recruiting, and hiring in-house, there are a variety of web-based employment services that can be utilized as well. Some of these offer a full suite of hiring services – from recruiting to onboarding – and use tests and assessment tools to help find your business optimal candidates.

The fact that much of the employee life cycle (from hiring to onboarding to training) can now be digitized ends up saving both time and money while producing higher quality applicants. Here are a few strategies to put into play while looking for that next best employee.

Make Sure Your Restaurant’s Recruiting Materials are Targeted and Compelling

Regardless of what vehicle you’re using to post your hiring opportunity, it’s critical that all of your recruiting materials are targeted towards the demographic you’re seeking to hire. It’s also critical that your recruiting materials are compelling. Focus on using language and visuals that speak to the crowd of prospective employees. The Millennial crowd in particular (those currently around 18-25 years old) are visual learners who are highly dependent on technology to get their information so it makes sense if you are recruiting from this crowd to have materials which speak their language.

For instance, this crowd will respond far better to a headline which says, “Get a job that doesn’t suck,” than they will to one which says, “Start your career today.” Post videos of current employees talking about what it’s like to work with your business, use lots of pictures and visual content, and ensure that the entire application process can be completed electronically.

Utilize Existing Relationships and Social Media Outreach to get Quality Staff

Posting an ad on Craigslist about your hiring opportunity is going to garner a lot of responses, but typically yields very few people who actually follow through and show up for the scheduled interview. A more cost-effective approach to notifying the public about your employment opportunity is to tap into your existing relationships – such as your social media crowd and professional contacts.

Along with posting your opportunity on your own social media pages, ask your industry contacts if you can post on theirs as well. Make friends with HR offices in culinary schools. Offer a “finder’s fee” to anyone who refers an employee who stays on board for at least a month. Using the people and professional contacts in your life to help find employees is often a better approach, because you’re working with people who already have at least some level of vested interest in your business.

Save Time and Money Using Digital Assessments

Along with being able to speed up your own hiring and training process by making it all digitally available, you can save time and money by using digital assessments to pre-screen your applicants. As you well know, an employee’s ability to be successful at their job often has less to do with their work history and more to do with their personality and work ethic.

Fortunately, you can now use online job boards to pre-screen your applicants according to aspects like personality or work ethic, because the vast majority require prospective employees to fill out personality profiles before they can search for jobs. These profiles typically include everything from work history to personality questions and can be very instructive in terms of finding employees that are well suited for your restaurant’s particular work environment.

Confident and Effective Restaurant Management

Effective managerial skills are critical to the overall functionality of your workforce. Managers set the pace and the example for the rest of the staff, and employees very much take their cue from their managers about how to treat their jobs. Managers who are insecure, poor communicators, or who get locked in power struggles end up losing the respect of the employees, which, in turn, affects the quality of the service that they provide.

If you want to ensure that your staff stays motivated and treats their jobs with respect, it’s essential that the skills of the people in management positions are up to par. Fortunately, there are a few easy tips that anyone can keep in mind which will help nip mediocre management in the bud.

Effective Restaurant Management Starts with Confidence

Confidence is more crucial to effective management in the restaurant industry (or anywhere) than a person might think. People who are confident in themselves and their abilities come across as composed, secure, and trustworthy. Managers who exude confidence give their employees a sense of security that they are a person who knows what they are doing and are to be trusted in their directives.

Now granted, even the best of us don’t feel confident all the time, but if you’re in a management position, you at least need to understand how to come across as a confident person. Simple things like making eye contact for instance, or having good posture, positive facial expressions, and a professional appearance can make all the difference in the world in how people perceive you.

Excellent Communication Skills are Essential in Restaurant Managers

Along with confidence, managers also need to have excellent communication skills. They need to be able to give directives without coming across as being overbearing, wimpy, or ignorant of the situation. They need to treat people fairly, be able to communicate clearly and calmly about what is needed, and why and they need to be able to truly listen to and respond to the needs of their wait staff.

Obviously, they also need to be able to think ahead, anticipate situations before they arise, and act to correct any potential issues in a calm, clear, and rational way. Needs are expressed clearly and power struggles are dissolved as employees begin to trust in the equanimity of the manager as well as the fact that their needs are being heard and respected.

Restaurant Managers must Excel at Positive Reinforcement

The final ingredient to truly effective managerial skills is the ability to foster an atmosphere of teamwork and respect among the workforce. Along with having confidence and excellent communication skills, managers achieve this largely by positive reinforcement. They focus on their employees’ strengths and on what they are doing right. They tell their employees how valuable they are to the business and how much they appreciate all that they do for them.

Furthermore, effective managers are problem-solvers. They see every challenge as an opportunity to grow and learn and they keep an attitude that nothing is insurmountable.

Having effective management makes all the difference in how the rest of your staff perceive and respond to their jobs. Confidence, clear communication, and an upbeat, positive attitude are the key ingredients for successful managers in the restaurant world.

Boost Restaurant Employee Morale and Keep Your Team Motivated

In the service and hospitality industry, the attitude and sentiment of your employees is critical to the overall success of your restaurant. If they are unhappy and unmotivated, your turnover rates are going to be high and your diner’s experience is going to be poor.

Understanding this, it’s critical to do everything in your power to boost your employees’ morale and keep them as motivated and happy as possible. The following tips will help nurture a supportive, fun environment which keeps your staff engaged. 

Fostering an Atmosphere of Teamwork in the Restaurant

One of the most critical elements to having motivated employees is encouraging an atmosphere of teamwork in your restaurant. Workers who feel vital to the restaurant’s success stay engaged, whereas those who don’t, won’t. You can encourage involvement by soliciting ideas for improvement, brainstorming on problem solving solutions together, asking for their feedback and ideas, and genuinely listening to what they have to say. Make it a regular practice to quiz new hires on their perspectives, garner feedback from exit interviews, and hold regular meetings in which your employees are allowed to express their feelings and ideas.

Furthermore, it’s important to regularly tell your team what they are doing right rather than only what they can improve on. Focus on their skills and give regular positive reinforcement about how much you value their contribution to your workplace.

Be Consistent, Fair, and Avoid Favoritism with You Restaurant Employees

Another factor that keeps employees motivated and happy lies in your ability to set clear guidelines for what you would like to see out of them, and then be both consistent and fair in the reinforcement of those boundaries. Avoid favoritism at all costs. It only breeds resentment in the rest of your employees because it feels like their efforts are not being recognized.

Everyone needs to be subject to the same rules and dealt with in the same way if those rules are not followed. Be fair, clear, and consistent and your employees will be far more likely to act according to your expectations because they feel treated fairly and they know exactly what to expect.

Create a Supportive and Nurturing Environment in the Workplace

The final ingredient to keeping your employees’ morale high and their turnover low is to create a workplace environment that is both supportive and nurturing. It’s important to recognize that your employees often have a full plate outside of their jobs – whether it be child care, classes, or other work. Being supportive and showing consideration and understanding for these other responsibilities is often all it takes to make your staff go the extra mile for you.

Going the extra mile for them can make a big difference as well. Perhaps you notice that language classes could be helpful or that financial literacy classes could be of use. Orchestrating a class to help improve their lives, for those employees who want it, can be a great way to demonstrate how much you care.

The bottom line is that in order for people to stay engaged and motivated in their jobs, they need to feel respected, heard, and nurtured. Playing on their skills, providing lots of positive reinforcement, and being open to growth and improvement can make all the difference in the world when it comes to creating happy, motivated employees in your restaurant.

New Gluten-Free Standards set to Change Restaurant Offerings

It is estimated that roughly 18 million Americans have a non-celiac, gluten sensitivity while another 2 million have a diagnosis of celiac disease. Add on the growing number of people who are avoiding gluten for various other health-related reasons and it’s no wonder that so many restaurants are making the move to offering gluten-free items on the menu.

‘Gluten-Free’ has Varied Widely from Restaurant to Restaurant

That said, what the term ‘gluten-free’ actually reflects can vary greatly from one restaurant to another, with as much as 90% of restaurant items currently labeled as gluten-free actually containing quite a bit of gluten. Part of the problem is inadvertent cross-contamination. The other part of the problem is that gluten is found in a number of items a person wouldn’t necessarily suspect. As a result, those whose health can be seriously affected by gluten currently can’t trust gluten-free labels or menus.

This safety risk has led the FDA to put out a new rule which requires items voluntarily labeled as gluten-free (or with similar terms such as “no gluten,” “free of gluten,” or “without gluten”) to contain fewer than 20 parts per million of gluten.

The rule was added to the Federal Register on August 5^th, and gives packaged food companies one year to comply with the new standard. Once in effect, restaurateurs will be able to purchase anything with a gluten-free label without having to examine the ingredient list for hidden sources of gluten.

Next Step: Preventing Cross Contamination

Cross contaminating an otherwise gluten-free food in the restaurant is very easy to do and is another area of real concern for those with health issues related to gluten. For example, a gluten-free food cannot be fried in the same oil as foods with gluten; nor can knives, cutting boards, or other food preparation tools be shared. Airborne flour can even be a gluten culprit, meaning that gluten-free foods must be prepped in a sealed area.

Many restaurants are developing company-wide training programs to teach staffers proper food handling and preparation for their gluten-free customers. Some restaurants have even gone so far as to develop a “GF” prefix code for their point-of-sale systems so that employees can follow specific plating instructions and recipes when a gluten-free item rings up.

Education and Alternatives for Restaurants to Meet the Gluten-Free Demand

In some cases, it is simply not feasible for a restaurant to be able to prepare gluten-free foods in the establishment itself. For example, many restaurants don’t have a dedicated fryer for gluten-free items nor the capability to prep gluten-free foods in an area sealed from airborne flour. Some restaurants are working around such problems by simply not offering any gluten-free items that are fried or by purchasing pre-made pizzas, for example, which have been packaged and sealed in a certified gluten-free facility, cooked in the bag, and are opened only by the gluten-free customer.

A number of restaurants have been utilizing the training provided by nutrition consulting groups and advocacy organizations such as the National Foundation for Celiac Awareness to train staff, implement procedures, and find new methods of meeting the gluten-free demand in their establishments. The prevalence of gluten sensitivity is a real issue that has a significant impact on consumer choices. New labeling standards, staff education, and the willingness of restaurateurs to be a part of the solution are making all the difference in the world to the 20 million Americans who need gluten-free options.

Cause Marketing in the Restaurant: Charitable Strategies for Growth

The degree to which a business makes the world a better place has a major impact on the purchasing decisions of its consumers. In fact, research has shown that nearly half of U.S. consumers are already making a monthly purchase from an establishment that supports a cause while 64% say they would switch their loyalties to a similar brand if the company decided to support a cause they care about.

What does this mean for you, the restaurateur? Put simply, doing good is good business and charitable strategies are well worth the time and effort of implementing if you are not already doing so.

The Difference between Philanthropy and Cause Marketing in the Restaurant

Whereas philanthropy is given purely through the desire to do something good in the world without any expectations for return (other than perhaps a ‘thank you’), the goal in cause marketing is to do the most good while simultaneously creating measurable business benefits.

In cause marketing, you build relationships with your customers by supporting causes that both appeal to their values as well as align with the values of your business.

The idea is to build your establishment’s reputation as a business with strong morals and ethics that make your customers and employees feel good about supporting it.

Selecting the Right Cause to get Your Restaurant Behind

Given the high number of donation requests that restaurants get each year, it’s critical to set parameters for giving and charitable participation. Rather than taking a broad-wash approach, restaurants have found it far more valuable to focus on supporting issues which tie to their brand identities, leverage their currently available resources, and appeal to their target audiences.

Providing your customers and employees with the opportunity to select causes that they care about is one way to keep them engaged and involved in your efforts.

Keeping your charitable giving at the local level is another way to ensure that your efforts are maximized and that the results can be easily seen. Focusing on building long-term partnerships with the charities you select is also a savvy approach, and helps your program build momentum and notoriety over time.

The bottom line is that you don’t have to give to anyone and everyone to benefit from the cause marketing model. Instead, focus on building relationships and harnessing the power and energy in your local community by selecting strategic, meaningful causes to get behind.

Keep an Eye on Your Restaurant’s Return on Investment for its Charitable Efforts

Keeping an eye on and being transparent about the success of your charitable efforts is the final ingredient to cause marketing success. Not only do you want to ensure that your efforts are worth the while, but you also want the consumers who have participated in your campaign to see the results of their efforts.

Being transparent about the success or failure of your campaign builds confidence in the integrity of your establishment and allows your followers the opportunity to help you improve your program. This creates a collaborative experience that will continue to build loyalty and participation for years to come.

Everyone likes to feel like they are doing something good and to feel like their money is going towards a worthy cause. There are a number of easy and creative ways that restaurants around the country are utilizing this basic truth to improve their bottom line while simultaneously improving the world we live in.

If you’ve been looking for ways to build your business and inspire people to help you do it, cause marketing is an extremely effective method of doing so.

Creative Ways to Make Your Restaurant Training Stick with Your Employees

When you’re in the restaurant business, having well-trained staff is critical to your establishment’s success. That said, making the training that you provide really stick with your team members can be somewhat of a challenge. Here’s some techniques you can use to help your staff retain the information that they have learned regarding your policies, procedures, and product knowledge, ultimately lowering the cost of training and minimizing costly mistakes.

Training is a Daily Process, Not a One-Time Event

The first thing that is important to recognize is that the most effective training is a daily process, not a one-time event. The human brain can only absorb small amounts of information at a time. Therefore, it is only logical to train your employees with this understanding in mind.  While every employee will still have to undergo some sort of orientation training, finding creative ways to reinforce and strengthen their knowledge on a daily basis will result in staff members who are thoroughly educated on all of the important information that they need to know in order to do their jobs well.

Teach Your Restaurant Team Members Something New Each Time They Clock In

As you are well aware, there is always something new that can be learned about the policies, procedures, and product knowledge pertinent to your restaurant. Therefore, it’s a smart idea to make pre-shift meetings mandatory rather than optional and to teach your employees something new every time they clock in. Hosting such mandatory meetings not only provides an opportunity to further educate your team members on a daily basis, but it also creates a shared learning environment that fosters team work and mutual support. These meetings are also an opportunity to check in with your employees and to keep your finger on the pulse of what is working and what isn’t – allowing you to act on issues before they become problems.

Require Employees to Demonstrate Their Knowledge Each Time They Clock In

One very simple and effective method of ensuring that the training you have provided has been driven home is to test your employees’ knowledge every day. Do this by working with your vendor to configure your clock-in system so that team members have to answer at least two multiple-choice questions correctly before they can even proceed to their positions.  Questions can cover any information you feel they need to know regarding your policies, procedures, or product knowledge. If they don’t answer correctly, they can’t move on to the clock-in screen, simple as that.

Aside from the obvious benefit of reinforcing the training you have provided on a daily basis, this method adds the extended benefit of helping you to identify which employees are worth keeping around and which aren’t. Someone who gets a question wrong time and time again is probably not worth the effort of continued investment!

Using simple methods such as those described above to train your restaurant staff on a regular basis results is employees who are more keyed-in and knowledgeable about the intricacies of your business. Better trained employees result in more satisfying customer experiences which, in turn, translates into higher profits for your restaurant business!