Restaurateurs! Listen up!
Here’s 3 problems faced by restaurants in Sri Lanka, and solutions on how to fix them.
Also, these same issues and solutions are applicable to other types of businesses as well. We hope you find this post helpful.
1. Employee Turnover
Employees leave. That’s a given. But what if your employees don’t stay for more than a year or even 6 months?
One way of solving this is to organize and behave like a company. From how you fill a vacant position to how an employee is offboarded, the impression you create about your business is a big factor in hiring and keeping good employees.
Think about it, would you prefer working for a ‘business’ or a ‘company’. When we think of a company, we imagine a nice office with AC, comfortable work space, a nice paycheck, and importantly, we take it seriously.
On the other hand, hear the word ‘business’ and we tend to picture a shop with a ‘mudalali’ type boss, not so comfortable work space, a small salary, and tend to dismiss it entirely.
Your business may have saved a penny with costs, but you’re repelling talented and professional potential employees. And ones already working for you are looking for a place in a ‘company.’
So, how does one go about organizing and behaving like a company?
Start with creating HR policies. It doesn’t have to be anything fancy. Just basic stuff that relate to your employees.
For example, policies should exist for how vacant positions are identified. What are the objectives, responsibilities, qualifications, and outcomes for each position. How are you going to let the world know that you’re hiring? Are you going to advertise it on your website, LinkedIn and topjobs like other companies? Or are you going to spread it through word of mouth?
If you’re advertising, then is there a template for the flyer? Is it professionally done?
For applications, are there procedures to accept applications? Who’s going to do that? What do they need to look for? Who’s going to do the interviews? What questions are going to be asked? What’s qualities are you looking for?
Then, what are the policies and procedures for onboarding?
If your business is seen to be concerned about who is hired and how they are going to be treated, then be sure that your new hires are going to take things seriously. And behave like it’s a company they’re working for.
This is just the tip of the iceberg when sorting out employee retention, for more details of resources management, feel free to contact us.
2. Keeping a healthy margin
More and more businesses are engaging in price competition. While, there are benefits, the pitfalls are more. At Ant & Bee Stories, we believe in cooperation over competition.
Margins are often calculated by the owners like pulling a rabbit out of a hat.
That’ll never fly.
The owner, usually, looks at how much the raw ingredients are going to cost and then adds a price for the finished product based on gut instincts.
This approach may work for a kade mudalali, but not for you.
Try to differentiate your market. If you’re selling coffee, then make it a special type of coffee or offer additional services that are needed by the consumer. The key word here is ‘needed.’ Do a market analysis to find out what drives spending behavior, and see if you can incorporate the finding to your products/services being offered. Avoid being generic at all costs.
A rule of thumb is usually 50% margin. Never less.
50% on the cost of raw materials? Wrong!
50% on price of raw materials + cost of delivery, and other related expenses per item.
For example, if it costs Rs 100 to prepare a dish in your restaurant, check and see if this includes the cost of gas/electricity needed to make it, the cost of condiments used in the dish, etc. And then add the margin on top. The best companies have systemized to the degree that they can calculate the cost of manpower, rent, utilities, etc… for EACH item/service they sell. This is true cost accounting!
If you want to learn more on how to set a healthy margin for your products and services that doesn’t drive up the retail price, please contact us.
3. Dropping Sales
Usually, restaurants open with a big splash. Facebook and Instagram ad campaigns, spreading the word through existing networks of contacts, soliciting reviews, and maybe distributing leaflets are events.
A year or two later, there’s no word about the restaurant. A quick search on Yamu shows that the restaurant has been given a RIP status.
Did you know that it costs five times as much to attract a new customer, than to keep an existing one? The first rule of any business is to retain customers and build a loyal relationship with them, and thereby avoid customer acquisition costs.
Research also shows that Sri Lankans are slow in adopting new trends or products. We love our comfort zone, and God have mercy on whoever tries to take that away.
So, it only makes sense to make sure that once a customer walks in, they keep coming back.
To grow your base of loyal customers, do the following.
Make sure that each time a customer walks in, their experience is the same as the last. The food may be the best, but any inconsistency in the overall experience at your restaurant is a surefire way of losing valuable LOYAL customers.
This is where a lot of factors come to play.
Always make sure the restaurant is clean and tidy. Always.
Your waiting staff cannot be enthusiastic during the beginning of the shift only to be rude towards the end.
Make sure there’s change money. Always. Some restaurant staff are rude if you, the customer, don’t have change.
Make sure your staff are in uniform, and have a standardized way of treating your customers. That way each and everyone on your staff treats your customers the same. This means that even if a ‘star’ employee leaves you’re not handicapped.
The menu should be the least of your concerns. Of course, there should be good food on it. But have you noticed that major chains like McDonalds, KFC, and Subway all have pretty much the same menu over the last few decades.
Sales is primarily to do with the overall customer experience. It needs to be predictable and consistent.
If you want to keep up your sales and even boost it, you have to give your customers the sense of control in the experience you provide.
Your restaurant must demonstrate sensitivity to the impact of this behavior on them.
You must be seen to run the restaurant for them. Not you.
By doing so, you provide the customer with the experience of deciding to return to your restaurant for their own reasons.