3 Problems faced by (Sri Lankan) Restaurants and how to fix them

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.

The solution:

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.

The Solution

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.

If you’re keen on driving up sales and building a loyal customer base, and want more details on how to do this, check out how we can help you. Or contact us if you want what we have to offer.

Types of People Who Have No Business Doing Business pt.2

Types of People Who Have No Business Doing Business pt.2

When it comes to business, there are attitudes that win, and then there are those that lose.

This series of posts is dedicated at looking into those that don’t work in a business.

Our last post looked at how it’s important to not be complacent. If a certain business model worked in the past, it doesn’t guarantee success in the future.

In this post we are going to cover another type of attitude that doesn’t belong in business.

There’s an art to cutting costs. But if an expense is going to add value to the overall service, then it’s not a cost. It’s an investment.

Penny wise; pound foolish

Nishad is the owner of Rich Fabrics, a linen supplier. He started the business nearly 4 years ago. Since the leisure industry was booming, he was sure that this would be a success.

Nishad is a one man show, a ‘my way or the highway’ kind of guy. He’s also hardworking. A good fella.

He started out small, and worked his way up to establish Rich Constructions.

Nishad has 2 showroom locations, and employs 8 staff.

Since Nishad is a hard worker, he does all the purchasing, negotiating with the suppliers and clients, and checking the accounts at the end of the day.

He’s very careful with each penny being spent. The business depends on minimizing costs.

The 8 staff are school leavers. The showrooms are minimal. Product brochures were made on MS Word. He took the pictures with his camera phone. Leaflets are printed in black and white. He does all the marketing materials and content work.

The sales staff clean the showrooms when they’re free.

There’s no uniform or formal dress code policy for the staff.

Staff take leave as they see fit. Not all of them come to work on time.

Worst of all, no one stays for more than a year. Rich Fabrics is the place staff come to gain ‘work experience.’

Nishad hires new staff through word of mouth. Vacancy ads are too expensive.

The website hasn’t been updated in quite a while.

The accounting package is MS Excel, and inventory quantities are anyone’s guess.

Nishad has to close shop for a day or two for stocktaking.

Things have been the same for the last 2 years. And try as he might, Nishad is unable to scale the business, to grow it. He feels stuck.

His kids haven’t seen him in days, since he gets home very late, and is out again before first light. His wife is very supportive, but she also urges him to spend more time at home.

Nishad thought of hiring a few more people so he could assign some of his roles and responsibilities. But at this stage, he doesn’t want to do that. Most of all, he was afraid.

There were many competitors and sharing details of his business with staff was a risk he didn’t want to take.

He’d also thought of hiring a consulting firm, who were in the business of fixing the problems people like Nishad have found themselves in. But, he saw it as a cost, as opposed to it being an investment. And he didn’t have the time to get in touch.

So, he went on like this.

Gradually, the accounts and inventory started to look funny. 8 employees became 3.

Then the number of customers and clients began to drop.

New customers weren’t just coming in.

His suppliers don’t answer his calls now. The last shipment of goods from a supplier was 3 months ago.

Clients start to return purchased goods. Something about quality issues.

Who’s to blame here? Why aren’t new customers coming in?

Why aren’t employees staying?

What Nishad doesn’t understand is that without investing in infrastructure, systems or the people to run them, everything is just kanashot. He saw it as a cost to invest in systemizing his business. He saw it as a risk to delegate his tasks and responsibilities to others.

The Point…

Anyone going into business shouldn’t view spending on structuring the business or investing in services/personnel as a cost or expense. If that’s the case, might as well shoot yourself in the foot while you’re at it.

Create a business that adds value, that exudes class, where people come to work not to leave in 6 months. Create a legacy, not just a business. Ant & Bee Stories can you help you do all that and more. Contact us for more details.