Important Things to Know About the Hospitality Industry Before Opening A Restaurant

Opening a restaurant is often considered a fool’s errand. A dream that is destined to end with a “going out of business” sign. But in your heart, you know it doesn’t have to be that way. Sure, plenty of restaurants fail. But plenty don’t! Who's to say that you can’t find success?

In this article, we take a look at things you need to know about the hospitality industry before you open a restaurant.

Quality Isn’t King

What? You say, mouth hanging open as the cursor drifts toward the exit tab. Hold your horses, cowboy. Quality isn’t king because this isn’t a monarchy. We’re looking at a representative democracy here. You want to make good food, sure, but you also want to structure your menu in a way that maximizes sales while minimizing shrinkage.

Maybe you make the best Tuscan ragu on the planet. It’s possible. You’re happy to spend half a day chopping veggies into rice-like pieces. Sauteeing them in sinful quantities of olive oil until they become tender and gold. Then adding in the meat. The red sauce. The hand made noodles.

But if your customer base wants spaghetti and meatballs straight out of Lady and the Tramp, you’re wasting your time and your money.

Writing your first few menus will definitely be a challenge. You want to make great food, of course, but you also need to write your menus with your target audience in mind. Stephen Kings, The Shining is a great book, sure, but not an excellent bedtime story for your five-year-old. And so it goes with a poorly calibrated menu. It doesn’t matter how good your food is. If it’s not what your customer base wants, you’ll be belly up by the end of the year.

Hack: Incentivize menu feedback. Your customers are also your best source of data. Consider offering small discounts for people who will take online surveys. Not only will this get you feedback, but it will also provide you with a sweet email list you can use later on.

The Customer is (Almost) Always Right

The hospitality industry thrives on (wait for it) hospitality. Sometimes that will mean catering to the demands of difficult and unpleasant people. There’s a value calculation that needs to be made during tense customer exchanges.

Scenario: someone has sent their lasagna back three times, it's overcooked, undercooked, or it's too cold. You’re pretty sure that they are angling for a free meal. What’s more, they’ve wasted three perfectly good servings of food, so no matter what, you’re losing money on this transaction. Do you draw the line or play their dumb little game?

The answer depends not just on how much of an investment you’ve sunk into this particular meal, but also on what it will mean for your reputation to take a firm stance. Disgruntled customers are considerably more chatty than your fans will ultimately be. That’s just a sad fact of life.

If you draw the line, it might have an adverse impact on your reputation worth more than a little pasta. The best solution to this situation will probably be a compromise of sorts. While we regret to inform you that we can not provide any more replacement dishes, tonight’s meal is on us.

You stop the bleeding and hopefully make them happy at the same time.

Grand. I can’t for that. But, I believe you said “almost” always right?

Ah, yes. The almost. In situations where you’re forced to side with either your staff or the patron, it’s almost always best to choose the former. Not if your team member made an egregious error, of course. But let’s say that the lasagna Karen from earlier is taking their frustration out on your server.

Time to show her the door. Not only is it your ethical responsibility to create a safe, comfortable work environment, but it’s also sensible. High turnover is a death sentence for restaurants. Prioritize their well-being, and let their voices be heard to ensure that people will stick around for the long haul.

It’s Tough

No matter what you do, chances are your restaurant’s first year will follow a predictable pattern. You’ll have a strong opening because people want to see what you’ve got. After that, business may taper off a little bit. If your food is good enough, you’ll keep filling tables, but the learning curve and upfront costs are still significant enough to ensure that you won’t be rolling in cash for some time.

Even the best restaurants have very tight margins. That’s why it can take several years for one to become profitable.

Branding and Marketing Will See You Through

Branding and marketing will see you through the storm. Create a community around your food. Use email lists and Facebook groups to reach your customers directly.

Find out what people like about your business. What they don’t like. Use data to grow, to scale. To improve. Stagnation is death so make goals, and use your data, marketing, and branding efforts to reach them.

It can help to have an angle. Something that sets your business apart. Maybe you provide meals for the homeless or prioritize conservation. Maybe you’re farm to table. Maybe you just have half a bunch of fun knick-knacks. It’s up to you to figure out your angle. Just find your brand, and make sure to live it every day.