Restaurant Rescue: 4 tips for flipping a failing restaurant

Feb. 7, 2013

By Jared Isaacman, CEO of Harbortouch

We’ve all seen the restaurant rescue shows like Restaurant: Impossible, Bar Rescue and Kitchen Nightmares that help restaurants resurrect their failing eatery, get out of debt and revamp to revive profitability. Not every restaurant, however, has the luxury or good fortune of being selected for an upgrade and saved from failure by one of these so-called “reality” shows.

It’s a common mantra that supposedly 90 percent of restaurants fail in their first year. But in reality, the rate is more like 25 percent in the first year. It’s no secret that the restaurant business is one of the toughest. But, regardless of the failure rate, the burning question for most restaurateurs is simply, “How do I avoid it?” While poor planning, lousy location and a host of other factors can cause a restaurant to decline quickly, inefficient processes and a lack of appropriate equipment can be equally as devastating.

If your establishment is struggling, despite a terrific location, exciting concept, appealing menu and outstanding quality of food and service, perhaps it’s time to take a serious look at how your systems operate. Unlike the complete overhaul demonstrated by the “reality” shows, most operational problems can be corrected with a series of small and entirely affordable improvements that can make a major difference. Here are a few:

1. Look for bottom-line savings at every turn. While you certainly don’t want to cut corners or compromise on product or service, there may be a number of ways to streamline operational efficiency to save money. Are servers wasting time by handwriting and then manually relaying orders to the kitchen? Are employees taking advantage of free food and drinks or fudging their hours? Do you know which items are best-sellers so that you can be prepared for peaks in demand? Implementing better workflows and more efficient ways of handling order entry, inventory, menus and employees can save time and reduce costs, resulting in better sales and higher profit margin.

2. Get a handle on employees. Servers and kitchen staff are the lifeblood of any restaurant. Without committed, honest and hardworking staff, the owner or manager could never do it alone. But, managing the payroll and HR paperwork can be a time-consuming burden. Tracking and verifying hours, maintaining appropriate discount programs and even training can be a chore. Streamline employee management and tracking with an electronic system that saves time, ensures accuracy and provides a secure, verifiable way to record employee activities. The most efficient systems securely incorporate time clock punch in/punch out features with hour tracking, payroll, incentives earned and other HR data.

3. What’s in your storeroom? Having the supplies you need, when you need them is critical to ensure availability of product and satisfied customers. “Running out” should never be an option. But, inventory management can be a challenge, especially if kitchen staff – those largely responsible for using up inventory – are not in close communication with management, who is often tasked with dealing with vendors and reordering. Electronic inventory management systems can eliminate low stock problems, ensure you always have what you need and when you need it, and reduce the amount of unused product that sits idly on the shelf, wasting space, until it finally expires and must be disposed of. An electronic inventory system ensures accuracy, saves time and reduces waste—all of which add up to big bottom-line savings.

4. Is your POS system up to snuff? At many restaurants, the checkout process looks like a tennis match, with staff bouncing from a cash register to a separate credit/debit card swipe machine and back again. Not only does this take extra time, but it also creates a siloed system for tracking sales—management must manually add and compare card sales with cash sales. Even worse, these tasks must be done after closing, when staff is already tired from a long shift and ready to go home. A unified POS system that integrates all forms of payment not only simplifies and speeds up the payment process but also provides more useful reporting that helps eatery owners take control of their sales and revenue stream. Tracking sales through a unified system can also help identify peaks in demand, customer-favorite menu items and even server performance when it comes to upsell and add-ons.

While each of these can be addressed separately, one step at a time, there are some technologies that address them all in a single solution. These comprehensive systems are delivered as an enhanced POS system, with backend operations modules to handle inventory, sales and employee tracking functions. Making a reasonable investment in a solid, integrated technology can save a lot of money down the road versus trying to lace together disjointed systems in a piecemeal approach. And, even better, the best systems are scalable to grow with your business once you’ve turned the corner out of the red and onto the road to success.

Jared Isaacman is CEO of Harbortouch (, a leading national provider of point-of-sale (POS) systems and merchant services, offering the only free state-of-the-art POS system on the market.

Topics: Operations Management

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