A Comprehensive Look at Small Business Management
Restaurants serve various meals to the general public. The meals are served depending on the specialization of the restaurant. Customers’ preferences are always considered when choosing a segment of specialization. Restaurants are critically important for economic development since they give numerous job opportunities throughout the country (Hospitality Net, 2010). This paper will examine the concept of successful small restaurant management according to my observations in the position of the assistant manager.
Restaurant Management Project
The restaurant I worked in specializes in the delivery of a wide range of ethnic dishes that are cooked in an exposed kitchen. In such a way customers can smell and see their food while it is being prepared. The interior emphasizes ethnic atmosphere by displaying pictures, ingredients and maps of countries origin. It is aimed at providing a relaxed and festive atmosphere. The target customers are mainly university students, families and young professionals searching for pleasurable meal at an affordable price.
The restaurant I worked in deals with various menu categories. We can define that it works in full service segment. Full service refers to restaurants offering a possibility of fine dining. Such restaurants should offer a vast variety of dishes and beverages in addition to qualified table service and comfortable atmosphere (Hospitality Net, 2010). Management of the restaurant is considering opening a fast food service attached to the main restaurant in order to provide a possibility for the customers to take meals with them.
In order to be popular, many restaurants are trying to invent additional concepts that would attract customers. Ferasat (2009) points out five tactics that can make a sustainable restaurant profitable. These include: provision of proper food service and constant feedback on it; high quality of food; the use of modern technologies; adequate marketing; and creativity in organizing the space, events, food, and services.
The restaurant was working independently, but it was intended to grow and develop into chained operations. The independent restaurant is easier to establish and control in the very beginning while a franchise is potentially more profitable since it covers numerous locations. The restaurant mostly served middle income earners. However, it is expected that vast variety of dishes and quality service will attract all levels of potential customers. Qualified management is still the key component of success of any small business. This paper describes traditional and emerging practices used in order to establish profitable restaurant.
Internal Factors Affecting the Success of the Small Restaurant
There are always internal factors that affect restaurant day to day operations; some of them are scheduling, food preparation, customer relations, etc. The internal factors have both positive and negative impact on the business flow. I will group such factors into weak and strong points according to my personal experience.
A strong branded image is one of the most influential factors on the success of any small business (Franks, 2010). Big investments are justified later with customers’ loyalty, which results in the sustainable business. The restaurant I worked in was very concerned with the branded image since our senior manager was well aware of the fact that customers like stability. Small restaurants that can offer quality service usually have a stable flow of customers. As an assistant manager, I was responsible for the quality of our services, thus making sure that restaurant image is supported by daily operations.
According to research conducted by Franks (2010), only qualified and well-trained staff guarantees a high level of performance. Hiring process is an important component of future success. The creative and innovative approach to the restaurant management can never succeed without reliable staff. An intelligent waiter or waitress can take several orders at a time and serve them accordingly. The qualified kitchen staff cooks well and without any delay. It is worth stressing that one of the biggest challenges I faced was to find initially qualified staff and then provide effective training. Since small business cannot afford expensive advertising, I was supposed to browse resumes and look for potential staff online. Interviewing our future staff was very time consuming. Although we hired only 3 waiters and 2 cooks, I had to keep on file potential substitutes. In case something goes wrong, I had to find a replacement in the shortest terms.
Maintaining tidy and clean environment of the restaurant (Franks, 2010) in order to attract more customers was another challenge. Any restaurant cannot become popular among its clients unless both interior and exterior are always kept clean. Satisfied customers should never doubt hygiene and freshness of the served food. The clean environment of the restaurant is very important in this business since local authorities always strictly check all the aspects before issuing any licenses, like health and operational licenses, necessary for the restaurant operation. Thus, the high level of hygiene is strongly recommended avoiding any conflicts with government regulations.
Another big challenge was keeping prices low and thus attractive to customers in comparison to the competitors as it is recommended by the SWOT (Franks, 2010). The competition in the restaurant business is tuff, so prices are critical for demand changes in the small restaurant that offers similar menus. When we managed to lower prices, we could attract more customers, taking them away from competitors. Thus, business revenue was increased. On the other hand, detailed cost benefit analysis was carried out in order to ensure that we do not suffer any substantial losses by offering substantially cheaper prices. Although, according to statistics, “26% of independent restaurants fail in their first year of operation” (Ferasat, 2009), there is surely a way to make small restaurant, offering fine dining. While many consumers tend to choose healthier diet and watch their expenses, small restaurants have to continuously “compete for their stomachs and wallets” (Ferasat, 2009).
Since more customers are now concerned over their health, our restaurant was paying a lot of attention to a well and accordingly -balanced menu. Following main principle of a well-balanced menu, we offered a choice of fresh well-cooked dishes.
Another task of the assistant manager was to create a warm and caring atmosphere, demonstrating our customers that we think about their health. We managed to increase loyalty of our customers, which later turned into increased profit.
Since I worked in a new restaurant, still to be established, we could not boast of big demand or numerous customers from the very beginning. The customer base should be developed with time (Franks, 2010). We did not have any reputation so even negotiating of special reduced prices with our suppliers was a problem. The growth was slower than we expected, and a lot of additional efforts were taken for the brand development. Our restaurant is customer oriented, thus we have nearly overcome this problem in two years of operation.
One of the biggest problems was a big investment needed for successful operation of a new restaurant. While funding of the restaurant was rather limited, we worked hard to reduce its affect on the position on the market and expansion potential (Franks, 2010). Attracting additional funding from the banks could be an option, but it is hardly the case for the new establishment.
Another problem of the new restaurant is the fact that it is virtually impossible to be unique unless you find a creative approach and stop simply copying the competitors (Franks, 2010). A standard menu is often offered by many small restaurants operating in the neighborhood. It is a common problem of many limited budget diners. We have found a solution to the problem when started offering some ethnic meals in addition to the regular menu. In fact, ethnic food became very popular. Thus, we decided to change our initial strategy and turn our restaurant into fine dining establishment offering sophisticated East Chinese dishes. We have also tried to add some personal touches. For example, senior manager and me used to stop for a small chat with our clients. We used to send a complimentary dessert or a bottle of wine to returning customers on their special occasions.
The biggest challenge is a lack of general knowledge concerning potential customers (Restaurant Business Plan, 2010). Any new restaurant should spend a lot of time to learn and understand all needs and preferences of its customers. As we had made several serious mistakes in marketing before, we learnt all the details of the neighbor restaurants and main factors influencing decisions of the customers.
The growth of our small business was possible only when we started developing positive relations between our staff, suppliers, managers, and clients. A small restaurant income highly depends on proper relations of the employees. Managers can only become effective when they consider both positive and negative effects of every decision they make.
Our small restaurant was opened in the place previously owned by a fast food restaurant. When it was closed down, our restaurant could take up the chance and use the clients’ base left by ex-competitor (Franks, 2010). The customers from the neighborhood had no better choice but to seek alternative options. So our new restaurant had a great opportunity to attract them from the very beginning. It is a great opportunity that may occur whenever a player in any industry leaves its customers in a state of looking for other product suppliers.
Recently we have discovered another business opportunity when we were informed by a contractor that a new office complex is about to be built just around the corner. The office complex always brings many customers as people do not like to walk far during their lunch break. Thus, our business is expected to grow. Hopefully, new offices will bring additional opportunities of large corporate clients, who tend to pay regularly for the lunches of their employees. On the other hand, one of the biggest threats to our business is opening of branded franchise restaurants. Such a possibility becomes very obvious with construction of the new office complex.
While potential growth is great for any business, space is another problem to be solved. The downtown area does not give many chances for expansion, so every opportunity is to be used in advance (Franks, 2010). Usually every possibility is in high demand, so we have to give some extra attention to the realtors’ ads and consider potential of each one.
Consumers’ demands are often changing (Restaurant Business Plan, 2010). Eating habits can be influenced by fashion, lifestyle, or even personal circumstances. We consider it to be rather difficult to monitor demands of our customers that are constantly changing. “Restaurants can provide consumers with memories of family, friends, childhood, a great date, a memorable birthday, or a significant accomplishment.” (Ferasat, 2009). We followed this advice and tried to make our fine diner the place to be visited by families and friends. We could not compete with the fast food quick service and cheap prices, but we could offer memories. Furthermore, we always have to deal with a threat of a smart competitor, who can offer exactly the same menu and similar services to our customers (Franks, 2010). Not many customers can stay loyal when they can hardly differentiate what makes your restaurant special. Continuous efforts are made to add some creative approach to our routine.
Another important thing to consider was a marketing strategy. We decided to use PR possibilities. We opened our web site and blog. We promoted our web site via Twitter and Facebook. E-mail marketing is successfully used to attract new visitors and to remind our customers of innovations and special events offered. PR actions demand significant time and investment, but in the world of the internet, they are absolutely justified. Many visitors return to us simply because they can book a table via the internet. Other samples of our public activity were offering special sponsorship and best samples of the dishes we serve at a local fair. This way we attracted more new customers and supported a positive image of the restaurant in the neighborhood. We also distributed gift certificates and discount cards to encourage our returning customers. We are planning to start inviting some famous guest chefs for the next year. They will boost interest of our customers and add some unusual touch to the stable atmosphere of the restaurant.
Current Challenges and Future Plans
Main operational issues in our small restaurant are quality management of the entire system, as well as the implementation of innovated tools and thoughtful marketing. One of the challenges is a continuous balancing between changing customers’ demands, expansion, increased expanses and competitors. According to Ferasat (2009), 43 percent of consumers are extremely concerned about the safety of restaurant food. As an assistant manger I had to take care of heating, air conditioning, and ventilation. We had strict norms regarding cooking equipment, but restaurant cleanliness was always the biggest concern. I have visited several workshops held by the United Fresh Produce Association regarding crisis management. I have learned that communication with the outside world is one of the most significant concerns. So our future plans involve developing of the web-site and blog, as well as further PR actions.
Another plan for the future is training of our waiters/waitresses regarding some ingredients that can cause food allergies. We certainly do not want to have any financial problems, thus considerate time will be input in avoiding dangerous situations.
We have placed emergency services contacts near each phone and printed a warning in bold in each menu, but still I think we should work on improving our food safety system to serve our clients better. So I am going to take care of staff preparation for any allergy emergency alerts and procedures.
We are going to improve our services with the help of constant feedback from our clients. I am sure that our staff can also input a lot to the success of the restaurant. We are going invest heavily in trainings and newest technological aspects in order to meet the increasing competition. I am very optimistic about the successful future of our restaurant.