Why do many hospitality businesses fail to reach their full potential, or fail all together? According to Cuisine Scene Hospitality Solutions more than 200 restaurants, cafes or catering companies close down every week in Australia. Those that are now open probably won’t be around in five years.

Only 5% of restaurants open today will be operating in 10 years. More and more competitors are opening every day, wage costs increase, cost of goods continue to go up and staff turnover is always a problem. The overall average net profit (before tax) in the hospitality industry is only 1.5%.

Cuisine Scene identifies 10 reasons for hospitality businesses failing to achieve their full potential.

1) Lack of consistency.

2) Selecting and retaining the right staff.

3) Incorrect menu structure.

4) Ineffective and non-existent marketing.

5) Little understanding of key figures.

6) Work on the business, not in it.

7) Poorly presented concept or branding.

8) Lack of integrated business systems.

9) Ineffective control of your POS System.

10) No Structured Business Plan.

1) Lack of consistency

Most restaurants, cafes and catering companies forget the importance of constantly striving for consistency in every aspect of their establishment. Consistency of product, service and concept will provide a competitive edge. Clear and thorough systems will ensure a solid base from which all your staff can achieve a consistently high level of product and service, whether you’re there or not.

2) Selecting and retaining the right staff

Your front line and key personnel are crucial to your business success. Attracting and keeping the right staff is a difficult and time-consuming operation. It demands a documented and thorough chain of employment focusing on relevant issues from an attractive job advertisement through effective interviews, orientation, and development path. The problem of staff recruitment is present in almost all restaurants, cafes, and hotels that fail to reach their full potential. Ensuring you get the best staff means your competitor can’t.

3) Incorrect menu structure

Effective menus increase sales without changing food and beverage costs. There are psychological factors that guide your guest’s decision when choosing their meals. A thorough knowledge of these factors helps you achieve a menu that really performs.

4) Ineffective or nonexistent marketing

Most restaurants, cafes and hotels that fail to reach their full potential often lose thousands of dollars on marketing that is unmeasurable, ineffective or too expensive. Brand recognition and product placement are vital to a successful hospitality business. Competition is fierce and if you don’t know your target market well, how will know how to get them in the door?.

5) Little understanding of key figures

Many businesses have little or no understanding of the key elements involved in establishing key performance indicators as critical business controls. The break even point is one of the most important success indicators you need. What are your fixed and variable costs?. Other indicators include contribution margins, yields, gross profits, wage costs, server sales analysis, stock values, and many other important key figures allow you to know at anytime, how well your business, and its staff, are performing. Set up reliable benchmarks and access to key performance indicators that allow you to measure your business performance without having to be there.

6) Work on the business, not in it

Streamline your restaurant, cafe or catering business so it runs itself when your not there. Allow yourself to step back and critically assess the indicators that help you determine where your business is heading. Trust your systems and key personnel to manage things when your not there, but ensure they know you are always watching from a distance. Stepping out of the business will allow you to think outside the box and give you the freedom to play a major part in the strategic planning of your business and not get caught up with time consuming day to day operations. Cuisine Scene can assist you to rethink how you look at your business.

7) Poorly presented concept or branding

A well thought out concept gives an impression of professionalism and confidence. Acceptable lighting, sound, and décor are critical to the success of your restaurant, cafe or catering business. It is the crucial element that completes the entire experience for your guests. Consider speed of service, menu variety, menu value, first impressions, kids facilities and complaint handling. What does it take to give your establishment the competitive edge it deserves? Good food? Good Service? Effective marketing? Yes to all of these but a strong concept will tie them all together and leave your competition wondering where they went wrong? And your guests wondering what they will discover on their next visit!

Any restaurant, café, or hotel that wants to stay in the spotlight needs to be dynamic. There needs to be an emotional connection on some level with your target market. Be prepared to refine (not change) your brand as industry trends and clientele dictate. Your brand should be evident throughout all your marketing, advertising and premises. Stop and look from the customer’s perspective every week. Ask yourself about the standard and speed of service. What do you see? What do you hear? What do you feel about the experience?

8) Lack of integrated business systems

Not only is it imperative to have these integrated business systems and procedures in place but is it critical that you know how to use them. Everything needs to be clear, detailed and on paper. Job descriptions, checklists, sales analysis sheets, labour control reports, workplace safety security guidelines, phone script sheets and functions bookings procedures should all be set down. All staff must have access to the information at any time and be accountable for completing or using it. The systems must be regularly updated and creating them should involve relevant staff as much as possible.

9) Ineffective control of your POS system

Most point of sale (POS) systems in restaurants, cafes and hotel businesses today are outdated, obsolete and not providing the speed of information necessary to closely monitor day to day operations. Update it and make the most of it. A great POS System will pay for itself and boost sales at the same time, not to mention the added value when an effective staff incentive program is tied into it. Hospitality staff motivational software is one of the best ways to analyse and compare your server sales/product mix. It will even improve your menu profitability across the board. Effective and easy to use POS systems integrated with your back office reports and systems will also ensure you have your critical KPIs at your fingertips. Add-ons such as stock control, reservations, and labour programs will increase the effectiveness of your system. Cuisine Scene can show you how a cost effective POS system can manage your tables during a shift and organise your reservations.

10) No structured business plan

96% of all businesses do not have a structured business plan involving detailed systems, marketing plans, forecasts and budgets. It is essential to know where you are headed and how you’re going to get there. Without a structured business plan it is easy to wonder why you don’t have control over your business.