12 Secrets of Successful Restaurant Owners

If you’ve dreamed of opening a restaurant, be aware that your success is far from guaranteed. After all, only two-thirds of restaurants will make it through their first year. There are many reasons for the number of restaurants that don’t succeed: too much competition, low profit margins, poor planning, lack of capital, high staff turnover, and poor marketing.

But don’t let this statistic scare you away – thriving as a restaurant owner is possible. Here are a few of the secrets that make for a successful restaurant business.

1. Account for Slow Periods

Whether it’s a midday slump, a certain day of the week, or even all winter, likely your restaurant will have some slow periods. Plan accordingly. 

Consider cutting back on staff for this period. You can hire extra temporary help for the busy seasons and work with a bare-bones team during the slow seasons. You can also fill in yourself and reduce your payroll spending. If a shift is slow, send one or two staff members home to cut costs.

Another way to save money during slow periods is by reducing inventory orders. Yes, you may pay more per item if you normally buy (and save) in bulk, but this way, you don’t have food go to waste if you aren’t seeing as many customers.

Slow periods are great opportunities to market your business. You can create meal specials to drive traffic in or pump up your loyalty program (buy three meals, and the fourth is free).

Also, ensure you’ve got enough capital to make it through this time.  After a few years of running your restaurant, you’ll be able to identify what will likely be slow periods, and you can set aside a reservoir of cash to ensure you have enough to pay your bills.

2. Be Willing to Roll Up Your Sleeves

The best restaurant owners aren’t afraid to wash dishes, take orders, or greet customers. Not only does this help you understand what’s required in each role firsthand, but you will also save money if you’re filling a role rather than paying someone else. 

If an employee calls in sick, you can pinch-hit, and your business won’t have to suffer from a lack of staff.

3. Scope Out the Competition

Market research is key to the success of your restaurant business. Find out who’s serving similar cuisine to you within a few-mile radius. Eat there. Take mental notes on the service, decor, and food.

Find gaps in the menu and service that you can fill, thereby taking more of the market share. For example, if you have a pizza restaurant and the pizza restaurant down the street is serving Chicago-style pizza, you can still corner the market for Neapolitan-style pizza without stepping on another business owner’s toes.

4. Zero in on Your Niche

You may want to appeal to all tastes by offering everything from latkes to bulgogi, but it’s better to figure out what you make best and stick to it.

The more niche your menu, the better-known your restaurant will be for those dishes. If you’re the only Jewish deli in town, that will draw people in, not your effort to offer Jewish, Korean, and Mexican food all in one place!

5. Never Stop Marketing

Marketing is a constant effort and investment for a restaurant. Cull what’s not working and refocus your efforts on what is. Invest in loyalty programs, email marketing, social media, and ads, and pay attention to which channels get the best results.

Knowing your audience and which channels they pay attention to is important. If you want to attract teens and young adults to your coffee shop, you should look to TikTok. However, you might reach individuals over 50 with a combination of Facebook posts, emailed discounts, and coupons mailed to their homes.

Whomever your audience is, give them a reason to keep coming back. A loyalty program can reward them for multiple visits, while a buy one, get one free offer might compel them to bring a friend. And here’s a tip: happy hour specials are always a great way to get people in the door for low-priced appetizers while buying drinks with a higher profit margin.

6. Always Look Ahead at Your Finances

Now let’s talk about money. Sometimes it’s better to secure a loan or financing well before needing it since you may qualify for lower rates. If you don’t have enough set aside for that slow period mentioned earlier, taking out a loan before it hits may be the right move in case a reduced income stream negatively impacts your loan approval.  

Before applying for a loan, create a budget for how you’ll spend the money and detail how that money will help you increase revenues. Also, have a plan for how to repay the loan, especially during the slow periods.

7. Treat Your Staff Well

The turnover rate in the restaurant industry is one of the highest, topping out at around 45%. Some of this can’t be avoided, but you can do your best to ensure your employees enjoy working for you.  Commend them when they do a good job, be involved in actively managing your staff, and pay them what they’re worth.

Invest in training them well when you hire them so they are competent and confident at their jobs and are more likely to stick around.

8. Pay Attention to Food Waste

If you don’t have practices to minimize food waste, you could (literally) throw thousands of dollars in the trash every week. Work with your chef to create daily specials to make the most out of food that won’t last more than a few days. Pay careful attention to your inventory so you don’t overbuy, especially in those slow periods.

9. Get Feedback from Your Customers

The best way to serve your customers is to ask what they want and how you’re doing. You can do so in person: stop by the table to check in with diners after they finish their meal. You can also send an anonymous email survey to your email list. Ask for feedback on the food, pricing, and service. Then actually use that information to make improvements! In the email, you can include a link to your Yelp or Google page so diners can leave a review, which can help you attract more customers, assuming the reviews are positive.

If you get a negative review on Yelp or Google, don’t panic. It happens. The best thing you can do is to respond publicly and politely. Apologize and invite the customer in for a free meal to make it better.

10. Negotiate Your Inventory Orders

Often when you buy in bulk or buy multiple items from one vendor, you can save on the cost per item. Plan to maximize your savings and orders, and buy produce in season. If asparagus is priced low, for example, ask your chef to plan several dishes using it. And it never hurts to negotiate. Shop for a better price and see if your preferred vendor matches it.  Every penny you can save counts in the restaurant business!

11. Make Your Restaurant Physically Inviting

You might have the best steak in town, but if customers eat it in a torn pleather booth, it won’t be a memorable experience. Instead, invest in your restaurant’s decor. 

Create an appealing environment with art, plants, and design features, and make sure the tables and chairs are comfortable enough to sit in for hours. Or, if you’re not up to the challenge of decorating (or redecorating) your restaurant, hire a professional who understands the aesthetics of restaurant design. Remember: diners love to take photos and post to Instagram, which is fantastic marketing for you.

12. Consider Buying an Existing Restaurant

Rather than reinventing the wheel by opening a new restaurant, consider purchasing an existing one. Even if you rebrand it entirely,  you’ll save time and money by not starting from scratch, and buying equipment.

Do your due diligence on the restaurant you’re considering buying. Why is the current owner selling? What are the profit margins? Is it in a highly-trafficked area? Ask enough questions to understand the restaurant's potential success and how much money will be needed to help it thrive. 

Conclusion

For many, owning and operating a restaurant is a lifelong dream. And while success is never guaranteed, with hard work, dedication, and knowledge of these key secrets, you have the best chance of thriving as a restaurant owner!