Every restaurateur knows that the first few years of owning and operating a restaurant are some of the most challenging. In fact, an Ohio State University study found that 60 percent of restaurants fail within the first year, and another 80 percent are out of business within 5 years. So how do restaurants make it past the 5-year hump? According to four successful restaurateurs who spoke at the Google Lake FX Chicago Summit, the secret is knowing what needs to change in your business, when to do it, and how it should be done.
Customers Are Key
In order to make it through that rocky first year, restaurant owners and operators need to keep a close eye on the customers’ reactions to their dining experiences. For Brendan Sodikoff, owner of 11 popular Chicago restaurants, this starts from day one. By observing body language and getting direct feedback from his customers, Sodikoff gets a feel for what’s working and what needs to change. “I generally know really quickly if someone connects to [the restaurant],” said Sodikoff. “I can usually tell on the first or second night if it’s going to work.”
Former “Check, Please!” host Alpana Singh also valued customer feedback when opening her first restaurant, The Boarding House in Chicago. “When we opened The Boarding House, we thought it was going to be one way, but your customers are going to tell you [what needs to change],” she said. “You have to take that feedback, as painful as it is because somebody’s making fun of your ‘child,’ and you have to make it what people want it to be. But then you have to blend it and pick and choose your battles.”
Feedback to Move Forward
Besides comment cards and conversations, social media and online reviews are a valuable resource for feedback on what’s working and what needs to change at your restaurant. “People are exchanging restaurant experiences [online] like they’re exchanging baseball cards,” said Singh. “You take the good and you take the bad, but within that criticism there’s going to be a common thread. You have to take that to heart — emotions aside — and you have to make those changes quickly.”
But once you’ve made it to that 5-year anniversary milestone, it doesn’t mean your business is set for life. Chicago pizza powerhouse Lou Malnati’s Pizzeria has been in business for over 40 years, but their business is still open to making the changes needed to thrive for another four decades and beyond. Even with this history under their belt and 35 locations, Lou Malnati’s management team approaches change the same way Singh and Sodikoff do.
“It is all about community, hearing from your people, and being in your places,” said Jim D’Angelo, chief operating officer of Lou Malnati’s. “I spend 60 percent of my time in our stores, so that allows me to be with our people and our customers. Social media has helped a lot with the customer aspect as well. Some things they’re unwilling to say [in the restaurant], they’ll say on social.”
Knowing When to Change
Part of owning and maintaining a successful restaurant, whether it’s a single unit or part of a chain, is being able to recognize when it’s the right time to make a change. Ten years after opening Rockit Bar & Grill in Chicago, Rockit Ranch Productions CEO Billy Dec and his team recognized that the restaurant needed a facelift. “There’s no roadmap for what you’re supposed to do at 10 years,” said Dec. “So at 10 years, we’re like, ‘We should just give back to the staff and to the community and make it nicer in some way.’”
Dec and his team knew what they needed to do in the Rockit renovation from that trifecta of observation within the restaurant, following social media, and being open to feedback. “I feel like I can hear quite a bit from the public through social media and just living in our space,” said Dec. “I work in the venues just to absorb what’s reality.”
But it’s not just the community and your customers who can tell you what needs to change in your restaurant. Your employees are at the front lines of your business, and great ideas for improvement can come from their first-hand experiences. “We have these pre-shifts that are designed to allow people to contribute ideas, thoughts, and complaints,” said Dec, “but most of [the feedback comes] from being super public and relationship building like crazy to the point where you would let me know if something was off or if you heard something was off.”
Whether you’re celebrating opening night or 40 years in business, being able to fix what’s “off” in your restaurant is the key to maintaining a successful business. And the way to effectively do so is through observation within your restaurant, open communication with your customers and staff, and monitoring feedback through social media and online reviews.
Want to update your restaurant but need a cash infusion to make it happen? Merchant cash advance can help!