Nearly half of restaurants fail in their fifth year of business. My long and largely positive journey in the industry hasn’t been without challenges. That’s part of the price of doing business – especially when you own multiple restaurants.
But if you learn from failures and misfortunes as we have, those experiences can spur you to even more success. My first KFC franchise burned to the ground. The third KFC we opened and a second TGI Fridays we operated both failed. But my message is turning obstacles into opportunities, and that’s what we did. And you can do the same. During our 40-plus years in the industry, many issues have come up, and here are some key things I learned as we developed a resilient, consistent mindset and strategies leading to growth and sustainability:
1. Know Everything about Your Potential Location
You want to be in a high-traffic area and the business should have a great ingress and egress for customers. Location is a big reason many restaurants fail. Do a complete location analysis including demographics of the local population, competition (including the different restaurant concepts in your area), and availability of qualified staff. If you are not purchasing land, check the rent and lease agreements, and local regulations (such as zoning laws, permits, and licenses required).
2. Beware of Buying an Existing Restaurant
When you buy an existing restaurant with a negative backstory – such as high employee turnover, an unappealing location, or a sub-par reputation for service, quality or cleanliness – be aware that it will take a lot of financial effort to turn it around. Building momentum and changing the work culture and public perception of the restaurant is difficult against those deeply entrenched negatives.
Building from the ground up rather than buying an existing location is often advantageous because it’s easier to get buy-in from a new team and from new customers looking for something fresh and different. Plus, there isn’t the pressure of needing to turn the business around.
If you do buy an existing restaurant, give it no more than two years, tops, to see positive change. You must have a system for evaluating sales, profits, and opportunities on a weekly, monthly, and quarterly basis. If you consistently fall short, assess what it will take to turn the business around and what it will cost you – whether it’s a further financial investment, more training, improved retention, or replacing people.
3. Make Training Your Bedrock
We developed strict training programs to ensure competence among managers and all employees. Every new person coming in, hourly or management, had to undergo a training program of at least six weeks. We also introduced and implemented the corporate philosophy through our human resource activities, such as pre-opening and end-of-shift meetings. And we had monthly meetings for the management team and quarterly meetings for the staff to discuss how we would approach our guests and other issues.
The vast majority of the brands we franchise with – from KFC to Starbucks, PF Chang’s and Wendy’s – had well-developed training programs. While many other franchisees deviated from corporate training, we don’t. Sometimes, we added our little corporate philosophy of cleanliness, quality, and customer satisfaction. Training and re-training are essential components of long-term growth – for both the employees and the company.
4. Put a Big, Organized Effort into Your Grand Opening
When you open a new restaurant, it is good marketing to let the community and family of the employees try the “new place” a few days before you open to the public.
Then, they usually tell 10 people who will each tell 10 more people. This word-of-mouth advertising encourages people to try you out. The key is to ensure they have a great experience – excellent quality food, great service, and a clean environment.
It’s essential to have a robust staffing plan in place for your grand opening. Typically, the initial two weeks draw strong crowds, and you need to ensure that your team is primed to deliver exceptional service to match the high demand and sustain that early surge of interest.
5. Keep Employees Motivated and Incentivize Them
Along with selecting the right people to run their business, restaurant owners must do a good job motivating employees and creating an environment where they feel they’re an integral part of the success.
When a new employee enters your restaurant business, oftentimes they come with baggage from past work experience. They feel like this is going to be the same scenario. You must help them make the necessary attitude adjustment. If you don’t show them why it’s great to work at your business and how important they are to its growth – in addition to how they should work to be successful – then you may be on your way to losing them. Giving employees tangible incentives is a key stepping stone to individual and company growth. If you do those things right, you will not have high turnover.
6. Show up on Location, Check in on the Managers
It’s vital to the success of the restaurant, especially in the early years, that the owner shows up on a regular basis. He or she must be hands-on to make sure that the processes that are essential for success are being properly implemented. That means the owner must lead by example and make sure the managers manage the team with the same positive leadership. If you are positive then your team will be positive.
That can be difficult if you own several restaurants, but you must prioritize and divide your time at the locations that most need your oversight. Even as our business capacity peaked, I had a rule to appear at all of our restaurants at least once a month. Where feasible, I was in at least one of our restaurants daily, including on weekends. During our first five years at the TGI Fridays in the Tampa airport, I spent a lot of time on location, developing the philosophy and ensuring the business was high volume. I insisted that we were doing things properly and aligned with the brand’s requirements and the airport’s guidelines.
7. Interact with Your Customers, Get Involved in the Community
Spend time in the restaurant talking to customers, listening to their feedback, and driving your marketing efforts. Sincere interaction with customers is a great way to develop rapport with them, increase the chances they’ll become regulars, and influence them to suggest your restaurant to others. In our company, we call it “Coloneling,” which I learned from Colonel Harlan Sanders. It means getting out in your lobby and meeting the guest and knowing where they are coming from and where they are going.
It’s equally important for owners to get outside the four walls of their restaurant. Get out in the community, spread goodwill, and give back to good causes. Be active in the chambers of commerce and rotary clubs, hire students, get involved with local churches, and sponsor youth programs and other community-based programs.
Adversity can come at you from all angles in the restaurant industry, as the failure rate indicates. But knowing what to avoid, what to emphasize, how to communicate, and how to grow your culture and your business can help your restaurant overcome struggles and thrive.
