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The 19 Deadly Mistakes Restaurants Make

Oct 28, 2021

Mistakes. We have all made them.

Most likely you’ll make quite a few more while running a restaurant. The thing you want to avoid is these 19 fatal mistakes that 80% of restaurants make each year which contributes to the low survival rate that restaurants experience.

Of all the restaurants that open this year, only 50% will still be open in three years! The even more shocking statistic is that only 5% will survive the 10-year mark. How sad is that? Only 5 out of 100 restaurants will celebrate their 10-year anniversary. So, what can you do to increase your odds? Everything you can!

Read books and blogs. Subscribe to podcasts & YouTube channels. Attend workshops & seminars. Join a mastermind group. Find a mentor. Hire a business coach (okay that was a little self-promotion…LOL).

Just do something that breaks you free from the limited mindset that keeps most stuck in fear, doubt, and denial.

Take a hard look at the following mistakes and give yourself a little reality check. If you’re guilty, just admit it and then take conscious action to change it. Your restaurant can take a totally different direction if you just make a decision to do something different than what you are doing right now. It’s obviously not working or you wouldn’t be here reading this.

Mistake #1: The leader does not know their natural strengths.

What are you good at?

What are you okay at?

What do you suck at?

Seriously, in order to get ahead of the competition, you must know what your natural strengths are. How do you lead naturally? What is your preferred communication style? How do you deal with stress? These are just a few of the questions that are answered when you use a behavioral assessment tool.

Once you know your strengths, now you can build a team around you that will complement your strengths and minimize your weaknesses. The first step to getting control of your restaurant is knowing what your strengths are.

The easiest way to do this is to use a behavioral assessment tool. There are quite a few on the market like DiSC and Predictive Index. For restaurants, I prefer the ProScan®️ Survey from PDP Global. It has a unique part that measures your kinetic energy which allows me to understand how much natural energy you have throughout a day to accomplish tasks. That is critical for getting a lot done.

These assessments when administered properly have a 96% accuracy rate. I won’t work with a client until they take a behavioral assessment. I need to understand how you will communicate, lead, react to stress, manage tasks, and what is keeping you stuck where you are.

When you know your strengths you stop running in a circle and you start getting more done! You also now have a tool that allows you to build a dynamic team around you as well to accomplish all you want.

Mistake #2:  They don’t have solid core values that they live.

I preach about core values for one simple reason: they are your ethical compass. You must know what you stand for if you ever want to attract your ideal guests and staff to your brand. Your core values are not to be taken lightly. They are the foundation of all great cultures. I challenge you to find a great restaurant (or any) brand that does not know its core values. They know them. They preach them. They live them.

Integrity is a core value that will attract or repel people to you. We hate hypocrites. Those that don’t know who they are doomed to just wander the restaurant industry with no clear path or plan to get there.

Core values are the perfect tool for keeping your team in alignment with your culture. Those that buy into the core values will be a better-fit long-term for your brand. They will perform better. They will be less likely to leave. They will be more accountable than those that don’t believe in your core values.

While core values are not a fix for every problem in your restaurant, they do prevent about 95% of the potential problems.

Mistake #3: They don’t have a clear and concise vision for their brand.

The Bible says that “Where there is no vision, the people perish.” - Proverbs 29:18 KJV.

It’s true. Without a clear vision, your restaurant will perish. You must have a goal or target to aim for beyond just surviving (which is the goal of 80% of restaurants).

I talk to around 50 restaurants a week and the majority of them just have a goal to break even! That is not a goal, that is a desperate cry for help! You opened a business to thrive, not just survive.

Having a clear vision and direction is vital to long-term success. The most successful restaurants re-evaluate their goals, targets, and mission every month to make sure they are still on the path they set out for. Now, sometimes you need to make course corrections and you can only do that when you have a plan. Otherwise, you’re just wandering around hoping that your business will be fine. Hope is not a strategy. Wanting to be fine is the same as wanting to be average. Being average sucks and honestly, it won’t make you any money.

The primary way to uncover your vision is to ask yourself quality questions.

Why does your restaurant exist?

Why do you do this every single day?

Why is success important to you?

If you don’t know the answers to those simple questions then you need to do a little soul searching immediately.

Mistake #4: They haven’t defined their standards.

We talk about standards a lot in this business and yet it is the one challenge most restaurants have trouble enforcing. Why? Because their standards keep changing or worse, they have double standards!

While you think this would be common sense, I can honestly say after over 40 years in this business that common sense is not very common. You must get crystal clear on exactly what your standards (and expectations) are. One of the major issues in any business is poor communication. Poor communication comes from undeclared or miscommunication of expectations.

You solve that by getting all those standards and expectations out of your head and written down on paper! This one step right here will save you a lot of problems down the road, but you have to do it.

The words I hate to hear from new clients are, “Well, they should know.” Well, they don’t know so let’s get them to know.

 

After you have declared and clarified your standards then if the team doesn’t follow them they now fall into a different category...they don’t care. Those people just need to be allowed to find employment somewhere else.

Mistake #5: They have systems that are not maximized or used consistently.

Right now, I would make a pretty sure bet that you have some clipboards hanging up that have checklists on them that rarely get used...

Am I right? 9 out of 10 times I am. It’s not that I am psychic, it’s just a common problem. Checklists were designed to help us run a more effective business and yet they become just an eyesore sitting dormant on the walls of many restaurants.

So, what can you do?

Checklists are a great tool IF used properly. That is the key for any tool, they have to be used to be of value. A hammer sitting on the table doesn’t do anything by itself, it needs to be picked up and used! The same for those checklists and software programs you bought with the best intention of using. Then your team pushed back a little and you threw in the towel.

Here is where we have a talk about who is running your restaurant? Are you running it or is your team? Once again, many restaurants are run by the staff and it’s not a good situation. It’s a lot like the lawless days of the Wild West!

Getting back control of your restaurant is going to be the big challenge ahead of you. Especially if the staff has been running things for any time. They hate to lose power. However, if you ever want to get to the point where you work “on” your business instead of “in” your business this is a bridge you must be ready to cross. And you want to do it prepared for the battle that will ensue.

It all starts with more training, explaining the “why”, and making the systems a non-negotiable.

Mistake #6: They have an outdated hiring system (or worse) they panic hire.

Okay, here is where many make a fatal mistake, and they don’t realize it. They have no system for hiring! They use the same boring questions that everyone asks...

  • Tell me about your last job?
  • What would your previous manager say about you?
  • What did you like about your last place of employment?

Zzzzzz. When you ask tired and boring interview questions you get tired and boring people working for you! Stop that.

The goal of the interview process is not to fill a job position (I know, that sounds counterintuitive), but it’s not! It’s to find a person who is a good personality fit for the culture and the team! We tend to hire for skill and forget the personality. Major mistake.

Always hire for personality and then train the skills. You can train pretty much anyone if they are coachable and trainable. You cannot change personality. Have a hiring system that asks for insight into their personality. Then back it up with a behavioral assessment! This tool has been used by Fortune 500 companies for years and you need to tap into the power they possess. They make sure that the person you are looking at, is the right fit for your culture.

Mistake #7:  They don’t know their theoretical and actual food cost.

Here is a very sad statistic...only 5% of restaurants operating today know the cost of everything on their menus! If this, is you, hold out your left hand and slap it with your right hand and say, “Bad owner!”

Seriously, not knowing your menu costs is low-hanging fruit that is just ready to be picked! There are two food cost calculations that every successful restaurant obsesses about: theoretical and actual food (beverage) costs. Theoretical is also known as “ideal” or “perfect” costs. This is what in theory every item on your menu costs to make. Now of course we know we don’t live in a perfect world since there are mistakes and waste. So that is why we need to know actual food costs. This is an easy formula to calculate: beginning inventory + purchases - ending inventory. Yes, you must be doing inventory at least once a month and if your costs are out of line then I suggest once a week!

Here is another fact that might motivate you to start costing (or update) the costing on all your menus: the average restaurant has a difference between theoretical and actual food costs of 9%! OMG! That is a lot of money to be leaving on the table! You just need to do some work to find it!

Mistake #8: They don’t market effectively.

95% of restaurants that are in business post on social media. Only 5% actually market effectively. There is a big difference between posting and marketing that many don’t realize. Posting is the same boring content that every other restaurant posts...pictures of your food with some cheesy remark about that food. It was unique when social media first started, now we are desensitized to the flood of food pictures that crowd out feed every hour. All the restaurants in your market are fighting for a piece of the pie.

Stop competing and start standing out with story marketing! You have a portable video studio in your hand in the form of your smartphone and yet most only use it for text messages and to take more boring photos of their food. Video is the only way to stand out in an overcrowded market. You can’t wait another day to not tell your story to the world. There are so many restaurants that have exceptional food and service that go out of business because they are the best-kept secret in their town. The last thing you want to be known as is a best-kept secret!

The other key to effective marketing is to be consistent and amp up your frequency. Most restaurants post occasionally and that will not keep your brand what is known as “top of feed”. Today, frequency is underestimated and overlooked. You can’t post just once or twice a week and think you are being effective. It’s not. This will require you to break from traditional thinking and your current habits of you want to rise above the crowd.

Mistake #9: They don’t have a strategic plan that they use consistently.

The formula is simple: the better you plan the better results you get. Do you have a plan for your restaurant or are you just trying to survive? Getting by is the default mode most restaurants operate from. You went into business to thrive, not just survive. Having a flexible massive action plan or M.A.P. is critical to success in today’s economy.

Dining trends change. Markets shift. Guest demands evolve. Are you ready for them as they come? Are you ready to shift quicker than your competition? Adaptive planning and anticipation are the two elements you must have to survive the impending restaurant meltdown.

Don’t think it can happen to you? Look at well know brands like Howard Johnson’s (over 1000 locations), Chi-Chi’s (210 locations), and Burger Chef (1200 locations)...all gone. If they would have been more adaptable to the market and anticipated the shifts in their industries they might still be here. Having a plan is not enough, you have to apply that plan daily and make adjustments as needed.

Mistake #10: They don’t cultivate their culture.

Culture is the secret sauce that separates the good from the great from the outstanding. Every restaurant in your market can buy from the same foodservice distributors. You all hire from the same labor pool. So, what separates them? It’s really culture.

Culture is the beliefs and values that hold a restaurant together. Think of it like social superglue! Without it, you don’t run your restaurant, it runs you. Plenty of restaurants with potential have been killed by toxic cultures. No one wants to work in a toxic work environment and guests won’t continue to return if the culture is unattractive. Bad culture is like bad body odor, you don’t want to be around it for very long!

Culture is cultivated by the core values and mission (vision) set forth by the owners and the leaders. If you don’t think that some words make or break a restaurant, then you have never experienced the power of a great culture. Getting culture right is not easy, especially if it has been turned to the dark side. Not saying it can’t be turned around, it’s just going to take more work than you expect.

Culture to me is the soul of a restaurant. What would you do to save your soul? Pretty much, whatever it takes.

Mistake #11: They don’t train enough.

Most restaurants have what is known as a training culture. That means they only train on the front end when a new employee is hired. Give them a workbook, have them shadow a fellow employee for a few days, and perhaps take a test. Then they are turned loose upon the guests and to work with the team.

Not a good plan if you want to rise above the average standards in this business. Training is never over for the true professional. It should never stop in your restaurant either.

Make the shift to a learning culture where learning and constantly improvement is the goal. Don’t train your team until they get it right, train them until they can’t get it wrong! That’s how the most successful restaurants operate. They make training an everyday task that keeps their people sharp and focused.

Mistake #12: They leave money on the table (not maximizing their P&L)

Miners obsessed with gold would say, “There’s gold in them hills.” Well, there is gold in your profit and loss (P&L) statement too. You just need to dig a little to find it. The worst thing you can do is take your P&L at face value and just accept what is.

No. You need to challenge reality and ask a more empowering question: what could be?

You have items right now on your P&L that could use a little diet mentality. Things that of just improved by 2% would have a huge impact on your profits. You have to look at both sides of the profit equation which is top line and bottom line.

Too often restaurants pay more attention to the bottom line and cut, cut, cut to save money. Let’s be crystal clear that you cannot save your way to profits. It does help and only a fool would not be conscious of the bottom line. You just don’t want it to come at the expense of your brand reputation or core values.

I had a client once that thought it was a great idea to buy a cheaper hamburger blend to save a few bucks. The backlash of complaints quickly made them realize that this one decision had a negative impact on their reputation and demoralized the team. It takes a long time to build trust with your guests and a very short time to lose that trust when you do stupid things like that to save a little money. Far better to keep buying the quality of product your guests expect and adjust your menu prices.

For the top line, you need to take control of the sales machine and put some energy into stimulating sales! How? Train the team to make sincere recommendations instead of being order takers like the majority of restaurants have on the floor. Increase your delivery and catering services. Offer prixe fixe menus or special events (wine dinners or cooking classes) that can bring in extra revenue on slower evenings. Increasing sales is really a matter of being creative.

Mistake #13: The leaders have bad habits that hold their business back.

Time for a heart-to-heart talk. Your restaurant is a reflection of your habits. Those habits might not be visible to you, but your team sees them and so do your guests. You can call these blind spots as well.

Hey, they are called blind spots for a reason!

The key is to open your eyes and find someone who will be honest with you. That could be a trusted friend, mentor, or business coach. You want someone who is not going to just let you slide off those bad habits you have.

What are some bad habits that restaurant owners have? Glad you asked...

  • Talking over people when they are talking
  • Not listening
  • Throwing temper tantrums
  • Being too affectionate to the staff
  • Drinking (or drugs) at the restaurant
  • Being late
  • Changing your mind (a lot ) to the point where the staff thinks you are the kid who cried wolf every time you change something

Those are just a few of the habits that drive your team and your guests a little crazy. People will tolerate crazy for a little while, then they get tired of the drama and look for another restaurant to call home.

Here is the good news: habits are learned behavior. So if you learned them, you can unlearn them too! Step one requires you to be honest with yourself. Step two requires you really want to make some changes that make you a better leader.

Mistake #14: They keep poor performers too long.

I know the labor pool is supposed to be tight. We all see the headlines saying there is a war for talent. I don’t believe that. I believe what we have is a war WITH talent!

I also believe that there is a steady stream of highly skilled and personable people out there that want to work in your restaurant. They just are not attracted to you culture because you tolerate low performers. It’s relatively simple: toxic cultures attract toxic people.

Right now you most likely have at least one poor performer on your payroll. Why do you keep them? They are not helping your brand. In fact, they are causing more problems under the surface than you realize.

Poor performers:

  • Do not elevate the standards, they barely can maintain them.
  • Do just the minimum work to get by.
  • Cause friction with the A players who have to do extra to make up for their slack.
  • Cost you sometimes twice as much as one A player! You need two people to do the job of one A player.
  • Can’t be expected to bring their A-game because they don’t have an A-game.
  • Are content with being average.

The best thing you can do is allow this person to go work for a restaurant that condones mediocrity! Stop, being the nice person trying to hold onto that image that you are a good person for not letting them go. You are a good person if you allow them to leave and find happiness in the cult of average that 60% of restaurants live in.

Drop the fear and face the fact that poor performers are killing your culture and your chances of attracting top talent.

Mistake #15: The leaders suck at time management.

I love it when people say they are “too busy”. Bullshit. We are called human beings when the truth is we are humans doing. That means getting shit done!

Here is the greatest insight that you know, yet you don’t take advantage of: we all have the same amount of time each day. That is the beautiful thing about time: it doesn’t discriminate!

I had an interview with a manager at a new client’s restaurant and I asked him point-blank: What are a few things you need around here that would make your restaurant run smoother?

His reply: Line checklists and prep sheets.

I asked: Why haven’t you done them?

He said: I’m too busy.

That right there just made me shake my head in shock! You know it would make your restaurant run better and yet you are going for the bullshit excuse that you are too busy? Shut the front door!!

You have the time. The truth is that you haven’t found a compelling reason to take action. That is a fundamental of time management...you make time for what is important to you! If it is of real importance, you will find a way, if not you will find an excuse! As human beings, we have a sad trait that we can rationalize anything! Every stuff that we know is the wrong thing to do!

There are very few restaurant management training programs that teach or develop time management skills. They talk about how to run a shift or handle a guest complaint. Maybe 1% invest in teaching their leaders to be better at managing the most valuable asset that all humans have and that is time.

Mistake #16: The leaders focus on the gX (guest experience) over the tX (team experience).

For the last couple of decades, the prevailing thought was to focus on making sure the guest experience was solid. It served our industry well and things were good. Then the millennials and Gen Z entered the workplace and things shifted. You might have noticed it, most likely it was in the form of having a harder time finding or retaining staff.

The new generations are not difficult or lack motivation. You just don’t know what motivates them because you are using old techniques that worked on Baby Boomers and Gen X. Those psychological games don’t fly with the younger generations that don’t think of staying with a restaurant for a career. No, they want to learn grow and develop. If you provide that you have a great chance of reducing your turnover. If not, you better just keep that ad up continuously on Craigslist. 

The team experience is the focus of the modern restaurant. You want to make sure your team has the resources and it constantly being trained and developed. Growth and learning are the new techniques being employed by successful brands.

Incorporate different learning platforms into your training. Videos are the new medium that the younger generations look for. Time to update that boring training manual you have been using for years and break it down into bite-sized training modules that they can watch over and over. The younger generations learn by repeat and the old way of showing them once isn't going to cut it.

The team experience also means having some cool perks as well like bus passes, family meals, and private Facebook groups for the team to connect. If you refocus your energy more on the team experience than the guest experience (I am not saying take your eye off of this) you will see that the guest experience actually becomes better! After all, the restaurant business is the people business at its heart.

Mistake #17: They choose competition over domination.

It truly baffles me that restaurants would rather play it safe and compete than stand out in their market. Oh, they say they want to stand out, and then when it comes to taking action they play it safe. To stand out you must be willing to push the edge of your comfort zone.

In my second book, Your Restaurant STILL Sucks, I talk about the difference between Red Ocean and Blue Ocean Restaurants. The majority of restaurant competition exists in the Red Ocean. It’s red from the blood of the dog-eat-dog mindset. Here restaurants compete on price and they are considered a commodity. Just look at any of the fast-food chain “burger” or “chicken sandwich” wars and you know exactly what this is. It’s brutal and the ones with bigger marketing budgets (or better ideas) tend to win. It doesn’t matter if the food or service is really that good either! That’s was is truly sad.

Then there is the Blue Ocean market. Here there is little competition because you stand out on quality, core values, culture, and your mission. People buy why you do what you do over anything else. We forget that there are so many different emotions to marketing (13 actually), yet we play it safe and only show one or two! Blue Ocean restaurants understand that to be seen you have to be open to sharing your story with the world. Authenticity is the number one tool for Blue Ocean restaurants.

The other fatal mistake most restaurants make is not posting enough on social media! The internet is bigger than you think! Those one to three posts you are doing each week is having the same impact as taking three pebbles down to the ocean and trying to make a big splash. It doesn’t do anything. It’s more noise than marketing. Believe me there is plenty of noise on social media, don’t contribute to it.

Mistake #18: They have the wrong people in the wrong positions.

You have that long time employee who has been loyal and dedicated over the years and now you decide to promote them into a leadership role. Good idea on the surface. Most of the time it turns into an ugly mistake that ends up with the long-term employee leaving. Why? You promoted them without considering if they were a good fit for the position.

It’s a common (and fatal) trap that many get caught in. Of course, we know what our people want and what is best for them! But do we? Have we ever sat down with them and had a clear (I mean a really clear) conversation about what the expectations are for the new role? Have we looked at their strengths and their weaknesses and developed a coaching plan so when they hit those challenges (and they will), we have a way for them to navigate them?

Have you sat down and asked them if they really truly want the job before we just battlefield promote them? 8 out of 10 times most haven’t had a heart-to-heart conversation like this. Why? Because we let our ego out of its cage, and we think we know what’s best for them. Let’s be clear...they need to know too before you just hand out that promotion.

Or worse, you let emotions or personal relationships make the decision to promote people or place them into a position that you know deep down they are NOT a good fit for. But we do it thinking we can “help” them or “change” them. Give them a chance, right? Famous last words that we end up eating later.

The chances you have changing some else are very slim. You have a hard enough time trying to change yourself so don’t think for a second that you are going to change other people. Your long list of unkept New Year’s Resolutions is proof of that!

Mistake #19: The leader doesn’t develop themselves.

Here is the one that is the fatal blow to a restaurant’s culture...the leader (if you can call them that) who wants everyone else to get better while they stay the same! You can put these words on my tombstone: All Business Problems are People Problems in Disguise.

Those people's problems start at the top of any restaurant organization and trickle down. Culture is a living thing that is cultivated and nurtured by leadership. It’s like a pipe that carries oxygen (and energy) to the team and that flows down to the guest. If the guest experience is weak, I just trace the flow of culture from the end and go up the pipe to see where the flow issue is. 9 times out of 10 it’s at the top!

Leaders are always the problem, and they are the solution. If they can swallow their pride and admit that their restaurant is a reflection of them. Your habits, attitudes, beliefs, and core values are the foundation of any restaurant culture. If you think you can bypass this and create a culture from hope and good intentions, think again. Culture is created by design or by default. If you don’t have a hand in its creation the staff will create one out of their habits, attitudes, beliefs, and core values...you really do not want that.

Changing culture is probably the most challenging thing I do as a coach. Toxic cultures like the way they are! That comfort zone is deadly once it gets ahold of your restaurant and it’s going to be like wrestling a gorilla to get it back. Here’s the secret when wrestling a gorilla: you don’t stop when you’re tired, you stop when the gorilla is tired!

Remember this:

Negativity breeds complacency.

Complacency invites mediocrity.

Mediocrity is the death of a restaurant.

When you fail to grow as a person you hold your restaurant hostage to remaining the same. The sad thing is 80% of people who run restaurants are okay with who they are and having the restaurant they currently have. Mediocrity has consumed them, and they have accepted a life and restaurant that is less than it could be.

If you made it this far, you are in that 20% that want more! You know that you can become more, do more, make more, and have more!

Now in order to get that you will need to jump into uncharted territory and that thought will make you uncomfortable. You need to embrace that feeling. Everything you want is on the other side of your comfort zone.

We all know we should be working “on” our business instead of “in” our business. But, how do you do that?

First, you have to go back through these 19 fatal mistakes and find the ones that you are guilty of doing. Awareness is your ally here! You cannot change something until you see you need to change. This will require you being honest with yourself about how you are running your life and your restaurant. Yes, the two work together. You cannot be successful in one without it spilling over into the other!

 

If you really want to break free from where you are now you will need a coach and a path that has been proven to get results. The Restaurant Accelerator™️ is my signature roadmap to getting you that restaurant you want.

More money in the bank.

More time for what matters to you.

Less stress.

More life.

If you say that it can’t be done, I have over 2100 restaurants in the last twelve years that say otherwise. Old habits, outdated beliefs, and limited mindset keep you where you are now. To change your restaurant, you must first change yourself.

It first starts with a decision to change.

When you are really ready to make the move towards getting more from your restaurant and release you from being held hostage by it, let’s schedule a 1:1 Strategy Session where you and I will have a talk about how we can work together to get you where you want to go.

I look forward to talking with you soon.

Your Coach,

Donald

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