Where Are Your Stuck? The 4 Stages of Restaurant GrowthJun 18, 2021
Knowing where you are is just the start.
I'VE BEEN WHERE YOU ARE...
Running a restaurant can be without a doubt, one of the most rewarding things you’ll ever experience in more ways than one. But it is also one of the hardest things you’ll ever do as well!
With a never-ending list of things to be done and decisions to be made, one of the greatest challenges we all face as business owners is knowing which of the many things on our plate we should prioritize in order to move our business forward and achieve our goals faster.
Working on the right things, in the right order, what to focus on now, and what to hold off until later, can mean the difference between success and burn out.
If you’re working tirelessly in your restaurant but not getting the kind of traction you expect, there’s every likelihood that you’re focusing on the wrong things based on the stage your business is at right now. Or, you skipped some core steps and now your brand has weak links that need to be repaired.
Here’s the thing. Every business fits into one of four clearly definable stages of growth, and your current stage should determine your primary focus. Once you identify the stage of business you’re in, you can start applying the right strategies to get to the next level far more quickly and with much less stress.
THE HARSH REALITY
The first few years are undeniably the hardest, but knowing WHAT to focus on, and WHEN to focus on it, is a huge competitive advantage for any business owner!
When you stay focused on the right things for growth and have a solid framework to help you consistently achieve your goals, your business is more likely to last longer and continually advance through the stages of business below.
And just in case you’re reading this thinking you’re special and those stats don’t apply to you, think again! The Bureau of Labor Statistics tracked restaurant survival and concluded that these statistics are pretty consistent… no special treatment in this industry!
STAGE ONE: STRUGGLING
Starting at the bottom of the pyramid are the Bad restaurants. They make up about 20% of the market. They are struggling and lose money or they might just break even. Let’s be clear that you never want to have a goal just to break even! It’s basically not a business at this level it’s more of a hobby. An expensive hobby that sucks your time and energy with little to show for it all. In school, these are your D & F students.
Symptoms: The owners and managers are in a constant state of stress, frustration, and overwhelm. They have an extremely high turnover of staff. Reviews average 1-2 stars. You're working 80+ hours a week and not making much progress.
Culture: This is a culture by default. It’s run by the staff and it looks like the lawless days of the Wild West. No standards, no systems, no controls. Chaos in action. The managers usually hide in the office and rarely (if ever) come out to talk to the staff or the guests.
Focus: Here the only thing they know if their product. They might have a decent recipe for one thing and decided to build an entire restaurant around it.
Keys to Success: They need to really understand their market and dial in their brand to be a specific niche.
STAGE TWO: SURVIVING
Up one level is the Good restaurants. They make up about 60% of the market. These restaurants are considered average. In school, these restaurants would be C students. They break even or even turn a small profit of up to 5% (the national average). They have some good months and then some bad months. Their P&L (Profit and Loss statement) looks a lot like a roller-coaster at an amusement park! They are classified as surviving at best.
Symptoms: The owners and managers are exhausted, yet they are still determined. When they have good months they get a spark of hope and then the bad months come and the fears set in. Turnover is moderate and they are usually looking for a few new staff each month. Reviews average 3 stars. You're working 60-80 hours a week and it feels as if you are taking one step forward and two steps back.
Culture: Now the culture is started to be more thought out and is more designed with a focus on the guest experience. They do start to train people better than the bad restaurants, yet their training system is still outdated and is usually only done when someone is hired.
Focus: Now they start to get some basic checklists in place and start to get more organized. Things look better than at the bad level, yet they still have some ways to go.
Keys to Success: Systems are great if they are used consistently and enforced. Holding the team accountable is the biggest struggle here. They want to become better, they just haven’t developed their leadership team enough to be consistent. The focus (sadly) is on improving the team and not the leader.
STAGE THREE: THRIVING
The next level up from good is GREAT! These restaurants are about 15% of the market! They are definitely thriving as opposed to just surviving. Profits are in the 8% - 15% range. These restaurants are considered evolutionary in the sense that they have carved out a niche that allows them to start to separate themselves from the cult of average. In school, these would be your B students.
Symptoms: The owners and leaders have high energy and zest for the business. Renewed and revived energy also starts to flow down to the team and the guest experience. Reviews are mostly 4-5 stars. Turnover is low. You're working 40-60 hours a week and you feel things are finally starting to run smooth (you are starting to break free from your restaurant running your life).
Culture: This culture is crafted into more about building the team experience. They shift from a training culture to a learning culture. Leaders invest time into improving themselves and step up to become an example for the brand.
Focus: Here they start to really dial in strategic planning. They understand menu engineering, market positioning, and have crafted a brand story that they share with their team and their guests. They know how they are and where they want to go.
Keys to Success: Focus on the continued personal development of all the team. Become more exact on their budgets and manage the forecast. The leaders are experienced to make adjustments quickly as the market changes.
STAGE FOUR: DRIVING
The top of the pyramid is reserved for those restaurants considered OUTSTANDING! These restaurants are only 5% of the market! They lead and drive their market and are often copied and admired. They routinely make 18% profit or more. These restaurants don’t have much competition anymore, because they are advanced and have sophisticated systems locked in. These restaurants are defined as revolutionary.
Symptoms: They don’t play small, and they take significant actions to maintain their place on top of the market. They create world-class leaders, team experience, and guest experience. Reviews are mostly five stars, and they receive awards and recognition for their food and service. Turnover is extremely low. You're working 40 hours or LESS a week and you have your life back. You run your restaurant and it no longer runs YOU.
Culture: This culture is high orchestrated and methodical about leadership. The culture at this level is about leaving an impact on the world. They want to create a legacy and to be remembered.
Focus: The focus here is all about their team and leadership. They truly understand that having the right people playing to their strengths is the key to long-term success.
Keys to Success: Focus on the personal development of THE LEADER. Become more strategic in planning. Brand domination of the market is the goal.
THERE IS A CLEAR PATH
At the end of the day, every restaurant has many things going on that we’re all trying to juggle.
But when you look at them, some are more important than others. However, which ones should you be focused on? That's where having a clear plan and path pays off.
Climbing the proverbial business mountain isn’t easy, but when you have a starting point (basecamp), when you have a guide (a coach) who can help you anticipate along the way and prepare for the pitfalls, you can plot a path straight to the top of the summit.
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