Recently, we met Muthukumar*. He owns a restaurant/ banquet business in the city that has run into a bunch of problems:
Not only has the business not taken off -even after 1 year of its launch (he faces huge operational losses with no sight of break even), he is also faced with a steady stream of complaints from his customers who keep dwindling by the day.
Food is his passion; he had assumed that with passion, he could taste success in due time. However, a prolonged period of dull business had made him vary of his own belief.
What was he doing wrong?
When Team Reservado dropped into his restaurant for a casual conversation, here’s what we found:
The ‘Big Start’ approach
For Muthu, this was his maiden restaurant business; he had no prior experience in hospitality & food industry. And yet, he had started expensively. Not only did he rent out the best space in the center of the city, he also invested a great deal into the ambiance (from imported tables to high quality floor cleaners). This meant that even before he had started, he had a huge capex on his books.
A better approach for owners venturing into this business would be to start small, learn the trade, and then invest into expansion. Seldom does the ‘Big Start’ approach work for such owners (an exception being the case when a conglomerate enters into the food & hospitality business)
Inefficient Utilization of Labor
Before predicting, or understanding the demand, Muthu employed ‘Over 50 workers’ to manage the business. Supporting more than what was required resulted in significant operational losses (which was also not balanced by customer inflow).
A better approach would be to hire a few experienced workers, test the demand, and scale up based on requirements
Excessive attention to Detail
Many owners pay too much attention to detail. While this might keep quality in check, it also dampens the efficiency of the workers while also increasing costs. As Arthur Hailey notes in his Book ‘Hotel’:
Sous-chef Andre Lemieux says: “For some who prepare food, the facade, how a dish looks is more important than how it tastes. In this hotel, we waste much money on the decor. The parsley, it is all around, but not in the sauce. The watercress is on the plate when more is needed in the soup. And, those arrangements of color in Gelatin!”
A kitchen worker in Muthu’s restaurant also noted (requesting anonymity):
“It is important to ignore some things that may not matter to the guests. For instance, if the taste is appealing, insisting on exactly 2 spoons of sugar, and 3 spoons of salt may not be important; this also reduces the pace at which the food is cooked.”
Wide variety in Menu
Variety introduces uncertainty, and therefore, food wastage. Having taken a franchise, Muthu was required to offer over 100 varieties of items. This meant that without prior knowledge of what his guests would order, cooking these items was time-consuming. Most of his early guests experienced very high serving times that in turn led to their “rather angry reviews” on social media platforms.
What might have worked better? Arranging the menu to reflect ‘daily food items’ (picking a smaller medley from the 100+ options) might have reduced uncertainties, and might have led to smaller serving times. For instance, on Mondays, guests could pick from 10–20 different items categorized by their types (starters, soups, main menu and so on).
Untimely redressal of complaints
Many business owners like Muthu are at a loss when it comes to handling customer complaints. A nice approach would be as follows:
Go right over to the table, apologize for the mistake, and offer discounts to make up for it.
A lot of new business owners lack the experience, and the insight into running a successful food business. As a result of this, most of them end up making the same mistakes as Muthu’s.
Understanding the demand, catering to the local tastes, measuring the utilisation of labour, reducing food waste by minimising variety etc. early on, might help with getting a solid start (among other things).
Are you a business owner finding yourself in these shoes? Do you hope to find out where your mistakes lie?
Write to firstname.lastname@example.org with the relevant details to get business tips on solving problems, and on improving your business!
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*Name changed for privacy reasons.