How to make your restaurant a profitable business

The restaurant business can be a gruelling one, with new food concepts popping up and disappearing again at the blink of an eye. It can be a real challenge for new business owners to know what works, and what doesn't. 

London-based restaurant consultant Vasken Jermakian often gets called in by hospitality entrepreneurs who need his help setting up business systems. Through his consultancy Foodication, Vasken helps struggling businesses become profitable again. We reached out to Vasken and spoke about overcoming some of the most challenging aspects of owning a restaurant business. 

I believe one of your specialties is turning underperforming restaurants around. What are some tips you have for managers who want to turn an underperforming team into a successful one?

When I approach an underperforming team in a restaurant, the first question I ask is “have these people been trained?” Have we told them what we expect from them, have we given them our standards, have they been told the basics? After clarifying that, it’s about retraining them if necessary.

"A good sign of a good place is that it should run by itself without a manager."

Many times, the underperforming team is underperforming because there are other issues in the restaurant, so I have to dig and find out what’s going wrong. But very importantly, underperforming people who have been given the chance to get better should not be tolerated, because that contaminates team work and the next thing the customer starts suffering as well.

What are some areas that business owners struggle with when they first go into business?

Probably the finances, I would say. Many people don’t have a financial background so it takes a while for them to understand their cash flow, their breakeven point, and generally how they will have to play the game to make some money.

Also, they often underestimate how long it takes for a restaurant to become profitable. It can take a bit of time, from a week to six months to a year for some restaurants, depending on the concept and location. Many cases where I’ve been called to help a restaurant in difficulty, they’ve misjudged the time that it takes for them to become a viable business.

Unfortunately, most entrepreneurs don’t seek help until there’s not a penny left in the bank and it’s too late. It can be quite difficult. Another thing I would say is that the entrepreneur should be ready to put in the hours initially. The first couple of weeks you will probably not have a day off unless you close. And for the first couple of months there will be no holidays. After that, if you’ve done your job right and have set up a proper team, that’s when you can go on holidays and enjoy life. A good sign of a good place is that it should run by itself without a manager.

What do you think are the main factors many hospitality businesses fail within the first few years of starting up?

Not every concept will work. If you start implementing a food idea without market testing, this can be quite dangerous. If you have a very new idea about a novelty food, it’s better to test it as a pop up or a market stall initially. There are lots of opportunities for street food right now, so it’s good to try and experiment. And this way you don’t have to give up your day job. You can do it on the weekends and see how things go, then when you’re convinced that it’s a business, that’s when you open.

"Many cases where I’ve been called to help a restaurant in difficulty, they’ve misjudged the time that it takes for them to become a viable business."

Taking the recipe that your grandmother used to make and taking that straight to the market is a recipe for disaster. I’ve seen those cases where people have this idea of the food they used to eat with grandma, and they think there’s a market for that. It might bring a lot of nostalgia and good feelings for you, but that doesn’t mean it will resonate in the same way with the general audience.

What are some tips for connecting with a Millennial audience?

Millennials are very mobile and have little attachment to a place. If the next door neighbour has an offer on they will go there. Or if there’s something new happening, they will go there. It’s all about experience for millennials, rather than being at a specific place.

So play their game. Go mobile, use arts, be on websites and use the means that they’re using to communicate. It’s good to have one of them do your social media and to help you with that, because they understand the same language, they have the same behaviour when they’re going out. The basic marketing rules apply, but it’s about adapting the message to the medium and to the end consumer.

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