Restaurateurs need to constantly assess menus
ADJUSTING IS PART OF THE BUSINESS, EXPERT SAYS
There are times in business when it pays to swallow your pride and start again. In the restaurant world especially, the sooner you can identify that moment, the better.
For seasoned restaurateurs James Iranzad and his business partners at Gooseneck Hospitality in Vancouver, opening a new seafood restaurant concept in the city’s Kitsilano Beach neighbourhood seemed like the perfect idea on paper.
Called Supermarine, it had all the hallmarks for success. Market research showed that seafood offerings were under-represented in t he neighbourhood, and they had recently had a round of successes with their other local restaurant ventures. “We were feeling really good about ourselves and felt we were on a roll, so made the decision to start this new project,” Iranzad says.
Despite the research, and stellar revenue over the summer months, the team soon realized t he momentum wasn’t going to carry into the fall and winter months.
It turns out the locals weren’t quite as enthused as the summer tourist crowd, and traffic slowed in what was essentially a very casual neighbourhood. “The restaurant didn’t resonate with residents,” he says. “That’s where we failed to see the big picture.”
Rather than wait it out until the next summer, they decided to shift gears. “We had to accept the fact we didn’t hit the mark with Supermarine and let it come to a natural end. We then made the adjustments we needed to open a Baja- style taco joint, which was more appropriate for the neighbourhood. After closing and reopening as Lucky Taco in 2016, we have never looked back.”
When Ricarda’s opened to huge fanfare in Toronto in June 2016, the European owners also experienced a disappointing start, but for different reasons. Within a few weeks, they were seeing uncomplimentary reviews on social media and a drop in revenue. Rather than abandoning the project, they engaged COO Chris Glaessel to review the situation.
While they had concentrated all their efforts on the opening, the management team that was in place fell short of the mark when it came to running the dayto- day business operations, Glaessel says. “I lifted every cover and looked in all corners to discover that it was badly managed. There was no control over processes or workflow. It was clear that fixing this was going to be much bigger than a tweak.”
The new plan involved eliminating the top leaders, retraining front- line staff, changing menus and implementing team building exercises. “We also introduced a new corporate vision, philosophy and values, and personally contacted every guest that was disappointed or upset as part of the journey to win them back,” Glaessel says.
After closing mid- December 2016 and reopening in the new year, Ricarda’s has been showing up to 27 per cent month- over- month growth, and the owners are now looking to open a second location in Oakville.
The restaurant business counts among the most risky ventures for startups and entrepreneurs, says David Hopkins, president of The Fifteen Group, a Torontobased hospitality management and consulting group. “I would estimate that 50 per cent of those we have seen failed because they were not managed effectively.”
Hopkins says changes are a natural part of running a new restaurant venture. “There will always be a need to tweak things, like adjusting pricing, removing menu items or fixing problems in the kitchen. But a wholesale change usually comes from not understanding what your business model is.”
To avoid that fate, restaurateurs need to have a very strategic and detailed financial model, he advises. “If you don’t have accurate financial information and a detailed budget, you are running blind as to what i s not working, and that makes it really hard to fix things. Sometimes owners don’t even know what their topline revenues need to be.”
A good plan needs to cover a broad range of inputs, i ncluding product costs, labour, average cheque size, price points, workflow, estimated guest count, operational costs ( e. g. rent, insurance) and space needs. “Finding the ideal size space is critical. If you have more than you need, the added cost can be astronomical.”
Having been in the hospitality consultancy world since 1995, Glaessel is familiar with the many reasons why operations can fail. But he also knows when an opportunity for recovery makes sense. “As soon as you have the feeling something is going wrong, an owner needs to dive in and steer things in the right direction — or find someone to do that for you. Once the novelty factor is over, you have to remember that this industry is not about running a sprint, it’s a marathon.”
THERE WILL ALWAYS BE A NEED TO TWEAK THINGS, LIKE ADJUSTING PRICING, REMOVING MENU ITEMS OR FIXING PROBLEMS IN THE KITCHEN. BUT A WHOLESALE CHANGE USUALLY COMES FROM NOT UNDERSTANDING WHAT YOUR BUSINESS MODEL IS. — DAVID HOPKINS, THE FIFTEEN GROUP