Tuesday, 26 January 2016

Top reasons for a food service business to not succeed

Unlike other start-ups and businesses that usually take around 3 years or more to see the real test of time and turn out to be a success, the rise and fall of a food service restaurant is very quick. If the word of mouth has not spread within one year and revenue does not exceed the expenses, then it is time to really really revisit a lot of things.

Here are the top 10 reasons why a food startup, in spite of fabulous food and great taste does not scale to a fully functional, profit generating unit.

1. Uniqueness. The lack of at least one item in the menu that is truthfully unique to the restaurant. No matter what the cuisine is, how common it is, there has to be ONE item in the menu that attracts customers to the place. This is your gateway into people's mindshare.

2. Location. Restaurant success is about location.  A Location can make or break the business. Depending on whether it is an upscale business or a QSR, the location must match the offering and be in the right place. It is a good strategy to identify a Food Community or a Food Street and start the business there.

3. Service. The restaurant business is as much about connecting to customers and hospitality as its taste. People relate food to hospitality. A very non courteous staff, an unclean environment, delayed services can totally wreck the business.

4. Prize Point. Do the customers feel value for money? An overprized Menu for a not so unique offering can have customers frowning. Identify your customer base and make sure they ready to pay the prize.

5. A Brand Image. Today's customers relate and identify with Brands. People reach out to well established, value driven brands. Even a very small scale business needs to have a logo and a name that strikes a chord in customer's mind. And this Brand Name and Value needs to be etched in People's mind through continuous marketing.

6. Social Media Connect. With so many businesses fighting for customer's mindshare, Social Media Connect with the customers is an absoulte survival must.  A considerable amount of Marketing needs to be done through Social Media Channels and should have customers following you. It is also an easy way to reach out to customers about news/updates about your business.

7. Experience. Any food service needs to give customer an experience to talk about. Word of mouth is the best social currency for any business and more so for food business. Have you given your customers a reason to talk about your product? If not, innovate on this.

8. Innovative Menu. Most food businesses become stagnant with their Menu. While this model might have worked a decade back, the climate today is that the Menu needs to be consistently innovative. You need to create a way to keep changing the menu by gauging people's tastes and make sure that boredom does not set in. this is mainly to keep your repeat customer base in tact, because 30% of a restaurant revenue is from them.

9. Consitency.  A lot of food businesses fail because they cannot keep up the same quality of the food served in the menu. This is why its most crucial to create a factory model in dishing out your menu so that the process never fails even if Chefs change.

10. Cost Control. A food business runs on very narrow margins compared to any other start ups. Even if you are great on the other 9, not watching your costs closely will bring the business down. So watch out for every penny spent on the business and keep it tight.

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