In my world of restaurant consulting, if there’s one question that gets asked more than any other, it’s the title of this blog.

What my clients don’t want to hear is often my first response: You don’t. That’s because it is an extremely expensive and trying process, even if you do everything right.

First, you need to ask yourself one question: Do you know why your business is failing in the first place? Most often it’s a combination of a few different things, but knowing this will certainly impact the strategy. Ultimately, it can give you a sense of whether it’s possible to bring your restaurant back to life, and if so, when can you expect to see positive results.

Why Restaurants Fail

Restaurants fail for a number of reasons, like new competition from both full- and quick- service restaurants, a change in demographics, or maybe your concept is just old and tired. However, more times than not, restaurants fail because of their inability to execute at a high level, day in and day out. If this is the case, you can expect you will need a significant infusion of cash to restore it to it’s glory days. Increased Labor, repair and maintenance, supplies and ultimately marketing will probably be needed. Once you have everything in place and are executing at the highest level, it could take up to a year or longer to reap the benefits. Even if the world is talking about how wonderful you are, it takes a while before people will make it in to try you out.

Case in Point

A good example is a restaurant project I worked on recently. It opened about six years ago, and was an immediate success. Annual sales were about $2.5 million, which is very good for a small restaurant in a C location. However, over the next four to five years, leadership changed and the emphasis shifted from focusing on the guest, to the costs, specifically reducing labor. This created a change in the execution that led to a “hit or miss” experience for both new and loyal guests.
Needless to say, sales trended down, which is usually the case when there are plenty of other options. Sales dipped double-digit percentages over that span of time, and when I got the SOS call, the annual sales were around $1 million, down about 140 percent, while losing over $100,000 in profit.

So What Now?

In the situation I just explained, I eventually had to inform ownership it was going to be a long, expensive road to get their restaurant back, but it could be done. This owner had the financial resources to make that commitment, however most don’t.

First, I knew we needed to make an entire cultural shift and send a message to both the employees and the guests that we will be doing things different and, more importantly, that we were committed to change.

Over the past several years, they ground their labor to the bone, while spending a ton of money on marketing. So the first change we made was to staff the restaurant hoping we would be busy, as opposed to praying we’d be slow. Labor has to be seen as an investment, not an expense, especially when you’re trying to win people back.

Next thing we did was reduce marketing. It may seem counterproductive, but it just doesn’t make sense to bring new guests in until you’re confident you can deliver an exceptional dining experience.

Next came the food (it’s a restaurant, after all). We had make sure recipes existed, that they were up to date, and that they were actually being followed. It helped that the food, when made properly, was very good.

After that we started enhancing the actual facility. This included some detailed cleaning, a few repairs, some painting and reconfiguration of the host stand. It didn’t take a lot to make it look good.

Our final step was to rally the troops, train them on the changes and then let them know that excellence in product and execution is the only standard we would accept. You have to be very creative in communicating the standards you seek, but you can never waver.

By this point, most of the staff were on board, and those who weren’t moved on. So the place looked great, the food was awesome and the service was nothing short of excellent.

Now actually comes the hardest part of process: executing those standards on a daily basis is how you actually save a dying brand. You can make mistakes on occasion, but those mistakes have to feel like an anomaly.

Oh, and then there’s patience. You have to be patient. As mentioned earlier, it takes time for word to travel that things have changed.

To sum it up, you absolutely can turnaround a failing restaurant. However it takes time, money and most importantly, commitment from EVERYONE involved.

If you want to learn more, contact me at penn@pennulitmateconsulting.com