These seven risks must be avoided if catering business is to succeed.

Seven risks to be avoided if catering business is to succeed.

In the past two years, the business of physical stores has been sluggish, and restaurants are often opened one by one. What kind of risks should catering start-ups avoid in order to succeed?

If you want to successfully open a restaurant, your success rate will be greatly improved as long as you successfully avoid the following "seven risks" in opening a restaurant.

the first risk: misunderstanding of the catering consumption demand around the store

A few years ago, a French leisure restaurant with a low price route was opened in Toyama County. The business philosophy of this store is "to provide consumers with low-priced and high-quality French cuisine", aiming at attracting "new customers who have never eaten French cuisine before".

at first glance, I feel that this store will be very successful. But unfortunately, less than half a year after its opening, the store started with a high profile and ended with a low profile. The biggest reason for the store's business failure is the cognitive error of "French cuisine consumer groups". At the beginning of opening the store, I once met the owner of the store, and I remember that he said something like this at that time.

"French cuisine is popular in Tokyo now, and I aim to open up a new French cuisine market in Toyama Prefecture."

indeed! At that time, there was no economical French restaurant in Toyama Prefecture, so it was logical for the other party to come to the conclusion that "... so this is an opportunity". But the problem is that there is no such precedent in the past. From another angle, it may also mean that Toyama Prefecture "has no such demand (market)". Because there is no precedent to follow, if investors have to test the water in places where consumer demand is not strong, the probability of winning is of course very small.

In Tokyo, the "consumers of French cuisine" have an overwhelming advantage, and the tourists tend to be low-priced French cuisine, so French cuisine can maintain its enduring popularity.

According to this inference, the French cuisine consumers in Toyama Prefecture should flow into this restaurant. However, because the absolute number of such customers is small, at least, the number of customers is far from enough to make this store operate stably. This is the real reason for this restaurant's high-profile opening and low-key ending.

The catering enterprises provided by well-known enterprise consultants have withdrawn from this market, and the main reason is that they have gained insight into this misunderstanding of consumer demand. The ideal is beautiful, and the reality is cruel (insufficient consumer demand), which leads to the store's revenue not reaching half of the expected.

by the way, the industry's misunderstanding of this consumer demand not only occurred in small business districts such as Toyama Prefecture, but also occurred in larger business districts and even prime locations.

The so-called sales forecast data moved out by some well-known management consulting companies or franchise headquarters is simply nonsense. If the forecast data they come up with is accurate, then at least there will not be as many French restaurants closed down as they are now.

These people have never made an in-depth investigation and analysis of the "first-line catering consumption demand (market)" at all. At best, they are playing some theoretical data calculation games.

in other words, "it is not only dangerous but also impossible to make a business plan if you don't master the correct analysis method of consumption demand in the catering market". This is my opinion.

the second risk: the store is too large

a few years ago, a popular French leisure restaurant opened along a traffic trunk line in toyama city. This road has a large traffic volume, which is one of the best in the local area.

besides, this restaurant has an excellent market. Not only the passenger flow is large, but also the number of enterprises distributed around it is many, and its advantages are unique. Therefore, this store is very attractive to consumers, and its revenue is second to none in the surrounding area.

unfortunately, the store ended up with hundreds of millions of yen in debt.

what is the reason?

in a word, the store is too large.

specifically, it is similar to the first "risk of opening a store" mentioned above, that is, compared with the consumer demand around the store, the size of the store is too large.

for the catering industry, the larger the store scale, the more inputs it needs, such as bank loans, labor costs, store rents, utilities and other fixed costs. In other words, it is expensive to maintain the normal operation of the store.

in addition, the more realistic problem is that in order to maintain the attendance rate in a relatively stable state, businesses have to invest heavily in advertising.

The store's marketing performance in the surrounding business districts is the best, but it finally left with huge debts, which is the terrible thing about opening a high-risk store.

Of course, I am not advocating that "the smaller the store, the better".

instead, I want to emphasize that "large-scale inconsistent with consumer demand" is not a good strategy for opening a store.

the third risk: failed store design

once the store design is messed up, the merchants will bear "unpredictable cost loss" or even "lost potential opportunities".

here is a failure case that resulted in "unpredictable cost loss".

This is a western-style izakaya. The interior design is simple American style, fashionable and atmospheric, divided into two floors. However, it is this special design scheme that leads to the store's high initial investment and greatly increases the investment cost. In fact, this design also caused some complaints among customers who went to the store for dinner, such as "the waiter didn't answer the call bell" and "the service speed was slow". Every time the business in the store is busy, the waiters have to rush upstairs and downstairs, so it is inevitable that the serving speed will be slow.

As a result, the store had to add a wine cabinet on the second floor and set up a special person to stay, resulting in a monthly loss of labor costs of more than 111,111 yen.

the enlightenment of this failure case is that if we make a hasty design scheme without careful consideration in advance, we can only bear additional costs.

Next, let's talk about a failure case of "losing potential opportunities".

This is a Japanese-style izakaya located along the main traffic lines. The shop is transformed from the original wooden building. The interior decoration is simple and elegant, the environment is elegant and comfortable, and the appearance is atmospheric.

however, the problem this store faces is that it is difficult to attract new customers. After investigating the store, I found that the store "doesn't look like a izakaya at all". From the analysis of its geographical location, the store has a large traffic volume and plenty of customers, but few people know that it is a izakaya. Because no one will go to a shop that doesn't know what it is, so they can't attract new customers.

Now, the store has added a signboard marked "izakaya" in front of the store. As a result, compared with the same month of last year, the store revenue increased by 1.5 times.

on the other hand, it can be said that this store has missed the opportunity in vain so far, seeing customers losing one after another and losing the precious opportunity to attract new customers.

From the above two cases, it can be seen that the failed storefront design is often not easy to be detected.

The premise is that storefront design is a fait accompli, so even if some costs and opportunities are lost privately, it is difficult for people to notice.

in the future, in order to reduce the cost loss and increase the revenue, the merchants must be cautious when designing the store in the early stage.

the fourth risk: relying on alternative modes and special items to operate

In fact, the "running road" restaurant mentioned at the beginning belongs to this type.

This store is the first "pork restaurant" in Toyama Prefecture. At that time, this business model was rare in the catering industry. Its concept is quite creative, and the dishes provided are delicious. Although this store has many advantages, it has been closed for less than half a year.

The reason for the failure of this case is exactly the same as that of Risk I and Risk Er Ru.

for example, suppose that customers who like pork cooking account for 11% of the total tourists. This ratio is basically the same in both large and small business districts. However, the tourist base of large business districts and small business districts is different. In other words, the "absolute number" of consumers who prefer pork cooking in large business districts is high, even if it only accounts for 11% of the whole, the number of tourists is amazing. Therefore, choosing to open a pork restaurant in a large business district is not a problem.

On the contrary, the number of customers in small business districts is small. Even if the merchants are slow and steady, and successfully attract 11% of consumers to eat in the shops, the operating income is far from the level of maintaining the operation of the shops.

this is the reality I know. By the way, of course, some exceptions are not excluded. These specialized in alternative formats and successfully established themselves in the catering market are some "shops with the best taste and overwhelming advantage", that is, "local famous shops". However, from my personal experience, there is only one chef in 111 people who can attract customers to come to the store for dinner. Therefore, these 1% shops are well-deserved to become local famous shops.

Some people think that "small shops should win or lose by special dishes" and "the focus should be on special items", and so on. However, in my opinion, these are absolutely high risks.

if you want to win with characteristics in a small business circle, it's almost impossible. Its difficulty can only be achieved by a handful of 1% shops. The remaining 99% shops simply can't make unparalleled delicacies.

fifth risk: poor understanding of finance and capital turnover

there is a phenomenon in the catering industry: some shops were originally profitable, but finally closed down. This phenomenon is usually the result of the shortage of capital turnover in enterprises.

I once had a face-to-face conversation with the owner of a barbecue shop, who was the owner of a private restaurant. His shop was located in a small street.

"Mr. Shizuzawa, the person in the accounting firm said that the break-even point of our store was around 1.8 million yen."

"Really?"

"Recently, the operating income of our store has reached 2.2 million yen, but the capital is still not enough!"

"Does your store have regular repayment? The sales profit also needs to be deducted from the repayment. "

"yes! However, after deducting the repayment of 1.5 million yuan, the remaining money is still not enough! "

"Your personal living expenses are also deducted from the remaining amount, right?"

"yes."

"Even if the remaining profit is 411,111 yuan, there will be repayment and living expenses, so the funds will not be able to turn around."

"hmm, but the monthly living expenses are about 51,111 yuan, and the repayment is 51,111 yuan. The two items add up to 311,111 yuan. After deducting from the 411,111 profit, isn't there a million left? Why is the cash flow still tight? "

"that makes sense! But there must be a reason behind it. "

after this exchange, I made a thorough investigation on the situation of this store, and finally locked in the cause of the problem.

first, the turnover of this store fluctuates greatly, and the amount of dunning increases sharply the next month after the store's performance is greatly improved. In addition, the single purchase quantity of refined meat is large, which leads to the deviation of monthly order quantity. Months with low revenue often face a large number of purchase orders accumulated last month, which leads to an increase in capital turnover pressure.

second, the water fee payment cycle is generally two months. Accumulated payment in two months led to a sharp drop in cash flow.

thirdly, in the month when the store's performance is rising, employees often need to socialize after work in order to strengthen the relationship with customers. This part of the expenditure is mainly included in public entertainment expenses (such as entertainment and welfare expenses), rather than deducted from the living expenses of employees.

these three factors are superimposed, which leads to the difficulty of cash flow in the store.

the above case may be a special case, but this kind of situation can be found everywhere in reality. Take the restaurant owner in this case as an example. When there is a big difference between store income and expenditure and the fluctuation of cash balance increases, the problem of unclear cash flow will occur.

as a result, it will be more and more wasted unconsciously, which will eventually lead to a gap in capital turnover.

in addition, the private sector also faces a problem, that is, there is no distinction between the daily operating funds of the enterprise and the living expenses of the operators, which needs special attention. Everyone has one thing in common: when they have money, they want to spend it. So, how to avoid the above situation and ensure that the enterprise has sufficient operating funds?

sixth risk: wrong promotion method

this kind of risk not only occurs during the opening of new stores, but also plays an important role in the daily operation of enterprises. Here is an example of izakaya.

located in the suburbs, this restaurant specializes in fresh fish dishes, and it is a large izakaya with 111 seats. When the new store opened, the store's advertisements in the local media occupied a full page. The store was full of diners for several days, and the initial turnover was very impressive. It seems that everything is going well.

however, the problem soon appeared: when the new store opened, a large number of customers flocked to the store, and the employees were frightened by the unprecedented situation. As a result, customers complained constantly. What's more regrettable is that the customer's evaluation of this store is not only bad, but also bad.

"If we continue to advertise, the situation at that time will definitely not be able to cope." However, the rhythm of this store's advertising in the media can't stop at all.

why? It's because of fear. The reason is very simple: if an enterprise that has achieved brilliant achievements is allowed to suddenly shed its former aura and face the cruel reality of declining turnover, no one will not be afraid.

As a result, the izakaya finally gave up advertising in the media due to financial pressure. Shortly after the advertisement stopped, the store's performance suddenly declined. Business in non-holiday stores is even more bleak.

So, the store had to find another countermeasure, trying to change the format to get out of trouble. Unfortunately, the result is still regrettable, and it was closed less than one year after its opening.

It's true that the initial decision-making mistakes were made, but continuing to promote sales to a large number of new customers has made this store bear heavy debts. If the store can adjust its thinking in time and focus on stabilizing its old customers, the result may not be so bad.

it is very important for catering enterprises to attract new customers. However, if the operator puts all his thoughts on new customers, he will certainly face great risks.

the seventh risk: the wrong way of talent recruitment and training

is the same as the promotion cases listed above. For catering enterprises, besides the opening of new stores, the seventh risk may also cause great risks in the operation of enterprises.

Take the French casual restaurant mentioned in the previous article as an example. Do you know how many waiters were equipped in this restaurant on the first day of opening? There are only four. The store has high requirements for employees (chefs, waiters), and it is understandable to value the professional skills and comprehensive quality of job seekers, but the risk of the above situation is too high.

For catering enterprises, labor cost is the most difficult expenditure item to control. No matter whether the business situation of an enterprise is good or bad, personnel expenditure is inevitable. Therefore, it is necessary to strictly control labor costs before the enterprise operates stably.

in addition, there is an extreme situation. A izakaya plans to recruit 21 people during the opening ceremony.