Restaurant Management | 12 mins read

Beginner's Guide to Restaurant Management

beginners guide to restaurant management
Lauren Christiansen

By Lauren Christiansen

What Does it Mean to Manage a Restaurant?

Managers are critical components of the restaurant business as they handle both employees and patron concerns. The many requirements of restaurant management include inventory management, ensuring food safety, shift scheduling, handling employee problems, and providing high-level customer service.

With restaurants facing new challenges that include poor market conditions and COVID-19 based restrictions, management must know how to handle all of their requirements with ease, while eliminating any inefficiencies.

As patrons increasingly demand high-quality and efficient service, it is essential to incorporate best practices that streamline restaurant operations. Managers that recognize what customers value spend less time worrying about attracting new patrons, and focus more on optimizing their current patron relationships.

As a result of high customer satisfaction and word-of-mouth, an effective restaurant owner will automatically attract new customers. Implementing best practices and delivering on a value proposition also leads to new opportunities, which include business growth and profitability.

  • 51% of restaurants say staffing is the biggest challenge facing the industry
  • Minimum wage increases has resulted in 47% of restaurants scheduling staff for fewer hours each week
  • 31% of restaurants update their menu on a monthly basis
  • The biggest current trends include local sourcing, zero-waste cooking, fresh produce, and healthy kid menu options

The Challenges of Restaurant Management

The restaurant industry is highly competitive and vulnerable, with only 40% of new restaurants surviving after one year. Knowing the way food trends affect menu choices, managing daily operations, running advertisements, and optimizing hiring processes are just a few of the many challenges of managing a restaurant.

While this may deter an entrepreneur from opening a new diner, it's important to remember that thousands of corporate chains started as small diners with few resources. These chains and other successful small restaurants faced several challenges and overcame them by implementing best practices. Many of these challenges include -

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1. Menu Design

Designing a restaurant menu and knowing which items to include requires research, analysis, and regular performance reviews. Having too many items is expensive and counterintuitive, as it is overwhelming to the customer.

Menu engineers discovered that using dotted lines to show prices causes customers to buy the least expensive items, while poor designs subtlety impact customer brand loyalty.

Regularly reviewing the menu with engineers assists in effective menu design. It's also important to include the menu on the restaurant's website, in accordance with best SEO practices and responsive web design.

2. Providing a Certain Customer Experience

In the restaurant industry, the customer is always right is not only applicable but critical to business success.

Providing a good first impression is required for service-oriented companies, particularly in a world with online reviews and social media posts. A restaurant can have the highest-quality, most delicious food but if their service is poor, it won't survive for long.

Ensuring excellent customer service necessitates good hiring practices, with managers, hostesses, and staff responsible for providing it. The onboarding experience should include rigorous training, inspirational materials, and brand information to ensure everyone knows their responsibilities and larger company goals.

3. Standing Out from the Competition

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The restaurant industry faces a competitive market in which standing out is essential for business success. If customers can't answer why they should eat at this specific diner and not another one, then the diner isn't showcasing its brand.

Defining and telling a brand story through the use of slogans, promotions, trend-setting, or involvement in the community are great ways to make the restaurant stand out from the competition.

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4. Inventory Management

Discerning how to effectively manage inventory and price menu items is another challenge the restaurant industry faces. Overordering, food waste and ineffective tracking methods will result in wasted money, resources, and poor customer service.

Managers need to understand the food market and which items are valuable so they can price items and still make a profit. If there is a need to increase prices, it's better if they are smaller and frequent rather than larger and infrequent.

Restaurant Manager Responsibilities

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New managers are often overwhelmed by the many responsibilities that are not included in the job description. Day-to-day operations are stressful and challenging, particularly in larger restaurants that follow strict guidelines. These responsibilities include training, supervising, ensuring work safety, and inventory management.

Furthermore, the digital age requires knowing how to operate software systems and analyze data so decisions are based on statistics rather than guesswork.

1. Managing Staff

Managing restaurant staff effectively requires adaptability and patience. This responsibility includes interviewing, managing the onboarding experience, carrying out performance reviews, enacting disciplinary measures, and juggling changes in pay.

It also necessitates several interactive processes such as mentoring employees and challenging team members to advance in their careers.

2. Accounting and Handling Finances

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Managers are responsible for ensuring the restaurant is making money and open regardless of external circumstances. This requires generating, monitoring, and assessing budgets and analytical financial reports.

Managers must establish a set of KPIs and metrics that track the progress towards achieving them. They are also required to monitor how many items are sold each day, what the labor expenses are, revenue per week/month/year, and the cost of inventory.

3. Managing Inventory

The kitchen should have the correct items, ingredients, and safety standards to avoid spoilage and waste.

Inventory needs to be regularly checked, along with the difference between the real expense of used ingredients and the documented expense of used ingredients.

This optimizes cash flow management and lowers expenses, which minimizes excessively large portions, waste, and theft. Daily menu planning with the chef can also ensure each plate is tasty, portioned properly, and cost-effective.

4. Scheduling and Performing Payroll

Managing shifts is one of the most time-consuming and challenging management tasks. With part-time and full-time employees who have different requirements and availability, it can be very easy to make a scheduling error.

Performing payroll is also difficult due to industry-related compliance requirements, payroll taxes, and handling all of the necessary documents that go along with it.

Utilizing automated scheduling software and payroll software can ensure accuracy, minimize error, and save time for overworked managers.

5. Advertising

In the digital age, advertising online is a critical requirement of effective management.

Creating engaging social media posts, employing search engine optimization practices, and finding cost-friendly alternatives for marketing in the local community are all management responsibilities.

It's important to note that all of these actions must be performed while balancing and monitoring the budget to avoid overspending.

Restaurant Management Basics

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Providing enticing food or fine dining is not enough to maintain profitability in this type of economy.

A competitive market requires quick and efficient customer service, systemized operations, and a reason for existing. Restaurants must have a brand story to tell their audience that stands out from the competition.

At the same time, managers cannot overextend themselves, particularly during the first critical year of operations. Managing all of these requirements and monitoring cash flow is only a small part of running a restaurant.

While management tasks vary depending on the restaurant, there are some basics that apply to every small and large diner. These include-

1. Offering Good Customer Service

The most important objective of management is to make sure that customers are satisfied throughout the dining experience. This requires -

  • Handling complaints to ensure customers return
  • Managing employee expectations to encourage high performance
  • Utilizing social media and other platforms to market a brand
  • Track revenue and costs to optimize cash flow management
  • Pinpoint methods to improve sales such as offering specials, providing catering, revamping the menu, or investing in kiosks

  • 7 out of 10 consumers claim they would spend more money doing business with a company that offers good customer service
  • 25% more people rely on customer review sites than they do food critics when determining where to eat
  • 65% say meeting seating preferences would improve their brand loyalty
  • 75% of customers would not visit a restaurant that has a record of uncleanliness

2. Enhancing the Onboarding Experience

Ensuring that each worker aligns with his/her role will help to streamline operations. During the interview process, managers should review references to see if the past experience will make the candidate a good fit.

A 1-3-month probation period is a good method to root out those who are not fitted to their roles.

Because it is a service-oriented industry, each worker must be friendly, engaging, well-mannered, highly organized, and good at problem-solving.

Offering incentives such as paid time off or promotions will also improve morale, optimize productivity, and decrease the turnover rate.

3. Cash Flow Management

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Cash flow must be monitored each day, week, and month to mitigate budget problems and prevent financial problems. Utilizing a point of sales systems assists in managing inventory, tracking sales, and monitoring cash flow. It can also help decrease food expenses, payroll costs, and identify popular menu items.

Managers are also responsible for increasing sales and predicting future sales to properly manage inventory and maintain profitability. It's critical to adjust prices properly when food costs increase, without losing customers.

Managers must decrease frivolous expenses and pinpoint areas of waste to optimize cash flow management. This requires using the most energy-efficient light bulbs, shutting off lights at a certain time each day, and picking and choosing which non-menu items are worth spending more money on.

What is Restaurant Management Software?

Restaurant management software assists in operating and managing a restaurant. It includes a point of sales system that monitors and collects data on each consumer transaction. While many restaurants only use a POS system, several other software solutions incorporate additional features, which include-

  • Payment Processing System - A method to collect and track all transaction data.

  • Inventory Monitoring Tracks - the number of available ingredients and optimizes the reordering processes.

  • Table and Order Management - Configures a complete layout of the restaurant to monitor open tables and orders. Assists in seating customers without overburdening the wait staff to provide the best customer service and maintain employee morale.

  • Timesheets and Punch-In Data - Tracks employee hours and provides self-service options so workers can clock-in easily each day. Employees can manage their shifts and switch with coworkers, which helps to decrease management workload.

  • Integrates with CRM - Integrates with a CRM to analyze customer information.

  • Advertising and Promotional Programs - Monitors loyalty programs or other promotions to provide the best customer experience.

  • Menu Design- Allows the user to choose menu items, costs, and how they should appear throughout the day. Integrates with Kiosks so customers can view promotions and happy hour specials.

  • Reporting and Analytics - Provides reporting so management can analyze historical data, pinpoint inefficiencies, and make better business decisions.

  • Technical Assistance - Offers technical assistance in case there is a system failure or inaccurate input.

  • Integration Capabilities - Integrates with accounting, payroll, time tracking, kitchen management software, and customer relationships management systems to streamline operations and ensure accuracy.

The Benefits of Using Restaurant Management Software

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Because of the many requirements included in managing a restaurant, it's easy to make a mistake. Utilizing an optimized software solution can not only minimize potential errors and decrease a burdensome workload, but it also collects valuable data that improves decision-making.

By investing in a solution with the correct features, restaurant managers will achieve greater profitability and eliminate inefficiencies that impact employee morale and customer satisfaction. Other top benefits of using restaurant management software include

1. Improves Attendance and Workforce Management

Every business knows that poor attendance is costly and harmful to employee morale. Furthermore, coordinating multiple schedules without making a mistake is a tiresome and meticulous process.

By utilizing a software system, restaurant managers can quickly handle every part of the workforce such as onboarding, scheduling, and time tracking.

2. Optimizes Payroll

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Every employee expects to be paid correctly and on time or they won't perform their jobs. Maintaining compliance with federal and state labor/tax laws is also required to avoid lawsuits and penalties.

A software system with payroll capabilities integrates with time tracking software to ensure all payments are accurate and timely. This also decreases the workload of the HR or accounting team so they can focus on more important tasks.

3. Offers Reporting

Software systems collect large quantities of data that are transformed into reports. These reports deliver insights into inefficiencies and strengths so management can make better business decisions.

When profit margins razor-thin profit margins, it's essential to eliminate any inaccuracies or errors that impact finances. Regularly analyzing reports to learn from historical and real-time data can decrease waste and predict future sales to help increase the bottom line.

4. Provides Data Security

As more customer information is available online, implementing security measures is increasingly important. Stolen credit card information or other forms of hacking can ruin a company's reputation and destroy its finances.

A payroll processing system that complies with optimal security standards can protect sensitive customer information and reduce fraud by up to 75%.

5. Manages Inventory

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Reordering and tracking inventory is a delicate process that requires time, money, and labor.

An optimized software solution can decrease labor costs and minimize inaccuracies by automatically tracking stock, sending alerts to reorder, and monitoring the popularity of menu items.

This improves the reordering process and optimizes relationships with vendors. By never running out of popular items, brand loyalty increases and it is easier to naturally attract new patrons.

Key Takeaways

In conclusion, here are the key takeaways about restaurant management -

  • The top challenges of restaurant management include menu design, providing a certain customer experience, standing out from the competition, and managing inventory.
  • Running a successful restaurant includes many responsibilities such as managing staff, accounting and inventory, inventory management, scheduling and payroll, and advertising.
  • An optimized software solution offers several features such as payroll processing, inventory management, integration capabilities, and reporting and analytics.
  • The benefits of restaurant management software include improved attendance and workforce management, optimized payroll, reporting capabilities, data security, and inventory management.

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