It’s no secret that running a restaurant and making a profit is extremely difficult. Restaurant failure rates have reached ‘epidemic levels’, according to accountancy firm Moore Stephens, with insolvency now commonplace among individual restaurants and restaurant chains of all sizes and ages, operating in the UK.

Some incredibly high-profile restaurant groups (such as the Jamie’s Italian Group) have fallen into administration in recent years. Smaller restaurant groups or the owners of individual restaurants may, in light of this, feel that running a successful restaurant business has become an impossible task.

The outlook is obviously concerning, and symptomatic of the general slowdown in town centre and high street trade. But is there any way you can still make a success of a restaurant, if you buy one out of administration by ‘flipping’ it? We think there is a way, so here are our top seven tips on turning around a failing restaurant business.

1.) Don’t ignore online reviews

As a restaurant owner, you can become extremely attached to your business and take criticism very personally. However, this would be a mistake. Instead, it’s a good idea to view online reviews as a vast source of helpful feedback from your customers. If you’re seeing regular criticism of your service, you need to improve it.

If every other review says your prices are too high, people won’t come back a second or third time, so you might need to take a look at your numbers and the menu itself, in order to meet expectations better.

2.) Look at what went wrong with others

Private equity investors developed an appetite for restaurant chains a decade or so ago, during a period of low interest rates and easy borrowing, which resulted in massive growth for a number of chains. These investors drove growth over quality and service, before the whole thing backfired.

Staff on the ground at Jamie’s Italian, for example, said that they witnessed a loss of loyal customers or repeat-visits, as bargain-hunting punters using vouchers and tourists passing by made up the vast majority of the customers coming in. In addition, the initial over-investment led to the chain overburdening itself with enormous restaurant venues with large numbers of covers.

When times became tough, they found themselves reducing staffing numbers, to try to save money, but this resulted in poorer service and even more overstretched staff.
Lastly, the prices were deemed too high by many of the customers, who were expecting to pay the same as they would in more mid-range chains that Jamie’s Italian was competing against.

Despite the Jamie Oliver Group attributing the failure to a slowdown in the casual dining market and soaring business rates, there was more to it than met the eye, and there were a number of vital lessons to be learned.

3.) Analyse your restaurant’s financial performance

This is, of course, is a key part of turning a business you have purchased from administration right around. An in-depth look at what the major costs are, where you are making money and where savings can be made will stand you in a stronger position, going forward.

When you take on a failing restaurant business, there are key areas where financial failure occurs and many of these are linked to costs, so taking a good at look at these should be your first port of call.

4.) Get staffing levels right

Staffing costs are probably one of your biggest overheads, when managing a restaurant business. Of course, you want to employ a talented chef who can manage the kitchen well and paying fairly seems like the logical next step. However, when it comes to other kitchen staff, do you really need the sous chefs for as many hours as they were working when the restaurant failed?

If you can review the menu and make it less labour-intensive, for example, you can significantly cut down on your staffing costs. It’s also important to be realistic about what you are expecting from each staff member.

Don’t schedule too many waiters on quiet nights, but also ensure there are enough of them on busier nights, such as during weekends. Getting it right will take a little time and practice, but there should be no excuse for over-staffing, once you get to know the ins and outs of your business.

5.) Make savings with your food supplier

This is just one area where you can save money and again – keeping a very close eye on your books will help you to ensure you are making a profit on everything. There is no point in having items on your menu that just lose you money. Sure, some will be more profitable than others, but each item should be profitable or it has to go.

Negotiate again with suppliers or even change suppliers if they can’t do you a deal. Don’t be afraid to make changes if costs were too high before. After all, you are trying to save the business and everyone’s jobs. A saving in time saves nine.

6.) Get the tables turned

If you can increase the number of sittings you serve in your restaurant, you will be able to make a huge difference to your bottom line. One service a night probably isn’t enough if your prices are anything other than expensive.

Mid-range restaurants need to aim to turn tables at least once an evening. Marketing and special offers can help to get people through the door in the first place, if you need a boost in the early stages, after a takeover.

7.) And finally…be present

If you want to keep a handle on the daily running a restaurant, you must be present and willing to get your hands dirty. Customers, especially those who are local and loyal to the restaurant, will be eager to say hello and get to know you as the new owner.

Developing relationships like this will ensure you can keep a close ear to the ground on all the above variables.