So you want to build your own restaurant startup? Who could you blame you – the restaurant and food industry is exciting and highly rewarding.
Starting a restaurant is a dream for many, especially for those coming from a culinary background. For the dream to become a reality, there are often significant hurdles to overcome, and merely having culinary knowledge isn’t enough. But let’s say you’ve got the business plan completed, business capital gets secured, you’ve got your supply partners in place and your location is being remodeled– things are starting to take shape, right?
The Top Challenge Facing Your Startup
Not so fast—you need manpower. In fact, labor is the top challenge facing established restaurants and restaurant startups alike. According to a 2018 HubSpot report, 59% of restaurant owners say hiring, training, and retaining staff is the biggest challenge they face. We can certainly attest to that! In our 30 plus years consulting restaurants new and existing alike, we see that manpower planning is a big issue that most owners and management gloss over. Not hiring the correct number of people is one of the biggest mistakes operators make when opening a restaurant!
The management team needs to create a realistic labor schedule that will be required to support their different levels of volume and service standards. What often happens is operators do not develop a staffing hiring plan, and they find themselves scrambling to cover post-opening shifts, resulting in unanticipated overtime. Not only is it costly for the operator and skyrockets their payroll costs, but it also burns the staff out, and they get exhausted trying to help cover shifts while they wait for the manager to hire more people. When overtime happens for extended periods, it also begins to affect morale negatively.
During the restaurant opening, you’ll need more staff, since many will drop out or be asked to leave. With that in mind, management needs to consider how many team members will be required to open the restaurant and what the ideal number of staff will be needed to run it once it normalizes efficiently. They need to keep these two numbers in mind when hiring. The restaurant staffing needs would be calculated based on the restaurant normalizing 3-4 weeks after opening.
Let’s take a look at a concrete example. If you believe you need 60 or more front of house and back of house staff members to cover all shifts, then you need to host a hiring fair and hire 160 people. Why 160 and not just 60? The reality is that 12% to 15% never show up for orientation, while 10% will attend orientation and decide the job isn’t for them. We find that 10% drop out during training, and another 10% will prove not to be a good fit for the job.
Get Organized: Details will Make or Break Your Startup
A reasonable timeline is for management to organize a job fair 6 to 7 weeks before opening. To attract enough people, be sure to have a lot of exciting things to talk about, such as employee benefits, financial compensation, growth opportunities, work culture, and other employee perks (free food?!). Get organized first: find a venue, assemble your restaurant team, prepare your interview questions for each role needed, and spread the word about the job fair through social media and other news outlets (radio, television, print ads). Plan on hiring at least hiring 2 to 3 times the people you need!
Don’t forget that successful staffing doesn’t end at hiring. You must have training processes in place as well as the critical employee handbook – crafted by the founders, partners, and management team of your restaurant startup. The employee handbook at your restaurant startup should cover everything from the food label system to restaurant management systems to the tablet pos platforms (point of sale platform) used at your restaurant. When employees quit, you should conduct exit interviews to understand their choice and to uncover any issues that may be causing employee dissatisfaction within your restaurant or restaurants.
Speaking of training – this is a major pitfall for both veteran restaurants and startups. Many restaurant training systems throughout the country do not embrace new tech, instead opting for outdated software and platform learning systems. As a result, employees and management at these restaurants lose interest and are often only equipped with reactive information, not proactive. Training tech and learning management software have rapidly evolved in the past 5 years – so why not take advantage? Your restaurant startup can make your training more engaging and accessible by converting your handbook to the virtual and mobile space. You can even utilize software that will turn the training information into a game among employees at your restaurant. Friendly competition at restaurants and startups encourages an culture of fun and growth. At Synergy Restaurant Consultants, we can help you develop and implement top of the line training systems – whether you are looking to build your startup or already operate multiple restaurants. We even offer a newly minted, virtual restaurant management course – Synergy U – that provides you with all the tools and information you’ll need to handle these manpower issues with complete confidence.
Quick Note: Don’t forget about restaurant laws!
It’s important not to overlook the laws and regulations of your country and locality while you are assembling all these pieces of the restaurant pie. As the owner of a restaurant startup in the US, you are subject to a variety of federal and state laws; federal restaurant labor laws originate in the Fair Labor Standards Act (FLSA). These laws are designed to protect restaurant employees’ rights in the food service industry. They address several topics, including:
- Minimum revenue for subjection
- Minimum wage requirement
- Deductions and minimum wage
- Tips and minimum wage
- Overtime
- Overtime and tips
- Youths and minimum wage
Restaurant owners and management also need to be aware of the Occupational Health and Safety Act (OSHA) and laws enforced by the Equal Employment Opportunity Commission (EEOC).
In addition to these federal laws, you will need a variety of permits and licenses to startup a restaurant. Depending on which state your restaurant or restaurants operate in, you may need:
- Business license
- Food service license
- Liquor license
- Food handlers permit
- Certificate of occupancy
- Sign permit
- Music and entertainment licenses
- Valet parking permit
- Seller’s permit
- Resale Permit
Check the website of the state and county your restaurant or restaurants are located in to view their resources for the permit approval process. While it can sometimes be a headache keeping track of all these laws, failing to follow one or more of them can cost your restaurant startup big time! If you need any help taking care of the legal side of starting a restaurant, multi-unit franchise, or chain – please reach out to us. Our team features experts with decades of experience in every single facet of restaurant ownership and management.
As you can see, adequately staffing your restaurant is no easy feat; however, with proper planning and the right information, it can be done! The growth of your restaurant startup depends on it!