We have our small business guest blogger here today with some great insights on different obstacles you may find when purchasing an existing bar or restaurant, and how to make the transition as smooth as possible. Enjoy!
Buying an existing restaurant or bar offers many advantages including an established client base, brand awareness, immediate cash flow and trained staff, but new ownership can generate problems with managing employees and keeping customers. You could inherit an incompetent staff, develop personal conflicts due to your management style, or alienate long-term customers by introducing unsettling changes in menu, service or décor.
1. Motivate current employees with transparency in changes
Change often becomes a painful process because you might need to let some staff go and institute new codes of conduct. People initially resist change and new management, but restaurant histories and statistics prove that changes made for valid reasons are quickly accepted. According to a Datamonitor market analysis, shifting spending patterns and greater health awareness have become major factors in choosing restaurants, so you can build staff and customer loyalty by making it easier for people to order from your restaurant, find meals for special diets and earn restaurant rewards for continued loyalty. Strategies for a smooth ownership transition include charting the following course:
- Reward innovations from employees, and take time to hear their suggestions.
- Define a code of behavior, but train staff completely and get employees involved in implementing changes.
- Seek volunteers for new responsibilities.
- Keep morale high by explaining why each change is being made.
- Change policies only when doing so will improve production, strengthen guest satisfaction or increase profits.
2. Review current restaurant policies before making major changes
Remember the cardinal rule of management changes: customers and employees want reassurance because restaurants play important roles in their lives. Take time to conduct a review of restaurant policies before instituting any sweeping changes. Restaurants generate many policies, advertising strategies and food-preparation techniques that need reviewing.
- Seek input from each area of the restaurant before settling on new policies.
- Research regular customers to determine why they eat at the restaurant.
- Check on any local health and fire regulations because previous owners might not have met guidelines.
- Determine what kind of advertising and restaurant loyalty programs were used by former management.
Loyalty for restaurants begins with keeping most of the restaurant’s established customers unless you plan major changes in type of cuisine, menu or customer demographics. Implementing, retaining or converting an established restaurant loyalty program could prove critical for ensuring a smooth transition and keeping long-term customers happy with the change in management.
3. Generate loyalty for your restaurants with an upgraded reward program
Buying an existing restaurant invariably leads to making changes, but you reassure loyal customers and staff by continuing loyalty programs, honoring previous commitments and showing customers that you value their patronage. Restaurant rewards help you create one-to-one interactions with each customer and provide the following benefits:
- Tailoring promotions for each demographic niche of your customer base
- Encouraging customers to return more often and spend more when they dine
- Acquiring intelligence about customer preferences
- Building a database of likely diners for marketing initiatives
- Giving customers powerful reasons to choose your restaurant for each meal
- Advertising new menu items and signature events
- Managing customer relations to address their concerns about new ownership, menu changes or service issues
- Enlisting staff in efforts that provide demonstrable benefits of any changes you institute
- Using demographic information to attract new customers to replace inevitable attrition and keep the business growing
- Becoming customer-centric in your planning instead of instituting wholesale changes based on gut feelings
4. Train staff to engage customers and combine previous loyalty programs
Train staff in how to engage customers, encourage them to sign up for restaurant rewards, and serve as cheerleaders and spokespersons for your management changes. Employees need to understand how to get information from your point-of-sale system and include reward incentives when calculating guest checks. Each server or staff member should promote the program with accurate information.
Thoughtful training helps your servers and bartenders think of themselves as independent salespeople. Loyalty programs encourage better tips, repeat business, and referrals that raise server salaries. New restaurant owners take all the risks by paying rent, buying inventory, and covering insurance and utilities, so servers and bartenders can only gain benefits by enthusiastically supporting your goals and programs. Of course, let your staff know what they are empowered to do. One benefit of established restaurant rewards is that staff members have limited options for keeping customers happy. Servers and staff can literally give away the store to increase their tips, but offering standardized rewards limits server discretion for providing customer incentives.
Creating and serving the most profitable customers becomes more efficient when employees understand their limits. Benefits of loyalty program training include:
- Increases in customer satisfaction when servers and staff take time to explain restaurant rewards, discounts, and incentives
- Additions to loyalty program databases
- Better employee morale when staff feel valued
- Generating excitement for changes you plan for the restaurant
Administrative and training initiatives often go unnoticed by customers unless they encounter problems. Busy new restaurateurs often neglect websites, social marketing, and online advertising to attract customers. Loyalty programs encourage new owners to take advantage of mobile apps, keep their online advertising fresh and provide social media connections to engage their customers. Making menu changes online, creating daily specials and offering coupons are much easier to do digitally than printing menus, distributing fliers, running ads or writing menu boards that are legible and visible throughout the restaurant. You can save time and money while keeping your online marketing current and responsive by starting a restaurant loyalty program.
Loyalty cards and/or mobile apps can make your loyalty program easier to manage
One concern that consumers have about loyalty programs is the proliferation of loyalty cards, but mobile apps on smartphones and tablets store information from cards so that people can use multiple cards easily. Your customers always have their phones handy, so they can use mobile apps to store loyalty cards and always get their entitled benefits. Mobile apps and restaurant loyalty initiatives provide various cost-value advantages for implementing your management style:
- Promote daily specials, or offer coupons for perishable foods that you need to move quickly.
- Use mobile apps to send suggestive-selling tips as concise text messages.
- Enable customers to study your menu online, order electronically and make dining reservations.
- Promote your business with mobile ordering and turn-by-turn directions to your restaurant.
- Target restaurant rewards based on each customer’s buying behavior.
- Connect with social media platforms where customers can read and post reviews of menu items.
Mobile marketing becomes increasingly important for businesses that want to connect with customers. Fortunately, technology has created a new playing field where owners can quickly establish their credentials and begin building loyal fan bases. According to Search Engine Land, 64 percent of restaurant searches convert immediately. The study also found that 95 percent of mobile-device users conduct restaurant searches. MobiThinking.com states that 29.6 percent of all searches involve restaurant research.
Mobile apps offer ways for your customers to manage loyalty cards effectively, and restaurants with older scanning equipment can always enter card numbers manually if the scanners can’t read smartphone displays.
The lovely people who run this blog, Fivestars Loyalty, also offer a modern digital loyalty program that combine many of these different features, all in one easy to use program. To learn more, head to this page to see how it can work at your small business: Learn about Fivestars Loyalty.
Ensuring a smooth change of your restaurant’s ownership
Your customers might include different demographic segments for breakfast, lunch, dinner and takeout orders. Bars are especially sensitive to changes in ownership because people choose places to drink based on clientele, entertainment options and management style, which could change tremendously under new ownership. Additional tips for making a smooth transition when buying an existing bar or restaurant include the following ideas:
- Train employees where to find answers to any questions they have or information that customers request.
- Meet regularly with staff to explain new procedures, air grievances or learn more about workers.
- Encourage responsibility in serving alcoholic beverages, and increase sales by recommending top-shelf spirits, fine wines or special drinks instead of encouraging people to drink excessively.
- Avoid hiring too many new employees at one time.
- Set performance goals, and conduct regular evaluations.
- Introduce a multitiered loyalty program for customers from different demographic backgrounds.
- If changing an established loyalty program, offer customers equivalent benefits for any credits they’ve earned.
- Choose rewards that recognize customer preferences for upscale restaurants; offer financial incentives for fast food or neighborhood eateries.
No other strategy offers a better way to take charge of an existing restaurant, keep customers happy, encourage increased spending, and retain valuable staff members than a customized restaurant rewards program. Restaurant rewards programs don’t really focus on the rewards, discounts, or free meals. Loyalty programs are about engaging your customers for long-term relationships and gathering intelligence about their likes, personal information, and buying habits. Entrepreneurs who buy an existing bar or restaurant can use loyalty programs to research their clients, put their stamp on a business, get inherited staff excited about the change, and connect with new clients through social media and mobile marketing.
- Hotel Mule: Owning and Managing a Restaurant—Change and Innovation
- Fare Apps: 14 Mobile and Social Stats Your Restaurant Should Know
- Search Engine Land: Study: 64 Percent of Mobile Restaurant Searchers Convert “Immediately or Within an Hour”
- Mobi Thinking.com: Global Mobile Statistics 2012 Part D: Consumer Mobile Behavior
- Berkley.edu: Customer Loyalty Programs: Best Practices
- Inside Business 360.com:Tips for Buying an Existent Restaurant
- Pencon International: Change Management in Your Restaurant
- Send Me the Manager: Taking Over: How to Buy an Existing Restaurant