How to Turn Around a Failing Restaurant

How to Turn Around a Failing Restaurant

Restaurants operate on razor-thin margins, facing intense competition and high failure rates. However, even once-thriving restaurants can fall into decline for any number of reasons – a dated concept, poor location, inferior food quality, high prices, negative reviews, or inadequate marketing among them.

Turning an underperforming restaurant around requires methodical analysis of the core problems plaguing the business, followed by strategic and creative solutions to revitalize the concept, menu, facilities, staffing, operations, customer experience and marketing.

Revamping a restaurant is a complex, multifaceted undertaking requiring ample time, capital investments, visionary leadership, unwavering commitment and often some tough decision-making.

Be prepared to make changes like renovating the dining space, overhauling the menu, rebranding and repositioning the restaurant’s identity, replacing ineffective staff members, updating technologies and workflows, or even relocating altogether if the site is a hindrance.

Attention must be paid to diagnosing and addressing both surface issues and root causes so problems are fixed at their core and will not resurface again. This may necessitate digging deeper to understand vulnerabilities in the business model, market positioning and operational efficiency.

The restaurant revamping process demands careful planning, sufficient financing, open-mindedness to try new approaches, resilience through setbacks, and dedication over months if not years. But with patience and persistence, struggling restaurants can absolutely be turned around to not only survive, but thrive as beloved and relevant dining destinations once more.

By following the comprehensive strategies outlined in this guide, owners of underperforming restaurants can gain the insights and execute the changes needed to stabilize cash flow, improve profitability, delight customers and ultimately resuscitate their business to achieve enduring success.

Diagnose the Root Causes of Failure

Before any turnaround plan can be created, the core reasons behind poor performance must be fully understood. Common downfalls of failing restaurants include an unclear brand identity, subpar food quality, high prices, inconvenient location, dated decor, incompetent management, poor customer service, and lack of marketing. To accurately diagnose the issues, thoroughly analyze all aspects of the business by:

  • Reviewing sales data to identify downward trends
  • Comparing customer traffic patterns to peak hours and seasons
  • Estimating customer retention rates by frequency of visits
  • Surveying customers on satisfaction levels and desired improvements
  • Monitoring online reviews and ratings across various platforms
  • Evaluating menu options that get low orders or poor feedback
  • Shadowing front and back-of-house operations during peak hours
  • Assessing locations and formats of top competitors
  • Speaking with staff across all levels to get their input
  • Consulting trusted vendors and advisors from an objective standpoint

Look beyond obvious symptoms to uncover the root causes of failure. For example, lackluster food quality could stem from an inadequate executive chef, inferior suppliers, poorly trained line cooks, or inadequate cooking equipment. Peel back each layer fully. The deeper the problems are understood, the more accurately solutions can be targeted.

Develop a Strategic Turnaround Plan

Armed with comprehensive understanding of the restaurant’s pitfalls, develop a strategic plan to address them. The plan should outline specific initiatives, responsibilities, timelines, and budgets dedicated to the revamp. Key elements to cover include:

Mission Statement: Craft an inspiring mission statement and vision that articulates the restaurant’s purpose and goals. This guides decision-making throughout the turnaround.

Concept: Pinpoint needed adjustments to the concept, such as a new cuisine type, more exciting decor, or shifting price points.

Menu Overhaul: Which items, flavors, and presentations need updating to boost quality and interest?

Brand Messaging: How should the restaurant’s brand identity, taglines, and visual aesthetic change to better attract customers?

Customer Experience Enhancements: Brainstorm ideas for improving customer interactions, like friendlier staff, reduced wait times, loyalty programs, or more comfortable furnishings.

Management & Staffing: Evaluate organizational structure, job descriptions, training programs, and staff replacements needed.

Kitchen Operations: Identify equipment upgrades, new systems, waste reduction methods, and layout changes to streamline food preparation.

Marketing Initiatives: Plot campaigns for social media, local PR, advertisements, partnerships, and grand reopening promotions.

Financial Projections: Estimate costs of planned overhauls and project their ROI through increased revenue. Factor in operating costs and profit goals.

The plan should balance an optimistic vision with realistic constraints like budget, staff capabilities, and timelines. Build in review milestones to reassess progress and adapt as needed. With a solid turnaround plan as a blueprint, it’s time to roll up sleeves and get to work.

Execute Impactful Changes to Concept and Menu

Two primary opportunities to revive interest are adjusting the restaurant’s concept and menu. As customer tastes evolve, the concept and menu must stay fresh and relevant.

For the concept, analyze current trends and competitor concepts that thrive locally. Brainstorm unique niches to fill, like experiential dining, hyper-local ingredients, cuisine mashups, or interactive cooking. Test ideas through customer surveys and feedback sessions. If wholesale concept change is too risky, consider a “concept within a concept” like launching a speakeasy-style bar inside a casual American eatery.

For the menu, cut unprofitable or outdated dishes and emphasize crowd favorites. Infuse local seasonal produce, craft cocktails, gluten-free options, small plates, or other on-trend items. Balance novelty with familiarity so as not to alienate existing customers. Updating 25-50% of the menu strikes the right balance typically.

Changes should align with the restaurant’s brand identity and price point. Whatever direction is chosen, commit fully and update all visual elements, decor, signage, menus, and messaging to match. When unveiled thoughtfully, exciting concept and menu changes generate buzz and give customers compelling new reasons to give the restaurant another try.

Invest in a Revamp

First impressions matter greatly. Dingy, dated front-of-house environments convey laziness and turn off customers. Investing in facility upgrades and decor refreshes shows commitment to improvement and enhances the overall dining experience.

Start by deep cleaning everything – floors, walls, tabletops, chairs and bathrooms. Repair broken furnishings or fixtures. Improve lighting with bright bulbs and natural sunlight if possible.

Pick a cohesive decor palette and add accents like plants, tabletop florals, artwork, mood lighting or thematic design elements that reinforce the concept.

Develop visible kitchens or appetizing display cases to showcase fresh ingredients and food preparations. If budget allows, replace worn surfaces with fresh paint, wallpaper, tile or wood.

Construct decorative partitions to segment large spaces into more intimate dining rooms. A professional designer can help plan renovations for maximum visual impact within budget constraints.

Take “before and after” photos to showcase changes on social media and the website. Well-designed, comfortable spaces make customers feel valued and eager to linger longer, which improves satisfaction and sales.

Retain and Support Staff Through Changes

The restaurant’s staff are invaluable assets during turnarounds. Servers, bartenders, chefs and managers who have history with the business provide stability and insight. However, some poorly performing employees may need replacing. Use the revamp as an opportunity to build a stellar team aligned around the restaurant’s future direction.

For current staff, communicate openly about the plans and rationale to secure buy-in. Encourage input on issues and ideas for improvement. Clarify how roles may evolve and outline skills training needed for new menus or concepts. Recognize and reward staff who demonstrate flexibility, initiative and commitment despite uncertainties.

For new hires, seek candidates passionate about the restaurant’s cuisine and service vision. Look beyond just experience and carefully assess personality fit. Invest time in training new staff thoroughly on menus, systems, values and service standards. Happy, invested employees dedicated to the restaurant’s success deliver welcoming experiences that are critical to winning back customers.

Boost Visibility Through Marketing and PR

Failing restaurants often cut marketing, but consistent messaging and promotions are vital to regain visibility. Devise engaging grassroots tactics on limited budgets, like:

  • Sidewalk Signs: Place creative sidewalk boards out front with daily specials. Have a staffer wearing a sandwich board if permitted.
  • Window Displays: Design appetizing window displays showcasing signature dishes and ingredients.
  • Local Events: Set up booths at nearby festivals, street fairs and events to sample food and coupons.
  • Social Media: Share photos highlighting new items, renovations, and staff. Run contests and giveaways to build followers.
  • Partnerships: Collaborate on cross-promotions with complementary businesses like bars, shops or hotels.
  • Happy Hour: Promote special happy hour deals on drinks and bar bites to drive visits at off-peak times.
  • Grand Reopening: Throw a weekend-long party with tastings, music, games and giveaways to reconnect with the community.
  • Influencers: Host food bloggers and local influencers to spread positive word-of-mouth.

Aim for consistent yet creative messaging across platforms. Monitor analytics and customer feedback closely to double down on tactics that gain traction. PR and marketing will accelerate notice of the restaurant’s evolution.

Improve The Customer Experience from Start to Finish

Beyond facilities, branding and promotions, scrutinize every customer touchpoint. Talk to patrons personally during visits. Survey staff on customer grievances. Mystery shop to experience the restaurant as a first-timer. Identify service weak points like long waits, billing confusion, or rude employees. Brainstorm and implement service flow changes for immediate improvement:

  • Greetings: Train hosts to warmly welcome, seat and orient guests.
  • Managers: Have managers introduce themselves and proactively check on tables.
  • Orders: Streamline order-taking steps so customers aren’t left waiting long for service.
  • Food Delivery: Determine proper pacing so courses don’t arrive too spread apart or backed up.
  • Table Touchpoints: Check in periodically and anticipate needs for beverage refills, condiments, etc.
  • Farewells: Thank guests sincerely and invite them to return.

Regularly solicit customer feedback using short surveys or email follow-ups. The more diners feel genuinely appreciated, the more likely they are to become enthusiastic regulars.

Monitor The Financials Meticulously

Turnarounds require diligent financial management and number crunching. Build detailed sales forecasts factoring in revamp costs, breakeven points and profit goals. Track daily and weekly sales versus the projections and prior periods. Break out performance by daypart, menu section, server, or other segments to spot patterns.

Scrutinize every expense like cost of goods, inventory levels, labor hours, vendor contracts, utilities, and maintenance. Weigh the ROI of each expenditure. Bargain with suppliers for better rates. Reduce waste through portion control and staff training. Analyze menu pricing regularly and adjust based on market conditions if needed.

Watch cash flow vigilantly to manage operating expenses. Only undertake initiatives like capital investments or new hiring that the current finances can support. With the data insights gleaned from rigorous financial tracking and cost management, fine-tune strategies to stabilize the restaurant’s profitability.

Stay Resilient Through Setbacks

Restaurant turnarounds are marathons, not sprints. Initially, some attempts may falter or show lackluster results. New concepts or dishes can flop. Promotions may fail to drive traffic. Hiring miscalculations can happen. Unexpected costs or delays will likely crop up. Don’t let temporary setbacks kill momentum.

Stay flexible, adapting initiatives and timelines as needed while persisting toward the end goal. Learn from mistakes and make course corrections. Celebrate small milestones and staff victories to keep morale up even if progress is slow. Break intimidating large initiatives into smaller steps that feel achievable. The vision should remain constant even when tactics meander.

With calm resilience that learns from failures and finds alternative routes forward, the restaurant will gradually regain its footing. Once the pieces fully come together, momentum will gain strength through sustained commitment.

Wrapping it up

Turning a failing restaurant around is enormously challenging yet entirely achievable with the right strategic approach. First and foremost, it requires fully diagnosing the core issues across concept, menu, staffing, facilities, operations, marketing and finances to pinpoint the root causes behind poor performance. Armed with those insights, owners can thoughtfully craft a revamp plan tailored to address the specific vulnerabilities and opportunities of the business.

Skillful execution of the revamp plan involves recalibrating the restaurant’s concept and menu to stay relevant, renovating the physical space to elevate ambiance, building a capable service-minded staff, ramping up visibility through promotions and partnerships, meticulously improving customer experiences, diligently controlling finances, and remaining resilient through inevitable setbacks along the way.

While the process is complex, it is very manageable when broken down into actionable steps and approached one day at a time. Within 12-24 months of consistent commitment to the revamp strategies, struggling restaurants can make tremendous strides toward stabilization and profitability. Adaptability, creativity and tenacity are key attributes for owners leading the charge.

With dedication to uplifting the cuisine, hospitality and community, and armed with the proven revitalization approaches outlined here, underperforming restaurants can overcome missteps of the past and reestablish themselves as beloved dining destinations once more.

By reinforcing their unique value and forging stronger bonds with patrons, neighborhoods and markets, even longtime failing restaurants can renew their vitality and thrive for decades to come. Just like a phoenix rising from the ashes, with hard work and optimism, restaurant turnarounds can soar to success.