What makes a restaurant successful?

You may think that a line out the door is the best marker of restaurant success — but there's much more to restaurant success than just a loyal fanbase. 

A strong restaurant identity, hiring and retaining your staff and building a supportive environment, familiarizing yourself with profit and loss statements, creating a profitable menu (and learning how to market your best-selling items) are just some of the key elements of successful restaurants.

Key elements of a successful restaurant business

What makes a great restaurant? The food, location, service, and setting are just a few factors behind why guests might flock to your restaurant — but there's a lot of work behind the scenes to bring an exceptional and consistent dining experience every day. A successful restaurant owner knows that, beyond what the guests see, there’s much more to be done to ensure the restaurant is both thriving and sustainable long-term.

While learning how to run a profitable restaurant can seem like rocket science, there are a few key success factors that play an integral part in a restaurant’s success.

A strong restaurant concept

Knowing your restaurant’s identity is very important — and this starts with a good business plan. A thorough and well-executed business plan shows investors and other stakeholders how you plan to take your dream and vision for your restaurant and turn it into an (organized) reality. You may think that having one isn’t important; but when you're building out your restaurant, hiring and training staff, and dealing with the inevitable setbacks, a business plan operates as your North Star, guiding you back to where you need to be.

Ensure that your business plan is as comprehensive as possible — the more detail you can provide, the better it will be once you start working on your restaurant. Here are some questions to consider:

• Who is your target market? 

• Where will the location be?

• What kind of restaurant will it be (fine dining, fast casual, etc.)?

• How many other restaurants are in my future location? Do they have a similar concept?

A good business plan has a firm grasp of what your customers want, the competition in your neighborhood and city, how your concept will stand the test of time, and a balance of takeout/delivery and on-premise dining capabilities. 

It's also critical to consider your flow operation, with guests as well as internally. For example, what will your restaurant opening and closing checklist look like?

Happy staff members

If you want to know how to run a profitable restaurant, look no further than the people who work for it. Staff members who are happy to come to work every day have a positive effect on the work morale, which is reflected in the service provided to guests. Here are a few key factors to retaining the best staff for your restaurant:

1. Competitive pay, benefits, and time off

While restaurants often run on thin margins, aim to pay your staff a competitive wage and offer benefits and time off. Your willingness to invest more money in your employees will show with increased retention and peace of mind from your staff, knowing that they don’t have to worry about basic needs like paying bills and healthcare. Give your business a competitive edge by offering the best benefits package you can!

2. Communicative, supportive environment

Good pay and benefits are important — but a positive, supportive work environment to go along with them should not be overlooked. Can your staff come to you if an emergency or scheduling conflict arises without reprimand? Compassion is key — try to be flexible when your business allows it. Get a harassment policy in place as well — and make sure staff know that any harassment will not be tolerated. Have clear escalation processes in case staff members experience harassment, and encourage them to speak up without retribution. 

Schedule regular one-on-one meetings with staff to learn more about their professional goals and career trajectory, and to show that you care about them as people, not just employees. 

3. Make your staff a part of your business

People want to feel valued, seen, and heard. Your staff is no exception. If you’re encountering any restaurant challenges, why not ask your staff? As the eyes and ears of your restaurant (especially when you’re not around), they’ll likely have excellent insights and suggestions for running a successful restaurant. 

Be transparent with your team about your books, and allow them to collaborate with you in creating a better restaurant. Every single employee in your kitchen, dining room and bar contributes to your restaurant's success. 

4. Treat staff with respect, always

In a restaurant, there are certain power dynamics and hierarchies, but this goes without saying: treat all staff with respect and mutual understanding. 

Punish privately and praise publicly is a good rule of thumb, but don’t forget to praise often. Let your staff know you recognize their hard work and their efforts don’t go unnoticed. Ask them how their family's doing. Celebrate birthdays and life events. Your restaurant staff wants to work with management who takes an interest in their lives and protects them from the toughest elements of this industry. 

A good grasp of the numbers

Time to talk about money. While cash flow and profit and loss statements aren’t the most glamorous aspects of running successful restaurants, it’s a necessary one. You’ll need to become acquainted with some key performance indicators, below:

1. Cash flow: How much cash is going in and out of your restaurant?

2. Cost of Goods Sold (COGS): What is the cost required to create each of the food and beverage items that you sell to guests?

3. Prime cost: How much does it cost to operate your restaurant?

4. RevPASH (Revenue Per Available Seat Hour): How much money are you making compared to the number of available seats you have during opening hours?

5. Retention/Repeat visitor rate: What is the cost of acquiring a new vs. existing customer?

In addition, looking at your profit and loss statement weekly can show you what area of the business is underperforming — and allows you to course-correct before it’s too late.

A flexible menu  

One of the most exciting aspects of creating a successful restaurant is designing a menu...but you’ll need to be okay with not being beholden to it. Consider analyzing and engineering your menu quarterly or twice a year. What is menu engineering? It’s an empirical way to evaluate restaurant menu pricing, using your restaurant data and menu psychology to influence your menu’s design and content decisions and design a more lucrative menu. It involves categorizing all menu items into one of four menu engineering categories, based on the profitability and popularity of each item:

1. Stars: High profitability and high popularity

2. Puzzles: High profitability and low popularity

3. Plowhorses: Low profitability and high popularity

4. Dogs: Low profitability and low popularity

Categorizing your menu items according to these items will help you see which dishes should be 86’d vs which are most profitable. This is a good opportunity to get staff input as well, as they have the pulse of customers’ preferences and desires.

The right technology

You have an excellent staff and a profitable menu — now you need the right technology to make your ordering and payment processes as seamless as possible. A key success factor in any restaurant is a platform that includes point of sale, online ordering capabilities, inventory management, staff management, and more.

Also, consider using pay-at-the-table or order & pay technology, which minimizes the number of trips your staff has to make to the central POS system, improves table turn times, and reduces labor costs (not to mention saving money on receipt paper!). Without your staff worrying about processing payments or receipts, you can operate as efficiently (or even faster) with fewer servers. With easy-to-pay, contactless options, guests can rest assured that their payments are completed safely and securely (and you can rest assured that payments are made safely, too).

Purchasing a restaurant POS system isn’t an easy decision — find a company that can provide high-quality, 24/7 POS support, along with a system that staff can use easily.

Marketing

You can have an amazing restaurant, but without marketing, no one will know your restaurant exists! Social media is where your potential customers are, and it’s a great way to attract them. The most popular social media channels for restaurants are Instagram and Facebook, but experiment with different platforms because each channel caters to a different audience and offers varied ways to communicate with customers.

Email is another powerful channel, too. If you have specials, discounts, or a loyalty program, email is one of the best ways to communicate your restaurant’s offers. With email, the customers you’re contacting have either signed up to receive email updates about your restaurant or have physically been into your establishment — they’re likely interested in what you have to offer. This makes marketing to them relatively easy, but it still requires thoughtful planning.

Also, don’t forget the impact you can make online and off. Perhaps you can donate food to a local homeless shelter, volunteer at a charity organization, or support other community initiatives. Our lives are often lived from one screen to the next; getting out into your local community and learning more about its needs is invaluable to becoming a part of the fabric of your community, and a great way to connect.

Guest feedback

Feedback, feedback... we bask in it when it’s positive, and want to crawl under our beds for anything less than a four or five-star review. While receiving feedback is an exercise in having thick skin, it’s a vital part of your restaurant’s growth. Don’t be afraid of any feedback — positive or negative — and ask for it often. Whether it’s from the checkout process on the screen of a handheld POS, a comment card, or a Yelp or Google review, respond to all feedback—especially negative — and if you notice trends, make changes. 

Click here to learn how SuViche Restaurant Group uses Toast's Guest Feedback feature to keep guests happy and feeling heard.

Bring your restaurant dreams to life

There are many moving parts to operating a profitable restaurant successfully, but it's not impossible. Creating a thoughtful and detailed business plan, hiring and retaining the right staff, and knowing your restaurant’s cash flow are just a few key success factors of a restaurant - and with proper planning and execution, your restaurant can be successful for years to come. 

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