Article contributed by Aditya Narula, Kabbage
Restaurants need to invest in order to keep growing. But what investments are really worth it? We’ve curated tips and best practices to help you decide.
Restaurant owners can’t afford to sit still in a constantly shifting market. Growth requires keeping up with consumer taste and rethinking the value you offer your customers.
Often, that means investing in your business. But how do you know what investments will help your business the most? And what are some of the key considerations to take into account before spending? Based on our conversations with industry veterans and restaurateurs, here are three questions you may want to ask yourself when weighing an investment.
Do you know what your target customer wants?
It may seem like a simple question, but given the complexities of the industry, it may require some thought and careful study.
Valerie Killifer, editor-at-large of Off Premise Insights, frequently speaks to restaurateurs who are seeking to expand their catering and delivery options. She’s seen a polarization between customers who want convenience and those who are seeking a dine-in experience.
A restaurant like Dallas-based French bakery chain Le Madeleine, she says, has been able to bridge the gap by offering an in-house delivery service during limited evening hours.
“Those two ideas are very conflicting, because if you think of convenience, you think of, ‘I just need to grab something to eat and go,’ but if you think of experience, it’s more like, ‘Take your time and sit down,’” Valerie says. “It probably comes down to, ‘Who are we serving?’ Are you serving convenience sector guests or are you serving the guest that wants more of an experience?”
Are you staffed for it?
When veteran Chicago chef Lamar Moore was working at a restaurant a few years back, he hired a cook from the burger chain Shake Shack. After one of his sous chefs asked why he would make a seemingly one-dimensional hire, Moore responded with two words: Happy Hour.
“We were getting ready to do a happy-hour program,” Lamar says. “So I said to my staff, ‘What’s our number one-seller during testing? Burgers. That’s your burger guy.’ And we can learn from him because he knows more about burgers than we do, because that’s all he did, was just cook burgers.”
As it turned out, that burger chef turned out to be one of Moore’s best investments and most versatile cooks. “I still take some of the things that I learned from him into how we cook burgers,” Lamar says.
Have you asked?
Laura Hobson and her husband Johnny started their baked-goods business, Hobson’s Homemade, in the small town of Maynard, Massachusetts, by circulating their products among friends and selling at the local farmer’s market. And at every stage of their growth, they’ve solicited the advice of their customers.
Laura and Johnny have regularly relied on online surveys that they circulate through customer mailing lists and through links on their social media sites. When they were considering a brick-and-mortar location for their business, they asked their customers when they’d be willing to visit, how often they’d come, and how much they’d spend.
They’ve since commissioned surveys to ask customers if they would come to their cafe at night, and to determine whether they should continue with entertainment like live music on the weekends. Laura’s also working on another that would determine customers’ preferred menu items and help them decide whether to expand into a larger space. Laura calls them “future focus surveys.”
“I’ve tried to be proactive and create very specific parameters they can answer within—do they live in town, or would you just buy a hot tea, or actually come buy food?” Laura says. “We’ve done it when we’ve been trying to consider a couple of different next steps. Because it’s a small town, the community feels like they’re really invested.”
Aditya Narula is the head of customer success at Kabbage. Kabbage has pioneered a financial services data and technology platform to provide access to automated funding to small businesses in minutes. Since 2011, the company has helped more than 185,000 small businesses access more than $7 billion.
