Mistakes to avoid at each stage of your F&B business
If your goal is to expand beyond one outlet, understanding your business’ needs at different points in time is crucial.
The challenges you’ll face at each stage of your business growth are very different. While it is tempting to work on things like optimising workflow or reducing food cost, they may not necessarily be what requires your attention most at that time. This article gives an overview of the problems faced by F&B businesses at each stage and suggestions on the type of POS system that can help to counter them.
First, what are the stages of a growing F&B business, and why are they different?
First outlet
At this stage, it is imperative for your independent business to build a strong brand and following locally. Your eatery’s offerings need to be fine-tuned to suit the target market. Your concept should be strong and identifiable. After all, with a new brand, surviving to be a profitable business is key priority.
The challenge
Figuring out the right balance of product and service that best fits your business’ personality and building enough awareness (together with a regular customer base) to maintain sufficient monthly revenue.
How to tackle it
Getting the right balance means lots of trial and error – testing out different ideas, improving or changing menu items, investing in marketing channels. The flexibility that comes with being a small outfit is an advantage as you can experiment and adapt quickly according to your customers’ preferences. The goal is for your business to evolve until you reach sustainable and stable revenue.
Most common mistake
Some of the reasons why businesses fail at this stage is because they are focusing on the wrong issues such as micromanaging every little thing, spending excessive amount of time and effort on managing inventory costs or coming up with a membership program before there is a loyal following of customers.The inexperienced focuses more on the nitty-gritty operational details and the ones that succeed focus on refining your menu items and service as quickly as possible. At this stage, speed of testing out ideas is essential to ensuring there are enough sales so that you can stay in business are more critical than analysing your costs.
System needed - Easy to use F&B POS
A lightweight, easy-to-use point-of-sales system that users can learn and be proficient in quickly helps reduce your training cost. Also a system that can quickly adapt to your changes and test new ideas like iCHEF POS. Built-in capabilities that help to boost sales or turnover, like easy add-on modifiers or table-side iPad ordering are a bonus.
Small business (2-5 outlets)
Chances are that you already have a strong concept that resonates with your target market, and there’s a growing demand for your food which has led to your expansion. When you’re juggling more than one outlet, the key to a sustainable business for more growth is effective service operations.
The challenge
While you may have been able to personally oversee your first outlet and solve problems when they arose, now you have to build an operational team that you can depend on to run an outlet efficiently without you having to be physically there.
How to tackle it
You need to have proper standard operating procedures (SOPs) in place for your staff to follow to ensure consistency in your food and service. Without the ability to be present at your eatery every day, you will need quality reports that can help you understand how well your business is really doing. Analytics that can generate insights give rise to ideas that improve business are critical for growth.
Most common mistake
Trying to do everything yourself and not delegating enough responsibilities to team members on your staff. With less control over every decisions, some business owners at this stage starts to implement complex and complicated restaurant management software or POS to govern every single details of the business such as purchasing, inventory, HR, accounting, payroll. However, relying too much on technology when proper business processes are not yet in placed is a recipe for failure. Such management software is designed to be used in a fixed manner and when the business has yet to figure out the most suitable way, forcing staff to adhere to a process that may not be ideal is going to cause more friction and confusion than necessary.
System needed - Cloud base POS
You need a POS system that can accommodate multiple users and allows you to control whether each user has authorisation to perform certain actions, like iCHEF. Managing multiple outlets also means you cant be in all places at once, and remote monitoring becomes key to managing efficiently. The right system at this stage is one with Cloud based POS that will connect your different outlets to the cloud and make it easy to retrieve reports from anywhere. It should be able to generate insightful POS reports and operational metrics that help not just the business owner, but the other team members to make decisions while having the flexiblity to explore different ideas and methods.
Medium business (6-10 outlets)
When your business has reached this size, your focus should be on backend and data management as the data you can collect from multiple outlets will be able to tell you how to optimise.
The challenge
With multiple outlets and food serving out consistently, now you can take advantage of economies of scale to reduce your costs, you need to expand and optimise your backend, which will in turn inform your purchasing and accounting. You also need to groom management staff that can streamline your operations and make them as efficient as possible.
How to tackle it
Hire a good management team to specialise in the different areas of business operations and delve deeper into the details.
Most common mistake
Not enforcing SOPs consistently at every outlet and not spending enough time and effort to source and transit to the right tools to manage these SOPs, which will cause chaos in the backend. Choosing the wrong system that limits what you can do instead of opening up more opportunities. This defeats the purpose of having quality reports and analytics.
System needed - Full featured POS
With multiple outlets, you need a system with strong backend capabilities that is able to provide detailed data to each department in your company. At this stage, an easy to use and flexible POS like iCHEF POS just wouldn't cut it as it lacked the deep backend capabilities to support your key managers in the IT, purchasing, inventory, accounting departments. Growing past the 5 outlet stage is a good time to reconsider if you want to continue with your current POS system or migrate to a full featured POS system like Raptor, ePoint and Revel that have created tools to govern different areas of business. If you still want the easy to use POS for your service staff but yet desire the structure of a business software, another option is integrate iCHEF POS together with an ERP (enterprise resource planning) system of your choosing.
Large business ( >10 outlets)
F&B chains at this stage are likely considering franchising or expanding as their next step. Now that you have found the right formula for your menu and operations, it’s time to create a scalable business expansion model.
The challenge
Identifying the right method to scale your business to more outlets while maintaining consistency in the quality of your food and service.
How to tackle it
Build up your workforce’s capabilities and ensure that you have easily duplicatable systems in place. Having a central kitchen will ensure consistency in your food to a certain extent. You will also need to cultivate your network and funding sources for expansion.
Most common mistake
A lack of well entrenched business systems and secured supply lines in place as well not finding the right partners on the ground to lead expansion into new markets.
System needed - Customized ERP POS System
At this point, you need a point of sales system that is customised for your business’ unique requirements that can deliver the reports to the level of detail you need and include the appropriate controls. Most off the shelf POS system mentioned in the previous stage would require your business to suit their software design. We recommend investing in the customisation of your own POS and ERP (enterprise resource planning) systems that allow the integration of multiple applications.
*all French fry images credit to McDonald's
Cheryl Tay is the editor and marketer at iCHEF Singapore. She also manages iCHEF Club, a growing community of F&B owners in Singapore – organising events, an online newsletter and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she attempts to read every book that’s ever won a literary prize and watches cat videos. Like any proper Singaporean, her love for food runs deep – especially spicy food. Chili is life.
