Restaurant Management: Guide for Managers

A successful restaurant is affected by many factors—food, staff, customer service, decor, atmosphere, and beyond. With all these responsibilities to handle, restaurant management can be overwhelming for managers.

In this restaurant management guide, you’ll learn:

• The responsibilities included in restaurant management
• Common problems you might run into when managing your restaurant
• Restaurant management tips for a more profitable restaurant

Let’s dive right in!

What is restaurant management?

Restaurant management includes many responsibilities that keep a restaurant running efficiently and provide top-notch service to customers.

It involves overseeing all aspects of a restaurant’s operations, including staffing, customer service, inventory management, financial planning, and marketing.

Restaurant management responsibilities

Staffing & employee management

To meet customers’ demands, you need to make sure every shift is fully staffed. And having enough staff isn’t enough, you need them to be skilled, friendly, and efficient.

In fact, 51% of restaurateurs claim that the biggest difficulties for them are hiring, training, and retaining staff. Understandable, as the industry is notorious for demanding work environments, low wages, irregular schedules, and limited career growth.

To attract and keep good employees, managers need to invest in better recruitment, training, people management, and employee retention.

Accounting & finances

You need to manage many types of costs when running a restaurant. If you’re not careful with the numbers, your business may encounter financial problems or even face bankruptcy. The manager’s responsibility should include creating and managing budgets, as well as keeping track of costs.

Scheduling & payroll

Scheduling shifts properly ensures that your restaurant runs smoothly without any delay. You need to understand your business needs and the labor resources available to create suitable schedules.

Through the employee schedules you’ve created, you can track the work hours of each staff and process payroll accordingly. The more precise your employee timesheets are, the more exact you pay your staff. This means you stay compliant and staff are reassured.

Though being tech-savvy isn’t compulsory, it’d be much easier for managers to know how to use scheduling software, POS hardware, or other apps that make the management process easier.

Marketing & advertising

In this day and age, your restaurant might sink into the Unknown Zone without decent marketing and advertising efforts.

Maintain your presence on social media, run ad campaigns, or use guerilla marketing strategies. Do what you can to keep existing customers and attract potential ones.

Inventory management

This aspect includes stocking, monitoring, and maintaining ingredients, food, and beverages.

Understocking means you can’t keep up with customer demands, while overstocking means you may throw away certain ingredients.

Besides tracking the amount of ingredients, you’ll also have to ensure they meet the health and safety standards.

Customer service

A large number of customers read reviews from other guests before choosing a restaurant. Most will leave positive reviews if they’re satisfied with their experience at your restaurant.

That’s why as a restaurant manager, your responsibility includes maintaining excellent service, interacting with customers, and dealing with their complaints. And it isn’t just about you, it’s also about how you train your staff’s customer service skills.

Operations

This is where you keep everything together—the atmosphere, equipment maintenance, people, and even compliance issues. Whether it’s cleaning, fixing some broken machines, or complying with health and safety standards, a proper operation procedure will ensure your restaurant runs smoothly.

Common restaurant management problems

Unexpected problems always arise when you manage a restaurant. But some problems are foreseeable. Let’s take a look at the most common ones so you can be prepared!

Staffing and staff management

To keep each shift fully staffed, you need to spend time and effort on scheduling. Understaffing will make things slow and drive customers away, while overstaffing costs you unnecessary money.

Training staff and keeping them engaged are also challenging. Sometimes you have to do all these by yourself. Sometimes you need to delegate to your HR employees or experienced workers.

Being satisfied with what’s already in place

It’s very easy to be satisfied with the processes that have already been established. Restaurant managers are often too busy to consider changing certain processes.

For example, many are comfortable with using pen and paper for creating employee schedules. The whole process can be a pain, but because it gets the job done, many refuse to change to a better option such as a scheduling app.

Too much admin work

There are many things to keep track of when running a restaurant:

• Number of customers per day
• Number of online orders
• What menu items are more popular/profitable
• What menu items are less popular/profitable
• Profit margins
• Losses

If you haven’t monitored these numbers, you need to. If you feel overwhelmed, consider hiring additional staff (assistant manager, accountant, cashier, etc.), using automation software, or delegating tasks to suitable people.

Compliance issues

Labor laws are complicated, and many managers have problems with compliance. Chipotle, Steak ‘n Shake Chain of St Louis, and Two Broward County Restaurants have all been filed lawsuits against and lost millions of dollars for compliance issues.

Whether you’re paying your workers incorrectly, scheduling unplanned overtime, or failing to schedule enough time off for staff, you need to make changes. To avoid excessive costs that come with being non-compliant, research state and local labor laws and maybe work with a legal expert.

Fail to manage data

Failing to manage important data means you risk wasting your time, money, and resources. You need to keep track of the time spent on tasks, employee work hours, the number of staff per shift, profit margins, which menu items bring more profit, costs, waste, etc.

By knowing data regarding scheduling, employee, inventory, and sales, you can:

• Estimate costs and calculate budgets more efficiently
• Automate certain tasks by using software or machines
• Schedule employees more suitably depending on business needs and employee availability
• Change menus in ways that profit you more
• Control costs better: food (raw materials, storage, seasonality, menu, transport, etc.), labor, equipment, marketing, advertising, and more
• Be prepared for emergencies

Lack of automation

Automation plays a huge role in restaurant operations these days. Online ordering systems, POS and online payment methods, scheduling software, website optimization services, etc.—all of them make operations faster and easier for everyone.

Doing things manually might look easy at first, but it takes more time and effort than you thought. Don’t let competitors outsell you simply because they know how to make use of technology and automation.

Restaurant managers need to catch up with the latest tools and seek ways to upgrade restaurant procedures. Being open-minded and innovative enough to try software or systems that make business operations faster may make a huge difference.

High turnover rate

The restaurant industry has one of the highest turnover rates. It takes an average of one month and 26 days for a restaurant worker to quit. And to replace a restaurant employee, the average cost is $5,864.

As you can see, managing a restaurant means you have to go through the whole process of recruitment and training repeatedly. It sounds tedious and costly, right? Here are some things you can do to minimize the turnover rate:

• Hire staff who are willing to work for you long-term
• Invest in employee engagement and retention programs to make employees feel like a part of your business
• Actively look for new talents so you don’t fall into trouble when some employees quit
• Create training materials in advance so that training won’t take too much time

Restaurant management tips for a more profitable restaurant

Here are some tips that will help you address the problems mentioned above and run a more profitable restaurant.

Create a profitable menu

Start analyzing your menu and divide your menu items into 4 categories:

• Star: high profit, high popularity
• Plow-horse: low profit, high popularity
• Puzzle: low profit, low popularity
• Dog: high profit, low popularity

After you’ve categorized the menu items, you can decide to:

• Increase prices of Stars
• Increase the size of Plow-horses, add premium ingredients to them, and change their names into something more attractive
• Make changes to Puzzles: get rid of them, change their ingredients, market and advertise them better, etc.
• Remove the Dogs if no one has really ordered them

Don’t just use the same menu over and over again. Update it frequently. Add new, seasonal, special, or limited items. Cross out sold-out or unavailable items so customers won’t feel disappointed when their choices can’t be served.

Redesign your menu

A well-designed menu doesn’t simply look pretty. It can attract customers psychologically and bring more profits than you think. Make sure your menu is easy to read and understand. Use high-quality papers and images. Place profitable menu items where your customers’ eyes rest on first and highlight them with attractive icons and call-out boxes.

It’s best to figure out your unique selling dish and focus on one type of cuisine so you’re more trustworthy. Customers often have doubts about the quality when restaurants have too many dishes/cuisines to offer.

To make customers order extra items and cross-sell, you can put complementary items near certain dishes and train your staff to make recommendations. For instance, you can put wine options near steak items on the menu design, and train your staff to recommend iconic pairings for a more delightful taste.

Don’t forget to post your menu on your restaurant website because most customers these days will take a look at your online menu before choosing you as their dinner destination.

Control food costs

Food costs are one of the biggest aspects you need to track. You can calculate plate cost and period cost with these 2 formulas:

Plate Cost = Portion Cost/Sales Price * 100

Period Cost = Food Cost/Food Price * 100

Establish a solid inventory management system to maintain the quality and freshness of ingredients, and to avoid throwing away redundant produce because you overstock the inventory.

To save money on food costs, you can maintain positive relationships with suppliers to negotiate better prices and minimize food waste by using zero-waste cooking methods.

Always monitor the price of ingredients, especially seasonal ones, because they may vary all the time. This is to adjust the portion size and price accordingly. You can also change the portion size when you notice customers constantly leaving leftovers on their dishes.

Control labor cost

Besides food costs, labor costs are also important. You can track labor costs with this formula:

Labor cost percentage = Total labor cost/Total sales * 100

To save money on labor costs, you can:

• Use good employee scheduling software to create cost-optimized schedules quickly. These apps allow you to schedule the right number of staff for each shift. This is to avoid paying extra when your restaurant is deserted and being understaffed when the restaurant is busy.
• Select the right POS that can integrate with your employee scheduling software and provide reports on costs and sales. These reports are valuable because you can compare the numbers and schedule your staff suitably.
• Improve employee engagement and reduce turnover rates. If employees keep leaving, you’ll have to spend extra on recruitment, hiring, and training. You can avoid high turnover by implementing employee engagement programs and finding ways to boost employee morale.

Build and strengthen a better workplace

The restaurant is notorious for being stressful and hectic to work in. To keep the best workers with you, maintain a smooth workflow, and reduce turnover, you need to make your restaurant a better workplace.

Working in a positive workplace, employees aren’t only happier but are also more productive. The happier they are, the better customer service they can provide, and the less likely they are to quit.

You can implement these strategies to strengthen your workplace culture:

• Organize team building activities such as camping, team lunches, etc.
• Strengthen workplace communication by providing constructive feedback and support, as well as applying active listening to every conversation. Establish policies regarding communication and encourage constructive and timely communication.
• Provide training opportunities and development plans. Show staff how to use new equipment. Let them experience new work procedures.
• Establish recognition and rewarding programs to acknowledge and appreciate staff’s efforts
• Offer flexible scheduling options, paid time off, paid vacation to help employees reduce stress. Create schedules based on employees’ availability and preferences.

Get your hands dirty

Managers often fall into the trap of not understanding the difficulties of employees’ jobs because they don’t do the work themselves. You might assume certain tasks are easier and thus, not evaluate your staff performance correctly. This may lead to staff feeling you disrespect their efforts and that you aren’t really good as a manager.

That’s why you should directly experience the work yourself sometimes to understand what’s included in certain jobs. Do some tasks take longer to finish? Are there any hidden challenges that may hinder your employee productivity? Do your staff experience more stress than you thought?

Create optimized employee schedules

Scheduling the right staff and the right number of staff for each shift to ensure smooth operation and keeping labor costs in control is challenging. Employee schedules are affected by many factors—employees’ availability, preferences, and needs; shift demands; federal and state laws, etc.

It takes a huge amount of time to balance all of the above factors. That’s why you need an effective scheduling method and process. Here’s a quick one that you can implement right away for your business.

A 6-step process to create an effective shift schedule

Step 1: Figure out what your business needs

How many roles per shift do you need to schedule?

What tasks are required for each role?

How much time and effort does every role need to complete their tasks?

For example, your restaurant needs a chef, 2 waiters/waitresses, a cashier, and a dishwasher for each shift. Your waiter normally can wait 30 tables per shift.

Step 2: Monitor levels of activity

Examine the levels of activity at your restaurant. Find out the patterns—times of the day/days when your business is busier and times of the day/days when there aren’t many guests.

Based on the levels of activity, you can determine the number of staff for each shift more accurately. For instance, if a waiter serves 25 tables per shift, and your restaurant often welcomes 100 shifts in the morning, you may need 4 waiters for that shift.

Step 3: Figure out employees’ needs and preferences

Some employees prefer morning shifts, while many love the extra tips of night shifts. You can note down each employee’s preferences and schedule them accordingly. This is more of an employee retention strategy, and sometimes staff may work shifts they don’t favor. It’s OK as long as you let them know you take their preferences into consideration.

Step 4: Choose a restaurant employee scheduling method

There are 3 most common types of employee scheduling methods:

Pen and paper: some restaurant managers use whiteboards, some print out schedules and pin on the notice board, some take photos of the schedules and send them to employees’ phones. This sounds easy at first, but can be time-consuming later. It’s also harder to gather the necessary data for managing budget and resources.

Spreadsheets: This method allows you to access data easier, but it still takes lots of time to set up and input data manually.

Scheduling software: This is the most efficient scheduling tool because it solves common scheduling problems without costing you an arm and a leg. You can create schedules in minutes, track data, and integrate with other HR and payroll systems. The risk of human error and law violation is also minimized.

Step 5: Distribute work schedules to employees

It’s best to send schedules to employees at least 1 week in advance. This way employees are well aware of their shifts and can be prepared. If you use scheduling software, notifications will pop up on staff’s phones immediately after you publish new schedules.

Step 6: Make adjustments to the schedules

Unexpected situations always come up when you run a restaurant. Whether it’s a no-call, no-show, or an emergency, you need to be prepared beforehand.

Check out our post for a more detailed employee scheduling process.

Upgrade your management skills

How your staff works depends largely on how you manage them. That’s why managers should constantly work on a wide range of skills, including:

• Communication: helps you communicate your ideas clearly, and deal with conflicts or challenging situations more effectively
• Interpersonal skills: interacts and builds relationships with guests, staff, other managers, etc.
• Decision-making: evaluates options from multiple perspectives and makes timely choices for each situation
• Planning and organization: helpful when planning shifts and menu items, managing inventory, etc.
• Flexibility: deals with unexpected problems that may arise daily, solve them timely

Check out this list of 30 qualities that managers should have and improve.

The important thing in management is to be consistent in everything you do—the way you communicate, resolve problems, employ restaurant policies, react to circumstances, show your expectations, and beyond. Changes and unexpected situations always happen in a restaurant, and the last thing staff want to see is that you’re confused and inconsistent.

Implement restaurant revenue management strategies

Besides working on yourself as a manager, you need different strategies to increase revenue. You can either increase table turnover or restaurant capacity, or do both.

To increase table turnover, train waiters/waitresses to serve customers as soon as they walk in, make menu recommendations so customers can make decisions faster, remember the favorite dishes of repeat customers, etc.

To increase restaurant capacity, you can arrange different-sized tables for different group sizes, or redesign your restaurant floor plan. If you have limited space, you can observe different times of the day to see if certain group sizes appear, and then arrange tables accordingly.

Which restaurant management tips will you try first?

Restaurant managers might be overwhelmed with so many responsibilities—scheduling, keeping, and managing staff; controlling costs and budgets; enhancing revenue, and so forth. Not to mention the problems you have to face every day.

That’s why you need this restaurant management guide and all the necessary tips to run your restaurant smoothly. They will make your life easier.

So which tips will you try first for your restaurant?