The restaurant industry is a cutthroat world. There is stiff competition among restaurants catering to all different tastes in every city across the country. While it is an urban legend that over 90 percent of restaurant businesses fail in the first year, the precarious nature of the food industry does see closure rates of around 80% within five. This means that if you want to outlive your nearest competition you will have to build a loyal customer base quickly, and then find novel ways to continue branching out to new customers in order to surpass this early obstacle.
Managing Cash Flow
One of the primary hurdles that startups or expanding restaurants face is shrinking cash flow. This is an important metric for understanding your end of quarter sales, targets, and planning in the next quarter. It takes some upfront capital to open a new restaurant, but owners quickly forget that they must constantly spend on food products in order to sell to customers. This makes the food industry one that can yield a large profit over a short timeframe, but also one that requires constant spending.
Without a focused company objective and strategy for achieving it, restaurants face a substantial uphill climb. An OKR process can assist in overcoming this challenge, however. OKR, or Objectives and Key Results is a methodological business planning framework created former Intel CEO, Andy Grove.
The OKR framework was then popularized by John Doerr as he invested in Google’s Larry Page and Sergey Brin, and Jeff Bezos of Amazon, to name a few. OKR rests somewhere in the same realm as the KPI and balanced scorecard objective management philosophies, however, the OKR process allows for a consistent and easily digestible understanding of where your company is succeeding and failing in alignment with its stretch goals and more modest intermediate objectives
OKR Enables the Setting of Manageable Goals
The OKR methodology is all about creating overarching company objectives, and then pairing these with numerical milestones – or key results – in order to continue to thrive over the long term. Employing OKR software is a great way to set and work to meet modest key results in the service of more expansive company-wide objectives. For instance, as your team enters the next quarter, you might suggest decreasing food waste by 10%, increasing aggregate customer numbers by 15%, and training 75% of the staff to use a cheaper POS device for rollout in the near future. All of these numerically measurable goals can function in the service of the objective: doubling the previous year’s profits.
This isn’t to say that all strategy can run through OKR planning, it is an imperfect science. Good OKR engagement can help your business grow, but you will still need to consider qualitative goals as well. For instance, you might decide to run a new special on Sundays in order to increase traffic throughout the week. While you could place a numerical goal on its rollout, the strategy likely functions largely as a marketing decision and the promotions will likely take a few weeks to see the word of mouth spread, and as a result, any insight into whether your strategy has improved repeat customers throughout the week. OKR sees its biggest impact when it is coupled with other company strategy creation methods.
For instance, if you are looking for a new wine shop to supply your bar, utilizing an OKR framework can help you set a target for the savings you seek in the switch. Using this key result will ensure that you are switching suppliers for a sound business reason and that you select a new outfit to stock your bar that serves your restaurant’s long term goals.
Employing the OKR framework is a great way to supercharge company strategy meetings and to start seeing meaningful improvements to your organizational objectives. A framework for expansion like this is critical for aspiring restauranteurs if they want their business to thrive for years to come.