Making the transition from a small business to a major player in the catering world is a daunting but necessary step for anyone serious about making it big in hospitality, says John Trueman, CEO of Quadranet Systems. Although there are a number of hurdles to overcome, it can be achieved with the correct measures of caution and bravery. Here he shares his five most crucial considerations:
Put simply, without the right staff, you cannot progress beyond where you are at the moment. It can be frightening to start allocating funds to new salaries, but it is the only way you will grow.
In a small catering business, the owner often performs multiple job roles, but it is vital to identify the point at which it becomes more efficient to hire and delegate. Just as a chef cannot simultaneously manage the kitchen and the front of house, the owner of two restaurants may need to hire an accountant or human resources specialist if their third and fourth restaurants are going to stand a chance of success.
As the company continues to grow, clear processes and expectations become ever more important. Staff need to be able to prioritise according to the expectations of the management, and the larger the operation, the more important staff feedback, robust processes and good management become.
Many restaurant operators find that, despite already running successful establishments, the opening of their third or fourth restaurant causes them no end to grief, and the wrong approach to staffing is often a big part of the problem.
At the beginning, a founder puts their house on the line, motivated by the belief that they will succeed. It is a daunting stage, and not one for the fainthearted. There should be a transition as the business gets bigger though, so the finance moves under the veil of the corporation. At this stage, the founder may breathe a sigh of relief – but be warned; there is still a long way to go. Banks like charges over property, and often do not want to let these go, even if a business is growing.
In this volatile economic climate, owners must never stop striving to separate company and personal finances, and achieving this is perhaps the most major milestone of success in any business’ story.
The move from a small café premises to somewhere with five times the number of covers is the dream for many a new hospitality entrepreneur, and even established operators are always eyeing up new real estate. In hospitality though, bigger isn’t always better: the business model that has turned a couple of small seafront cafes into relative goldmines, is unlikely to be appropriate for a large restaurant in town. The economics are different, the processes, the staff, everything. Tailor your premises search to suit your business model, not the other way round, and keep leases as flexible, low risk and inexpensive as it is feasible to do.
In a past life I was an accountant and, as such, I feel I need to know my assets and liabilities inside out. I spent many hours putting a system together when we started out, allowing us to interface with the bank and our own systems. We have bank transactions once a month, and all BACS banking is done by uploading five files. A slick, but simple system means we spend just one day a month inputting invoices, bank collections and changes. The reports are clear, and there is little margin for error. Most people get into hospitality for a love of, and expertise in their industry, and are not qualified accountants, but they must still insist on the best possible system for their business: if you are not an expert yourself, call on one to help.
The hardest part of the transition is giving up your baby. At the start you may know every member of staff personally, or indeed every customer. You know the suppliers and the components; essentially, you know your business inside out. As your business grows, you need to take a step back. You need to let your front of house manager be the one to know the customers, and let your chef, or even your buyer, be the one to liaise with suppliers. Giving up direct control is not easy, and hearing about a problem in the boardroom is not the same as hearing about it from a disgruntled diner. Similarly, you may wake up one day and realise you are responsible for 30 people’s mortgages, not just your own – your operation’s financial wellbeing becomes vital to that of the staff on your payroll. As an owner you must accept that, as your business grows, your role and your responsibilities will change also, and embracing it will feel much better than fighting against it.
There are many downsides of growing a catering business – the sleepless nights, the self-doubt – but there are great upsides too. If you are lucky enough to have the talent, and brave enough to put everything on the line, go for it.
John Trueman is the CEO of Quadranet Systems Ltd, suppliers of advanced hospitality management systems to restaurants and hospitality operators across the UK and globally.