What matters most for restaurant owners? What you should do as a business owner

Aside from signing a franchise agreement with a restaurant chain that already operates nationwide, it is the owner’s job to first come up with the concept for the restaurant.
You must decide what kind of dishes you will serve to what kind of customers, and what sort of atmosphere and interior design the place will have.
If you are not sure what the right answer is, it may be a good idea to start with a franchise agreement with an existing chain.
Among the restaurant chains that offer franchise agreements, there are some that are not very well known nationwide, and in regions where they have few outlets, it is even possible to open a franchised restaurant that, at first glance, does not look like part of a chain.

Whether you’re signing a franchise agreement or opening your own original shop, you have to look for a location to set up your restaurant.
Whether or not you can find a good property here will have a major impact on how your restaurant business performs afterward.
If you still have another job and are not in a situation where you need to find a property in a hurry, it’s better not to rush and to take your time searching.
If possible, look for a so‑called “inherited” property that was previously used as a restaurant, as this can significantly reduce interior renovation and construction costs.
However, in that case you must clearly identify why the previous restaurant there did not do well. If you open exactly the same type of restaurant as the one that used to be there, it may be difficult to succeed. Due to voluntary closure requests as part of COVID‑19 infection control measures, many restaurants in prime locations have been forced to shut down, which can be seen as a major opportunity for those who are now looking to start a restaurant business.

Deciding what kind of dishes to offer on the menu is an important role of the business owner. In this case, the owner does not necessarily have to be the chef; one option is to hire a chef and have them come up with several dishes.
Even if the dishes are created by someone other than the owner, it is ultimately the owner’s role to decide which ones will actually be offered as products.
The structure of a restaurant menu typically consists of a signature, flagship item, along with several other items that change periodically. For example, at a ramen shop there will be a main, standard flavor of ramen, and in summer they might serve hiyashi chuka (cold noodles), along with other seasonal items that rotate throughout the year.
Some restaurants, such as Chinese restaurants, adopt a strategy of offering a very large variety of dishes so that customers never get bored.
In addition to food, you also have to decide what kinds of drinks to offer.
Since drinks generally have a low cost ratio, creating a setup that encourages customers to order them together with their food can make running the restaurant much easier.

Pricing is one of the biggest factors that determines the success of running a restaurant.
If the plating is attractive, the atmosphere is stylish, and the food tastes good, customers will likely come even if the prices are set somewhat high.
However, if people compare your place with nearby restaurants and feel that overall satisfaction is low for the price, the number of customers will gradually decline. One valid approach is to lower prices and focus on attracting as many people as possible. While lower prices mean smaller profit margins, they also have the advantage of lowering customers’ expectations of the restaurant.
If you are running a restaurant for the first time and have little experience working in the food service industry, starting with a low-priced restaurant will likely reduce the risk of failure.

In running a restaurant, the way you think about the cost ratio is extremely important.
It’s often said that the food cost ratio for restaurants is around 20% to 30%, but rather than forcing every menu item into this range, you can adjust it—for example, set some items at a 10% cost ratio and others at 40%—to successfully generate profit.
In other words, if you use high-cost-ratio items to attract customers and then guide them to also order low-cost-ratio items, your restaurant can achieve stable profitability.
A common method is to sell items as a set. If you sell your signature item with a 40% cost ratio together with a drink that has a 10% cost ratio, you can bring the overall cost ratio of the set menu down to around 30%.

Unless a restaurant owner opens the business as a joint venture with someone else, they will most likely start out alone.
What is crucial at that point is building trustworthy relationships.
If it’s a very small shop, it may be possible to manage it alone, but for a typical restaurant you need other people’s help to run it.
For that reason, building reliable human relationships is the most important factor for the stable operation of a restaurant.

Once you secure staff who can be entrusted with running the shop—such as potential store managers—your work as a restaurant owner becomes much easier.
It’s best to secure these kinds of people not only by building trust, but also by offering them solid compensation.
If you plan to open multiple locations in the future, you won’t be able to launch new stores without people like this. Ordinary part-time jobs are gradually decreasing due to the introduction of mobile ordering, self-checkout, and similar systems.
In this kind of era, the most essential personnel in the restaurant business are those who can think things through and manage operations properly. Securing as many such people as possible is extremely important for the stable operation of a restaurant.

Part-time employees who stay with you for a long time are also important.
Young students, for example, can usually only work until they graduate from university.
However, housewives working part-time are more likely to stay for a long period.
For people who are willing to work long-term like this, make sure you provide appropriate benefits so they have as little reason as possible to quit.
Many part-time housewives value human relationships and the work environment more than money. For those who are not under a dependent spouse allowance, money is also important, but many part-time housewives work within the income limit to remain dependents of their husbands.
Because of this, whether they work hard at a stressful job with a high hourly wage or work at an easygoing job with a low hourly wage, the total amount they can earn in a year does not change.
Given these circumstances, many part-time employees do not worry too much about money.
Therefore, even as an owner or manager, you should avoid acting high and mighty, and instead make a conscious effort to treat your employees with an attitude of gratitude for the work they do.

In the normal course of a store’s day‑to‑day operations, such situations rarely occur, but when something critical does happen, the final decision must be made by the owner.
In a crisis, those decisions can be negative ones, such as how to handle complaints, or positive ones, such as opening a new store.
Your ability to calmly analyze the situation and decide what course of action to take is where your judgment as a manager is truly tested.

Deciding on capital investment is one of the most important responsibilities for a business owner.
When it comes to investing in equipment for an existing store, it is generally best to consider it in comparison with labor costs.
A common example of capital investment is introducing new kitchen equipment that improves cooking efficiency.
Convenient cooking appliances that automate part of the cooking process are often more expensive than ordinary tools, but they also reduce the time required for cooking.
As a result, it becomes possible to run the store with fewer staff, service time becomes shorter, and table turnover is likely to increase.
When making this kind of capital investment, you should carefully examine how much profit the new equipment will bring to the store and how much in expenses it will help save, and then make your decision.
In some cases, even after investing in equipment, the effect may be minimal, so it is also important to thoroughly gather information in advance.

If you want to know about other things you need to do when opening a business,please see “What do you need to open a restaurant? A summary of the information required to open a restaurant”.

In the end, it will likely be the business owner who has to make the final decisions on how to handle complaints.
Even when the store is at fault, there are cases where customers make demands that go far beyond what is normally reasonable.
For example, if a drink is spilled and a mobile phone is damaged, a decision has to be made as to whether the store should compensate for the phone or not.
At the very least, the employee who actually spilled the water on the customer should not be made personally responsible for paying compensation.
You need to calmly analyze the situation, determine whether the store is truly at fault, and then make a firm decision on whether or not to compensate for the mobile phone.
However, such compensation or damages can be covered by insurance, such as product liability insurance.

The name varies depending on the insurance company, but if you are enrolled in liability insurance, the shop can avoid suffering a major loss and the customer can also feel satisfied.
Another advantage of insurance is that a representative from the insurance company will listen and negotiate on your behalf.
If a customer, who is the victim whose mobile phone was damaged, has to speak directly with the shop, which is the party at fault, the shop may end up having no choice but to accept unreasonable demands. The power balance between a shop and a customer can easily work against the shop.
In such cases, if the insurance company steps in and negotiates, they will provide compensation at a fair and appropriate amount.
In restaurants, you may also need compensation for things like cleaning costs when food or sauce is spilled on expensive branded clothing or bags, or for food poisoning caused by some kind of mistake.
These kinds of incidents are accidents, so no matter how careful you are, the probability will never be 0%.
For that reason, it is better to have insurance as much as possible.

Evaluating the salaries of full-time and part-time staff is an important responsibility for a store owner.
From a management perspective, keeping employees’ salaries low makes running the business easier, but if wages are too low, talented people will not be attracted to the job.
Also, if employees are not promoted and given raises in line with their efforts, their motivation to work will decline and this can lead to higher turnover.
On the other hand, if you raise salaries too much, the business will no longer be sustainable.
Restaurant owners must conduct appropriate salary evaluations and pay their employees a well-balanced, reasonable level of compensation.

If you clearly define what exactly employees need to do in order to get a raise, it becomes a concrete goal for them to work toward.
For example, in kitchen work, you might raise the hourly wage once someone can handle all the fried dishes, and raise it again once they can prepare sashimi. If you set it up so that their hourly wage increases each time they master a new task, it will help motivate them.
In the food and beverage industry, getting used to the work is crucial, so in some cases the restaurant will run more smoothly with one experienced worker than with three people who have just started.
For this reason, you should carefully design a pay raise system and similar mechanisms so that employees will want to stay and work for you as long as possible.

Setting the hourly wage is also an important task for restaurant owners.
To decide the amount, it’s a good idea to look at job magazines and set your hourly wage at about the same level as restaurants similar to yours.
Even within the broad category of food and beverage businesses, the hourly wage can differ greatly between, for example, a café and an izakaya (Japanese-style pub).
For that reason, if your hourly wage is lower than that of places similar to your own type of restaurant, you won’t be able to attract good staff.
In reality, people often choose a job not only because of the pay, but also due to reasons like being introduced by friends or the workplace being close to home or school.
So simply raising the hourly wage does not necessarily mean you will attract good workers, but there is no doubt that the hourly wage is the single biggest factor.

If you’d like to learn more about other essentials for running a business, please see “Thorough Guide to Restaurant Management and Opening: Everything You Need to Know to Succeed”.

I have introduced what restaurant owners should be doing.
What is most important in the work of a restaurant owner mainly has to do with money.
Whenever large sums of money are involved, the owner must ultimately make the decision.
Also, choosing which idea to adopt from among the various ideas that are proposed is another key role of the owner.
In this way, whether the owner can make crucial decisions when it really matters and guide the restaurant in the right direction will greatly affect how the business is run.
To make the right decisions, accurate information gathering and analysis are essential, so it might be best to start by carefully listening to what your employees have to say.