3 Valuable Business Lessons From Restaurant Impossible

Lately I find myself watching less and less TV as most of my free time is devoted either to my family or to building this blog into a viable stream of income.

One show that I do watch religiously (usually on my DVR so I can zip through commercials) is Restaurant Impossible.

For those who haven’t seen it, Restaurant Impossible stars Chef Robert Irvine, who takes up the challenge of turning around a failing restaurant with just two days and $10,000 at his disposal.  The restaurants Chef Irvine visits are on the verge of closing their doors, so he has to quickly identify and solve problems with the ownership, staff, food, and building so he can get the restaurant back on track.
After watching dozens of episodes I’ve noticed that many of the same problems pop up again and again.  If you own a struggling restaurant (or any kind of struggling business for that matter) you need to read the entire list below.  Odds are good that one or more of these situations are bringing your business down.

1. You don’t know where your money is going.  My favorite part of the show is when Chef Irvine sits down with the owner of the failing restaurant and takes stock of the financial situation.  More times than not, the owner can’t even answer basic questions like, “What are your food costs?”

He then proceeds to show them all of the areas in which they are throwing money down the drain.  One restaurant thought their catering operation was keeping them afloat, but Irvine ran the numbers and discovered they were getting paid less than their costs.  They were losing money on every meal they sold.

In another episode, Irvine showed the owner that she could cut her food expenses in half just by switching from canned and frozen foods to all fresh…and it would taste a lot better too!

Cash flow is the lifeblood of every business.  If you don’t know where your money is going you won’t be in business for long.

2. You have no idea what you’re doing.  In each episode, Chef Irvine walks into a restaurant and shares his initial impressions and then meets with the owner to get some background information so he can determine what problems need to be addressed in order to get the business back on the right track.

Most of the time, he learns that the owner has no restaurant experience at all.  They simply thought it would be a fun and exciting thing to do.  Perhaps they assumed running a restaurant wasn’t all that hard or that they’d learn as they go.  Or maybe they figured since their friends and family always rave about their cooking then everyone else would too.

But there’s a lot more to owning a successful restaurant than just being a good cook.  You have to hire a reliable staff and you have to manage them effectively.  You have to create a warm and welcoming atmosphere and then get people to come in to try your food.  You have to pump out delicious meals and make sure you’re following all health department standards.  And you have to handle the food ordering, pricing, marketing, and payroll chores too.

That’s a lot of responsibility for anyone to handle, much less someone with zero experience.

3. You sacrifice quality to cut costs.  As I mentioned above, it’s important to know your costs and throwing money down the drain is just foolish.   When business is slow, trimming your expenses is all the more important.  But that doesn’t mean you should let your quality standards slip.

If you sacrifice quality and serve crappy food then you’ll find yourself in a downward spiral.  Less people will come to the restaurant, so you’ll have to cut the quality again which means less people come, etc.  Sooner or later you won’t be able to cut costs any further and your dining room will still be empty.

I’ve seen this happen personally to a sandwich shop that I used to visit for lunch.  A few years ago there was always a long line waiting for LJ’s Subs.  When the economy took a tumble, LJ’s got hit hard.  First, layoffs at the nearby office park chipped away at their customer base.   Then as the economy continued to tank many regulars started brown bagging their lunch instead of stopping in for a sandwich.  The sandwich shop that was always packed was now practically empty even during the lunch time rush.

As their sales suffered, LJ’s owners looked for ways to trim their expenses.  They started putting less meat on the sandwiches.  They charged extra for toppings that used to be included for free.  They switched to a less expensive bakery whose rolls were not nearly as tasty as the old ones had been.

Suddenly their sandwiches went from being the best in town to disappointing.  Not surprisingly, this only hurt their business more, which caused them to cut expenses again.  They were trapped in a downward spiral as both revenue and quality continued to drop.  The last I heard they were just barely holding onto the restaurant and I won’t be surprised to see them close down one day soon.

Do any of these three problems sound familiar? 

If so you’d better take a good look in the mirror or else you could end up on the show yourself. Of course, these lessons don’t just apply to restaurateurs.  Any business owner can relate to these examples and learn some valuable business lessons by watching Restaurant Impossible.

Do you watch Restaurant Impossible?  What is your favorite part, and what other lessons could a business owner learn by watching?

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Mike is a freelance writer and blogger who specializes in finance and parenting topics. He is a dedicated husband and father of three who is obsessed with creating multiple streams of income and building wealth so he can achieve true financial freedom for his family. Like what you're reading? Subscribe to our free RSS feed and follow us on Twitter.

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  1. says

    I have not seen Restaurant Impossible, but I like cooking/food related shows. This sounds like something I’d enjoy watching. These are good lessons for a business owner, especially the one about knowing how much your operating costs are and computing your profit. I’ve also seen restaurants go down because they compromise quality to save on expenses. It’s so unfortunate.


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