Updated: Feb 3
As Barpay continues to scale, we are learning that the difference between a small business and a real company, has little to do with the product or goods being sold. If a product is found useful by one person, it's almost a mathematical certainty that it will be found useful by another person. The difference between a small business and a real company is how repeatable the operations are. After working on several sides of the service industry for a decade, the one thing that sticks out the most is that owning and operating a successful restaurant is an extremely difficult thing to replicate. But why?
Learning About Scaling a Technology Company
Before we dig into the service industry, let's take a look at what operating a technology company can teach us about scaling. The larger a business gets, the more important documentation is in creating a repeatable process. For example, with Barpay, it would be impossible to hire new people and train them on specific tasks - i.e. uploading a menu, configuring a printer, updating a sales pipeline, etc - without clear documentation on every step of every process.
But having documentation isn't enough. When Barpay first started, our most important documents and information were stored as Google Docs that only the company founders had access to, with no real rhyme or reason as to how the documents were labeled. This made it difficult to find specific documents, and nearly impossible to teach new employees specific practices. What we learned, was that documentation needs to live in a central and accessible database that any new employee can have access to. To be clear, creating appropriate documentation in a centralized database is not the most fun thing in the world to organize, but it is a crucial piece of growing a small business into a company.
Think about it... Do you have employee handbooks for each position of your restaurant's operations? Does each new staff member read this information when they are hired? If the answer is no, expanding your restaurant concept is going to be more difficult than it needs to be.
Overview of the Restaurant Industry
Think about the best restaurant in your town (hopefully it's yours). Does that restaurant have multiple locations in your town? Does that restaurant have multiple locations outside of your town? Is the quality and experience the same across each location? More often than not, the answer to these questions is no, which is why only about 10% of all restaurants are chains. What does this tell us? Simply having the best food in town is not enough to grow your small business into a multi-location company.
According to a recent survey by Toast POS, more than half of all restaurant owners said that hiring and training new staff is the single most difficult thing to do in regards
to opening and operating a new restaurant, especially with the current staffing shortage. This process is expensive and time consuming, and does not guarantee that the employee will meet the owner's expectations. Add that onto the fact that most servers, bartenders, and bussers/runners are working at a restaurant in a part time manner, and it's easy to understand why the service industry has among the highest turnover rates of any industry. A high level of turnover means that processes are constantly needing to be taught to new employees, so the more difficult these processes are, the more difficult it becomes hiring a new reliable employee.
The last reason we think it's so difficult to expand a successful restaurant concept is the ownership. The majority of owners we work with are stuck in a "small business" mentality, where they feel like they have to be on premise everyday or the operations will fall apart. Owners that fall under this mindset are usually afraid to delegate responsibilities to managers and tend to micro manage every aspect of the business. While we don't fault them for caring about their establishment, we think that in order to truly scale a business, owners must learn to "let go" and instead of trusting themselves being at the restaurant everyday, they should trust the processes they create and put in place for managers to run the business. This is why creating repeatable processes is so crucial. It's not an easy thing to do, but if you own a restaurant and have any aspirations of duplicating your concept, "letting go" of complete control is a must. And what's easier? Replicating technology? Or replicating a reliable staff member?
As we take a deeper dive into all of the moving pieces that allow a restaurant to operate, let's evaluate what pieces are easy to duplicate, and what pieces are difficult.
The Easy Stuff
There's a handful of things that restaurant owners should be able to duplicate without any real difficulty:
Keeping these consistent across multiple venues means that every time an owner wants to open a new venue, they will already know the food and beverage items they will need to purchase, the kitchen equipment needed to prepare those items, and the furniture/decor needed to facilitate the restaurant's theme.
The larger a restaurant chain gets, the more important it becomes to simplify these easy things by working with single distributors for food and beverage items, and hopefully a single company/designer to build out the interior of each venue. California based hamburger chain In-N-Out has perfected this process if you'd like to see a good example.
The Stuff That Sucks
Unfortunately, staffing a restaurant and building out operations is not as easy as duplicating the name, menu, and theme, but this is where technology can help. For example, Barpay's QR code order and pay platform is proven to reduce the number of staff necessary per shift, and can duplicate menus extremely quickly. Here's how:
Alleviate Staffing Complexities