Challenges and Strategies in Operating a Chain Café-Restaurant

I operate a chain café-restaurant in a prefecture-level city. The establishment covers an area of 250 square meters. Initially, we served exclusively authentic Western cuisine alongside various coffees, teas, and desserts. Later, we discreetly introduced some Chinese dishes, but the number of patrons ordering these items remained limited. We’ve experimented with cashback promotions, coupon returns, and ordering incentives, but the results have been unsatisfactory. With high rent and substantial staff wages, our two-person partnership has encountered disagreements. We’ve replaced two managers, and the third, a relative and shareholder, manages the place with a loose approach. Kitchen and beverage raw materials are procured separately by the kitchen head and bar counter manager. Presently, the business expenses exceed revenue, making it challenging even to pay staff salaries. Additionally, a nearby café-restaurant is also up for sale. I seek to understand where my business falls short and how to augment revenue.

Let me begin with some statistics. According to research, the food and beverage industry grows annually at over 10% while undergoing a 70% reshuffling rate. It’s almost a norm for restaurants to shut down, suggesting not every restaurant’s issues have viable solutions.

Reflecting on the provided scenario, several problems are highlighted—high costs, loose management, among others. Although recognizing these issues and implementing changes, difficulties persist. This may not be the core issue, and the breakthrough might lie in unexplored avenues.

Today, I attempt to analyze this problem from a business logic perspective, starting with the formula: Sales = Traffic * Conversion Rate * Average Spend per Customer * Repeat Purchase Rate. This methodology reflects my approach to problem-solving and seeking answers.

Always Focus on Effective Traffic
Operating a Western restaurant in a shopping mall aims to capitalize on the mall’s foot traffic. However, these passing customers aren’t specifically visiting your establishment; they’re shoppers who might dine at your place incidentally. Hence, these are likely not regular patrons but different individuals each day, resulting in one-time transactions.

This differs greatly from setting up shop in an office building or residential area. In an office building, you engage with occupants, making strategies for repeat visits and loyalty programs more viable. In a residential area, catering to convenience for locals and emphasizing affordability and taste is essential.

Additionally, being a franchisee, there are generally three reasons:

Franchise brands supply raw materials, saving procurement time, ensuring quality, and offering discounts.
Franchise brands assist in managing operations, aiding in site selection, guiding management strategies, event planning, etc.
Franchise brands bring their own customer traffic.
To entice unfamiliar passersby, your brand must eliminate unfamiliarity and aversion, thus attracting them into your restaurant. Imagine a stranger faced with a choice between an unfamiliar coffee shop and a familiar Starbucks; they’d likely choose Starbucks. Even though Starbucks sells a cup for $30, customers prefer it due to concerns about pricing and menu variety at unfamiliar establishments. What you need is a brand that is trusted, familiar, and brings its own customer traffic. If the franchise brand fails to meet any of these conditions, reconsidering its necessity is imperative.

Design Suitable Ambiance, Enhance Conversion Rate
Categorizing customer segments: those seeking a meal, beverages, or relaxation, and those shopping.

For those seeking meals, your competition includes other mall floor restaurants. Finding ways to attract their attention and encourage ordering through enticing combo offers is a direct approach.

For those seeking beverages or relaxation, they are mostly waiting for someone or taking a break. Utilize the advantage of being on the ground floor by offering waiting services for customers. Also, offer complimentary water and small desserts to attract further consumption. Explore new business models such as “Coffee Making Classes for Kids,” “Company Coffee Afternoons,” or a “Male Care Center” (with discounts or tailored marketing plans).

Recording data on visitors—those arriving with children, couples, or individuals—can assist in understanding your primary customer base’s demands. Understanding this will improve the conversion rate of effective traffic.

Sell High-Frequency, High-Value Products
In a prefecture-level city, Western cuisine might not be the primary choice. Elevating average spend per customer through products poses a challenge.

Consider visiting other franchise outlets for insights. If other franchise outlets in similar malls are thriving, learning from their success is crucial. If none are successful, it might be time to relocate or switch to a different franchise, focusing on higher-frequency, higher-value products. For instance, Starbucks doesn’t serve full meals but offers a few pastries, attracting passersby with strategic lighting.

Finding Ways to Boost Repeat Purchases
To increase repeat purchases of your Western cuisine in the mall, focus on daily workers.

Utilize existing foot traffic within the mall, such as the mall’s sales staff and workers.

However, these individuals are cost-conscious and unlikely to spend lavishly on Western cuisine. Introducing a range of affordable meal combos may not generate profits but can sustain basic operations.

If you successfully cater to these staff members, consider cross-promotions. For instance, providing discount coupons to sales staff to distribute to customers shopping in the mall. For instance, if a wife shops and her husband waits, the sales staff can offer him a coupon for discounted cake at your place. This might encourage him to buy a coffee, boosting sales. If a salesperson distributes twenty coupons, bringing in twenty customers, you could offer her a complimentary lunch. This not only serves mall staff, boosting repeat purchases but also brings in new customers.