A very complex question, I have been asked to review a few places around town, and there are some common themes.
1. The owner must be involved. If you are a small restaurant, understand that your margins are miniscule, the top of your sector is maybe making a 4% margin. That means for a $1000 day, you made $40. That is exceptional, more like 2.5% in a moderately successful business. Let a couple six packs of beef slip out the door, you are going broke. Simply put, for the first three years, you must be there every day.
2. Margins are tight, you make money by managing expenses. You need to cost every single item out the door. The real successful guys, can tell you what they are paying for an empty condiment container. It isn't over management, it is watching the bottom line. A well run restaurant manages consumption, not just money in the door. You should know withing a week, if you bought enough ribs for 35 covers, and sold 30, but somehow need to order more meat.
My first restaurant job as a prep cook, I was peeling onions, taking off the outer 3 layers, it was fast, the head chef came up to me and asked what I was doing. I explained I was saving money by removing the outer 3 layers, instead of fussing with the skin. He told me to learn to peel onions faster and quite throwing away 15% of the onion.
3. Customer service is really important, remember that the restaurant business is a hospitality business. Listen and talk to your customers about the food. Do NOT lower your standards, but, do not be pig-headed. If they say the brisket is dry, don't say 'well, that is how they like it in Texas' ask yourself honestly, could it be dry? Ask the toughest people you know, is it dry. Don't believe you are all that, you have to try and get better every day.
4. Underfunding, number one reason people go broke. A typical restaurant enjoys a bump when it first opens, then the road gets a little bumpy. You should start a restaurant with at least the ability to live on no income for 6 months. The lifespan of a new restaurant is 3 years, mostly because of mistakes made in the first 6 months of operation.
5. Locations can be the problem, I have just been asked by the City economic development czar, why does this one place constantly fail, when every place that went in there had good food. My suggestion is that the location is just bad for food. The current owner has the place for sale, he is an experienced deli owner from NY. What he missed, is that in NY, people will walk blocks for a great sandwich, in San Leandro, they will walk about 30 feet. Literally. He is about 60 feet from the nearest parking. You really have to consider what you are selling and where you are selling it.
Surprisingly, it isn't really about great food. There are a lot of successful restaurants with mediocre food.
