Establishing a restaurant business from scratch is not easy, however the roadmap to success usually hinges on the people behind the business says Thomas Mielke, managing director, Aethos Consulting Group.
Restaurant entrepreneurs, when faced with the opportunity to expand, should ask themselves, ‘why do I want to grow in the first place?’ Growth for growth’s sake is never the right strategy.
Before committing resources to expanding the business, entrepreneurs should re-evaluate their plans to grow, understand the desired outcome, then define a business and HR strategy that suits their goals and develop a timeline to establish when each action is needed to execute this plan.
Entrepreneurs must also consider what is needed to set up a brand, and who should drive the business going forward. At times, business founders can be clouded by their own ideas. While their initial involvement is often crucial to the success of the firm, it can subsequently – given lack of experience or a focus on tactics rather than strategies – become an obstacle to success.
Entrepreneurs should therefore investigate their existing shortcomings and those of their teams. Recognising limitations and getting people on board who have complimentary skill-sets, is crucial. At times, thinking outside the box and securing a non-executive director during the early stages of the business, instead of a costly CEO, can help gain access to expertise while keeping costs down.
Another crucial consideration is how to best structure the organisation. Getting it right from the start is a lot easier than having to rewire it later, and this is where start-ups have the edge over well-established players.
“Start-ups and smaller brands are often more appealing to the next generation of leaders, who want to avoid being a small cog in a big machine”
Entrepreneurs would be wise to focus on the ‘trifactor’ of culture, rewards and development. The culture of a firm should guide and direct its talent strategy. Increasingly, focusing the selection process on character traits and emotional intelligence, and promoting engagement and a flatter organisational structure that fosters empowerment, are safe ways of attracting and retaining talent.
The culture should then filter down to the way entrepreneurs reward their staff. It’s important to think of both monetary and non-monetary rewards and to keep in mind the different stakeholders at both entry and mid management level as well as company leadership.
Often, start-ups cannot afford the big hitters from the corporate world, who are used to healthy, short-term and long-term incentive schemes. To overcome this, start-ups may want to consider shadow equity schemes or phantom share options, for example, which are tied to value creation and the execution of a specific long-term strategy.
Having defined the culture, and put in place a rewards system to attract and retain individuals, entrepreneurs should then focus their attention on talent development and critical succession planning. Providing internal development opportunities and fostering cross-exposure will help keep turnover low and retain staff, while succession planning can lower replacement costs.
Aethos’ engagement with restaurant start-ups often revolves around helping them attract and retain talent and business leaders, defining and building corporate cultures and devising sustainable strategies to scale up by ensuring alignment between business and people practices.
Yes, it is true that when it comes to attracting and retaining talent, one might think that the bigger, more established restaurant chains have it easier. They have tried and tested systems and benefits schemes as well as talent management programmes in place that can help gain access to and keep talent.
However, start-ups and smaller brands are often more appealing to the next generation of leaders, who want to avoid being a small cog in a big machine. Restaurant entrepreneurs should not forget this and should turn this perceived weakness of size into a strength.
In a highly competitive market environment such as the Middle East – and in a people-driven industry – these steps can help pave the way to success.
When faced with the opportunity to expand, restaurant entrepreneurs should ask themselves:
- Why do I want to grow in the first place?
- What is needed to set up a brand?
- Who is the best person to drive the business going forward?
- How do I best structure the organisation?
About the author: Thomas Mielke, managing director, Aethos Consulting Group
A founding partner of Aethos Consulting Group, the world’s largest hospitality-focused executive search and advisory firm, Thomas Mielke has a track record in successfully placing senior executives at leading hospitality companies across the EMEA region. He is an AESC certified consultant and is working together with travel wholesalers, real estate development firms, investment companies and sovereign wealth funds as well as leading restaurant brands to identify key talent and has joined forces with clients in establishing compensation schemes as well as organisational structures and workflows.