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4 Scams New Restaurant Owners Fall For Every Time

4 Scams New Restaurant Owners Fall For Every Time

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The restaurant industry is a competitive one. If you’re new to the game, it can be hard to know who the real players are and what they want from you. With scams like these out there, it’s no wonder so many new restaurants fail!

Just the other day, I got a call saying that I have $10 million waiting for me in an African bank account. And all I have to do is send them $1,000 in order for me to have that $10 million.

Very good deal, right?

That is the type of scam that I get all the time. Keep reading on as I show you the different types of scams that restaurant owners get approached with all the time.

So then that way, you can avoid it at all costs.

1. You Need To Hire A Social Media Agency

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Number one scam is that you need a social media agency or social media guru to run your restaurant’s Instagram channel and to promote for your restaurant.

Now I get approached a lot by these different agencies all the time. I’m not trying to throw shade at ALL of them. Some of the agencies and specialists out there are quite reputable and can actually help move the needle in your restaurant business.

But to start off with your restaurant and if you don’t have a high budget, you don’t need to invest in a social media agency. I don’t recommend it if that’s your situation. You can take the pictures, do the outreach, learn how to run a campaign, and manage your restaurant Instagram yourself.

If you’re a smaller food business, it is actually important to spend the time learning and executing it yourself. Because not only are you going to save a ton of money, but a lot of times these campaigns might not get you the results you’re looking for, right a way.

How do you think investing in these agencies would get you the promised returns that they always claim? How much are more likes and comments on your photo worth to your restaurant? Not too much I bet.

But that’s the result you’ll see most of the time from these agencies.

So unless you have the RIGHT mindset – that social media is a long-term strategy – and you have the budget to sustain, you’ll end up being frustrated and question the costs of the agency.

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It is a common occurrence where restaurant owners tell me that they got BURNED by a social media agency. Because most of the time, it’s basically a three months contract and by the middle or end of the term, you’re not happy with them since the expectations they set out were too high.

And you basically go through a bunch of headaches and cancel with them. Now you’re $10,000 short.

So definitely don’t invest in a social media agency until you have to done the proper due diligence and when you can actually afford a social media agency for the long-term.

What to do:

Hiring for marketing shouldn’t be your initial focus. Your main focus when you start a restaurant should be making great quality food products, aligning the values, understanding your customers, and then connecting with your customers.

After you have all the foundations dialed in, that’s when you run advertisements and do PR.

That’s the sequence of the ACE formula aligned, connect, explode. This is the same 3 step formula I used to build my 7 store ice cream chain and what others have used to build a profitable restaurant business. If you are stuck about how to start your restaurant business, then check out my free masterclass below as I’ll walk you through what to do.

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The ACE Formula

When should you hire a social media agency for your restaurant?

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It is when you are able to make enough to support marketing with a long-term strategy. That’s when you want to invest in them.

Because there are more costs associated with doing social media properly than you think.

Such as:

  • Management fee (of agency)
  • Photography and videography (may be additional cost by agency)
  • Approval and feedback time between you and agency
  • Your time and chef’s time for photoshoots & video shoots
  • Reviewing campaign proposals from agency
  • Design of collateral for campaigns or posts (may be additional cost by agency)
  • Food cost for photoshoots, video shoots, media invitations

And on top of that, make sure you guys do your due diligence, invest in reputable show media agencies.

2. You’re Going To Be Rich & Famous

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Second scam that you’re going to fall for is that you’re going to be rich and you’re going to be famous!

Unfortunately, in the restaurant industry, that’s just not how it works. This is not some kind of Netflix show like Chef’s Table. It’s not a glamorous industry like those shows, it’s not all that it is slim margins.

Everyone in the restaurant industry knows for the fact that if you want to get rich restaurant industry is definitely not your first choice.

In the first few years, you’re going to be putting in a lot of hard work to get your operations in place, to hire the right staff, and to actually learn the trade.

The reason why I’m sharing this with you is because I want to set you up for success. I want to make sure you have the right mindset when entering this industry – that you’re passionate about this industry, your passion to create food, passion to create something great that someone can enjoy.

That is where that whole inspiration should come from. And when you have that mindset right, then this would become a success for you.

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For me at 720 Sweets, we worked a good five years before we’re able to see some sort of success and was eventually being acquired. So if you’re not in love with this harsh industry, you’ll burn out, be miserable, and fail.

3. You Need More Marketing

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The third scam that is a must avoid at all times is that you need more marketing!

They may tell you that you need to put in a ton of money in Facebook ads or Instagram ads and you need to buy a billboard to get your restaurant out there. That is the worst advice someone can give you or that is the worst scam that you can fall under.

Why?

Well if you serve terrible food or have terrible customer service, then more brand awareness won’t transform your restaurant from a dud to a stud, right? Because the fundamentals are just not there.

When you put money into driving people into your restaurant, when your food is not good and when your fundamentals are not right…people will come and try it out once but they’re going to hate it!

What happens when the food sucks or the service sucks? They’re going to write you a bad review, tell all their close friends, and they’re most likely never ever going to come again. That means you’re spending money to destroy your reputation and business.

What to do instead:

Instead of destroying your own restaurant business with running ads, when you’re not ready, you need to work on your foundations.

That means (not limited to):

  • you align your values with your business
  • you align your WHY with your business
  • understand the problem your restaurant and food solves (job to be done)
  • you have a thorough understanding who your target audience is
  • you know how to connect with your customers
  • you have a brand story that is genuine
  • your operations are streamlined to be quick
  • you understand the whole customer journey and touchpoints

All these are critical if you want to build a community of customers who are loyal, supports you, and come back again and again. Because when you have all these in place, you don’t have to worry about the competitor down the block or the odd negative review you may receive.

And once you have all these in place, that is when you work on the sexy stuff that will explode your revenue like marketing and ads. Because before that, you’ll just be hurting your chances of creating new customers who will rave about you.

Now, building the fundamentals first and then doing the sexy marketing activities is the exact formula I used to build my 7 store ice cream chain and how my students are using to start their profitable restaurant business. You can learn more about the ACE formula and how to build a proper restaurant at my free masterclass below.

4. You’re Going To Be The Next McDonald’s

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The fourth scam that I hear the most is that people are boasting you and brown-nosing you telling you that you’re going to become the next McDonald’s or the next Chipotle.

That is the biggest disservice that anyone can do to you.

Because when your fundamentals are not right or you don’t have a proven model, there’s close to no chance you’ll be the next biggest chain in the world. That’s just the reality.

It is so common for us to take in the opinions and suggestions from people around us. But if those people have little to no credentials, then what they say has even less weight.

So when people are giving you praises, don’t be on over your head. Thank them but don’t let it blow up your ego. Because majority of the time they haven’t done created a successful restaurant or business. They’re just giving you compliments, just to give you some confidence boost. It’s just good manners.

What to do instead:

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When it comes down to it, you want to learn and listen from those who have achieved your dream, who have done it before, and who’ve made all the mistakes that you may end up making.

It’s simple: would you take business advice from a restaurateur with 10 franchises around the city or your office worker friend? The former hopefully.

These are the individuals who have the knowledge and experience that can be incredibly valuable for you. And they are the ones that can consult and gear you towards the right path.

Because one mistake that the successful restaurateur can help save you $10,000s easily.

Even for myself, I made the mistake of getting the WRONG ice cream machine when I first started. It was outputting less volume than we wanted. Swapping the machine and making the electrical updates costed me an additional $30,000.

If I consulted with another successful ice cream shop owner, I may have been able to avoid that mistake.

One thing you also want to make sure you do is to always keep learning. This is key when you’re running a successful business. The people that are on the top, the most successful business owners, they’re always learning and never settling for anything less than that.

That’s because there is always a better way to do your marketing, to do your operations, to make your business more efficient or to get back more time. So keep an open mind and keep investing in learning how to build a better restaurant business and self.

So there you go, guys, the four scams that I hear the most and are giving you the wrong mindset. I want to make sure that I share with you so that way next time you hear these bad mindsets, people poisoning you, even without them knowing you know, what is the proper way of approaching this restaurant business.

Now that you know the scams to avoid, now it is time for you to start creating the right foundations. I recommend you check out more of my tips on starting a restaurant, hiring the right staff, and more.

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