The ‘Stage 2’ Error That Can Fatally Weaken a Cafe or Restaurant

A conversation with a new operator during the week got me thinking about a classic and potentially lethal startup mistake: Stage 1 and Stage 2 thinking.

This approach basically says “let’s get this new place open as quickly as we can, even though we don’t have enough money to do it properly. After a few months when we are profitable, we can afford Stage 2 and get the job finished.”

Stage 2 items include things like:

  • A modern website that will compete with the best in the area, with some great photography to attract social media attention
  • Co-ordinated and regular marketing – interesting social media posts, responsive to reviews, developing an email list, and a calendar of promotional events
  • Professional decoration that makes an immediate impression – not just secondhand, DIY and IKEA
  • Plenty of refrigeration and storage space, including a coolroom, so you can buy in bulk
  • A properly-fitted washup area, so kitchen staff can do the job quickly
  • Cost-saving kitchen equipment like slicers, food processors, a salad bar and a properly-tiled floor that’s easy to clean
  • An effective and easy-to-clean kitchen exhaust system – proper filters, easy-access ductwork, and a regular maintenance program. Otherwise it’s a fire just waiting to happen.
  • An efficient and well-equipped counter with great beverage systems – not just the free-on-loan Coke fridge. Fortunately, a quality espresso machine is usually a Stage 1 choice
  • Staff facilities – lockers, a change area and plenty of regular training
  • Staff recruitment and rostering systems – to attract the best and minimise wage costs
  • Correct staff wages, with all the legally-required benefits
  • Well-trained and experienced staff. Most of the best people actually don’t want to be part of a startup, because they know it’s messy. But after a couple of weeks that’s forgotten.
  • Bookkeeping system (like Xero) and someone dedicated to run it, to accurately and instantly track income and expenses

Unfortunately, the lack of these essential Stage 2 items fatally weakens a business from the start, so the great profits expected when you openĀ  with Stage 1 never come to pass. Most Stage 2 items are essential for a healthy bottom line.

You’re overworked and tired, just managing to pay expenses, and the profits to finance investment aren’t there – it’s not long until you’re looking for the exit. Unfortunately businesses stuck in Stage 1 don’t sell for much, and there are lots of them on the market. Invest carefully.

Alimentari in Melbourne – getting it so right from the beginning…