Published on December 2, 2014

Making the dining experience better for restaurants

Prior to founding Reserve, I was consulting with small businesses - from yoga studios to law firms - helping them run their companies more efficiently. Many of these businesses were started by passionate entrepreneurs, who founded their company to share their skills with the world and deliver services that helped make people’s lives easier or better.

Very few of them, however, were excited about some of the minutiae of running a business - managing down their credit card rates, wrestling with their CRM systems, negotiating leases or contracts. My goal was to help them make these processes simpler and more efficient, so they could spend more time with their customers, doing the work they loved.

I was determined to take what I learned from working with small businesses into account when I was starting Reserve. Nine in ten of restaurants have fewer than 50 employees and 70% of restaurants are single-unit operations, according to the latest stats gathered by the National Restaurant Association. In early conversations with restaurants, I heard many of the same concerns I did from other small businesses. But a few things stood out.

One was how slim margins are in the restaurant industry - the New York Times recently reported the number to be around 3-5%. With such slender margins, the restaurant industry is one of the toughest to make it in - about 60% of restaurants go out of business in their first three years. As a point of comparison, the construction industry, which the US Bureau of Labor Statistics cites as consistently having the lowest survival rates for new businesses, sees about half as many establishments close in the same period of time. In a study of companies started in 2000, at the end of three years 31.6% of construction businesses had closed, while healthcare and social assistance businesses - one of most stable industries - only saw 18% of business fail over three years.

Chart 4. Survival rate by selected industries, 2000 birth cohort, 2000–2010

The restaurant industry is also physically demanding. Talk to anyone who has spent time in a commercial kitchen and you’ll hear about 12-hour shifts and seven day work weeks, spent almost entirely on one’s feet. The motivation for many isn’t the $46,000 mean annual wage that chefs and head cooks take home each year. Rather, what motivates and drives many of the chefs you’ll find working the line is the ability to be creative, to make and share great food, and make people happy.

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Figure provided by the US Department of Labor, Bureau of Labor Statistics

But given the slim margins and long hours, when I started knocking on restaurants’ doors wanting to talk with them about Reserve, I was blown away by how welcoming everyone I met was and how much they lived by the ethos of hospitality, soigne, taking care of their guests. The creativity, passion and dedication they had to their career and their craft was palpable, and I would often leave conversations more determined than ever to help the people who would be our partners succeed.

Reserve’s mission is thus not only to improving dining for you, the guest, but for the restaurant as well. We provide our service to partners for free, help diners connect with great restaurants and are working hard to help enhance hospitality. It’s important to us to help our partners run their business more efficiently, express themselves creatively, and create an experiences that will turn guests into regulars because we share a common goal with our partners - making dining better for restaurants.

Greg Hong, CEO and Co-Founder

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