Transforming A Distressed Chain Restaurant Through A Turnaround

By Author: Ken Gooz
Total Articles: 6
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If you thought successful chain restaurants or multi-unit restaurants can rest at peace after establishing a strong foothold in the super competitive and super volatile food-service-restaurant industry, you need to think again. Truth is, it takes an increased amount of efforts for a successful chain restaurant to sustain its status and rule out competition, as compared to emerging start-ups. This is because a successful restaurant venture is enveloped by increasing expectations from its customers and has higher stakes at losing its reputation. The owners, investors, managers as well as employees need to maintain a certain level of performance, if not exceed it. All this can actually put a lot of pressure on store level operations. At the same time, business owners might not have the time to innovate new ‘surprise and delight’ factors to keep competition at bay and broaden their client base. All this, together with highly volatile economic conditions may jeopardize a chain restaurant’s reputation as well as P&L statement.

This is where turnarounds become imperative. By undergoing a turnaround a chain restaurant ...
... can not only float but also rule the unruly waters of an unpredictable and highly competitive industry. Basically, a distressed or underperforming chain restaurant may find itself at the crossroads where it might need to choose one of the two options – lose out to competition and go out of business or revamp its business processes, infrastructure, operational methodology, financial frameworks and service quality to better its profit margins. It is in the latter case that the concept of turnaround chain restaurants comes into the picture.

Professional restaurant consultants who not only are well acquainted with changing restaurant trends but are also highly experienced in helping many chain restaurants accomplish successful turnarounds can assist distressed multi-unit restaurants in accomplishing an overhaul. Turnarounds can happen at a single level or at multiple levels and at any stage of underperformance. Professional restaurant consultants offer the following services as part of their turnaround chain restaurant strategies:

Review factors causing low or no EBITDA
Debt restructuring
Review the financial health of your single or multi unit restaurant
Review operational efficiencies
Review management accountability
Review brand attributes and profit performance
Assess product supply and labor cost management