Opening a Restaurant
Most new restaurant owners are fearful that his/her new restaurant will never get off the ground. With all the risks, a healthy degree of worry is helpful as new restaurants experience high failure rates.
Many of the new restaurants that never become viable businesses were doomed even before they opened their doors, owing to a lack of systematic preparation. It cannot be emphasized enough how planning and organization is crucial for a restaurant’s success especially early on before you have a customer base.
An owner can only predict so much about customer behavior before they open up, so he or she needs to give their attention to the details early on. That is only possible through drawing out and executing comprehensive and methodical planning. This is your business so you should leave as little as possible to chance and provide yourself with the maximum degree of flexibility.
The Restaurant Industry Realities
Consumers have many choices of restaurants, and small details influence their dining-out decisions. An interesting concept only goes so far. So in addition to creating a business plan and laying out an agenda to launching the restaurant, a restaurant owner has to think about the customers experience way down the road when the restaurant opens. Aspects like unique interior designs, customer convenience, singular cuisines or creative approaches to preparing familiar favorites can make a big difference in a restaurant getting a foothold in a market. However, these elements are much easier to address in very beginning.
Choosing a Location and Name Has Meaningful Implications
Choosing the right location creates an atmosphere ripe for success. The best locations offer high visibility, easy access and take advantage of heavy traffic of vehicles or pedestrians. Parking or transportation options, drive-through windows and unobstructed entrances and exits make it easy for customers to dine.
Planning Restaurant Details
Choosing the type of cuisine depends on personal preferences, demographic makeup of the nearby residents and available cooking talent, whether personal or provided by accomplished chefs. Type of cuisine influences restaurant design, seating, menu, prices and profitability. Incorporating the colors of company logos should be carried across design features, menu designs, signage and company stationery. Successful entrepreneurs consider every detail in the planning stage.
New owners must apply for zoning permission, business licenses, health and construction permits and insurance coverage. Restaurant operations need to register fictitious names, open business checking accounts and meet with federal, state and local taxing authorities.
Financing and Budgeting Concerns
Starting a restaurant results in expenses to buy equipment, pay deposits and license fees, buy inventory and hire contractors to remodel the chosen property. An underfinanced restaurant often cannot survive extended periods of relatively minor problems so have your finances in order is absolutely essential.
- Owners must choose whether to lease or buy their restaurant property. Negotiating a lease or sale involves complex legal and financial arrangements, so owners need effective legal representation and advice. Before entering into a legal agreement, a restaurant owner should make realistic projections to ensure that the property costs do not handicap the restaurants success.
- Entrepreneurs must come up with a strategy to finance the restaurant. They can finance their restaurants from personal resources, business loans, mortgages and investors, or through a combination of sources.
- Creating a solid business plan helps to convince investors or loan officers that the restaurant concept is practical.
- Strong business plans includes facts and figures, potential sources of income, targeted customer profiles, advertising strategies, design details and how owners plan to counter their competitors’ efforts.
Choosing Cuisines and Target Audiences
Choice of cuisine affects business plans, equipment needs, profit margins and capital requirements. Upscale restaurants need high-quality tableware, decorative accents and comfortable seating, but casual places have higher proportional food costs and need to buy various carryout containers and takeaway condiments. Restaurants get their supplies from suppliers, box stores and local produce vendors, and culinary trends favor finding nearby sources for meats, produce and kitchen staples and condiments. A restaurateur should have a supply chain established before the opening.
Owners need to determine how to reach their target audience. Grand openings, local advertising, establishing websites, distributing fliers and joining local community groups and business organizations help to raise the profile of new restaurants. Cuisine and advertising choices need to satisfy the target audience, which might be families, sports enthusiasts, business diners, upscale patrons or young, urban hipsters. Family-friendly restaurants need to plan children’s menus and offer play facilities or other diversions for restless kids. Other core marketing moves must be in place by the time you open for business. These include having a website, devising a promotional strategy and setting aside a marketing budget.
Hiring Qualified Staff Proves Critical to Success
Staff matters. Staffing issues can sink new restaurants, whether it is ineffective managers, rude servers or disorderly kitchens. Therefore, your initial hiring decisions have to wise ones, as you cannot afford to start off on the wrong foot. Hiring strategies need to consider employee-benefit packages, health insurance, loyalty incentives and compensation issues. Upscale restaurants depend on finding talented chefs and kitchen staff to create appealing foods for customers. Casual dining and fast food restaurants need to hire and train their staffs before they open their doors.
Choosing an Accounting and POS System
Restaurants must decide on accounting systems, payment options and point-of-sale systems to manage their daily operations. Small restaurants might accept only cash or personal checks, but consumers increasingly rely on credit cards for payments, so restaurants need to take them to remain competitive. Point-of-sale systems include touch screens that send orders to each bar, kitchen and server station to speed up service. Advanced systems interact with accounting software to facilitate management decisions, inventory control, timekeeping functions and scheduling duties.
New restaurants seldom survive just because they have good food and attentive service. Proper planning creates an infrastructure for success so that when you open up, all you and your employees energies can be concentrated on pleasing diners.