Those wondering about how to start a successful restaurant business have a lot to take in. After all, it is a known fact that there are several reasons why restaurants fail. Failing to plan and execute properly will take you down the road to disaster faster than you may think. You must come up with restaurant business ideas that are realistic, achievable, and measurable. This article is guaranteed to leave you with more knowledge and greater understanding of what you need to take into account.
As the saying goes, ‘seek to please everyone and you will please no one.’ It’s a fact that niche restaurants make more money and become better known than those that cater to every demographic. This is because defining target customers for your restaurant business can help you learn better ways to serve your customers. Here are considerations that you’ll want to take a look at in order to carve out your niche better. Just remember to be as specific as you can be when defining your target market.
Knowing the age group of your target market can make coming up with the right products and services easier. They all have different interests, so what works for one group may not necessarily work for the others.
Their Level of Income
Find out what your ideal customer’s level of income is so that you can better learn what they can and can’t afford.
Their Cultural or Ethnic Background
Does your product fit into their culture? Will it offend? Is it enticing to them? These questions are what you should ask yourself when taking culture or ethnic background into account.
Your location plays an important part in business. For example, depending on where you are located, you may attract a lot of your targeted customers or the exact opposite.
Choosing Restaurant Themes, Cuisines, Types, & Concepts
An important aspect of starting your own restaurant is exploring what type of restaurant to open. There are different cuisines, various types of service, and a myriad of themes to choose from. In the event that you are not yet sure of what to feature, here are some concepts you might want to look into: sandwich bars, coffee shops
This is one of the most common restaurant types. Prominent examples include McDonalds, KFC, Burger King, and sandwich bars like Subway and Arby’s. Customers like this because of the speedy and convenient service. Franchising is the typical way to go when it comes to fast food, so you’ll need to know the initial costs about a particular franchise before you proceed. It tends to be quite expensive too, in comparison to independent restaurants.
The clean sheets, fancy silverware, and well-dressed waiters are all staples of fine dining restaurants. It is more expensive than other types, but the ambience more than makes up for it. Quality should be through the roof when it comes to this restaurant type, so owners should be prepared to step up their game if this is their preferred concept.
Considering how reliant people are on coffee, is it any wonder how successful these shops are? Starbucks is a household name and there’s always another hopeful around the corner looking to achieve even a fraction of that success. Despite the stiff competition, there’s always a huge market for coffee shops, so this wouldn’t be a bad idea, especially for those looking to settle in more urban locations.
This is the type of restaurants where your customers can serve themselves by choosing from a selection of dishes. You can create variety for yourself by offering different themes for the buffet depending on the occasion or event.
Choosing A Location for Your Restaurant
Location is among the most important considerations to make for any business and restaurants are not exempted from this statement. There’s no such thing as a perfect location, but there are ways to evaluate a prospective space.
How to Evaluate the location of your Restaurant Business
Consider your Style or Theme
Depending on what you have in mind for your restaurant’s image, you’ll want to select your location based on your plans.
Consider the Infrastructure
Make sure that the building or space you look to occupy is in good shape. Those with terrible infrastructure will cause trouble for you later on in the form of repairs and cost of maintenance. Good infrastructure also involves having adequate air conditioning, electrical, and telecommunications services.
Consider the Utilities
Details of your restaurant lease, rental costs and dealing with landlords are part of your utilities. It would also be wise to ask about security deposits from your utility providers so you can have a better idea regarding your move-in budget.
Consider your Demographic
Concerning your demographic, your knowledge about who they are and their proximity to the restaurant’s location is what’s most important.
Consider the Foot Traffic
As a restaurant, you’d want your business to be easily accessible, so monitoring the foot traffic of a location is vital. Check in at various times of the day or week so you can find out if the pedestrian traffic of a prospective location is what you’re looking for.
Consider the Convenience of Your Customers
Does your place have parking? Empathizing with the needs of your customers is a huge consideration when looking into a certain location. People want convenience and if you can give them that, they’ll be more likely to patronize your restaurant.
Build a Strong Brand Identity
A strong brand identity is more than catchy names, slogans, or logos. As the message you send to consumers, the core of your brand is the quality of your products and services. Everything else fails if you do not consistently deliver excellence. With that said, you still have to pay attention to other details of your brand, so here’s what you need to remember:
When choosing a brandable restaurant name, you should pick something that reflects on your product. Examples are KFC and Burger King. KFC originally stood for Kentucky Fried Chicken, which immediately gives you an idea about what they provide even before you’ve seen their menu. Same goes for Burger King.
Your logo must be designed in a way that will not only attract people but entice your desired feelings towards the business. Know that consumers are tremendously influenced by color, to the point of making snap judgements. Brand personality is easily reflected in the logo’s colors, which is always strong way of branding your restaurant.
A simple yet effective way to create a strong brand identity through your website is with a call to action. This way, you can interact with customers in a warm and inviting manner, which says a lot about what you are all about. The website should also contain your logo, as well as complementary colors and fonts.
Put everything together and you’ve got the process of branding. The name, the logo, the online efforts, combined with the good service you provide completes the process. How much quality your brand puts out, its uniqueness, and everything else in between determines the level of customer loyalty you receive.
Restaurant Design & Development
Practicality is the right way to go when coming up with a restaurant development plan. Start with the concept development and work your way towards completion with these specific considerations in mind:
Your intended brand personality should the most direct influence on whatever design you come up with. The colors should be on point, and your logo must be featured prominently. Be sure not to neglect any aspect of your chosen themes and cuisines since those are what will help make your brand stand out in the market.
Consider both the style and functionality when coming up with your design. Don’t neglect your refrigeration and your storage; same goes for the ventilation and all of your kitchen equipment when it comes to your kitchen’s design. The placement of all the tables and chairs, along with the quantity that will be needed must also be carefully planned out.
A huge mistake when it comes to the design budget would be overspending. Prior to any actual construction, estimate what your initial costs will be. Once you’ve done that, set a maximum limit. You can do this for the restaurant as a whole or even according to a specific area.
Business Plan – How it Helps
It must be said that even with excellent financial backing, there’s still a great chance of failure if you don’t have a solid business plan or business proposal to guide you. An added benefit of having a detailed plan is that it can help with securing loans or investors. When crafting your plan, it is essential to consider the following elements:
An executive summary can be defined as a look at your establishment, but from a high-level perspective. It includes data and information that already summarizes the rest of your business plan. A good advice would be to write this part at the very end, so that you can also feature relevant information from all the other sections.
This section is where you describe your business. Spare no details and provide as much as you can. It can involve when it was conceptualized, established, and what you aim to accomplish. Naturally, you may form your vision and restaurant mission statement here, if you don’t already have one.
In here you get the chance to survey the market and your competition within. Don’t neglect to include data regarding your primary target market, ideal customer profiles, present customer testimonials, and others. You should also include industry and local trends so you can tell where you are doing well and which part you are a bit lacking in.
Under the management section comes your chance to impress by detailing just how competent and reliable your management team is. This is where you take a look at each member, highlight their skills, experience, and qualifications.
In this section, you must explain what your price strategies are and describe how your price point influences the rest of your organization. Don’t forget to cite your promotional tactics, both present and to be implemented. Social media, press releases, and other methods that helped raise awareness to your brand are also a part of this section.
When writing about funds, it is best to go for realism. Should you fail to come up with a specific amount, you can try to create a number range instead. This should include a best and worst-case scenario for your business. Potential funders may also be more enticed if you create a timeline because then they’d have a much better idea of what they can expect. Alternatively, you can also try to apply for a bank loan and include how that went in this section.
One of the last sections to include ought to be your financial projections, which must be based on data gathered regarding how your revenue grows, along with market trends. Take what’s been happening and add your own tactics and strategies to it. This allows for the creation of projects that are reliable and realistic.
Licenses & Permits Needed to Open & Run a Restaurant
Before you can legally start things, there is a list of licenses and permits you need to open a restaurant. The requirements are likely to vary depending on your location, so further research regarding your specific situation is advised. All in all, here are the core licenses and permits that anyone is going to need anywhere.
Having such a license is what authorizes you to operate within a certain jurisdiction, such as within your city or state. In order for you to get your business license, you’ll need to fill out paperwork, register a business name, and pay for your application fee.
Food Service Permit
Besides the business permit, this is the most important permit you’ll need since restaurants won’t be allowed to operate without a food service permit. Having this means you have met with all the safety regulations and laws, such as food preparation, storage, safety and sanitation training, and various other things. It will also involve a few on-site visits from a health department official.
Employer Identification Number
By having an employer identification number, you’re telling the government that you are employing others in your business. This is the number in which your business taxes are filed annually.
Certificate of Occupancy
This certificate shows both customers and the authorities that your new restaurant resides inside a building that’s marked safe. Before this is issued, the building must first be inspected thoroughly. Majority of restaurants tend to get their certificate of occupancy before the opening of their establishment to the general public.
Some other licenses and permits will depend on your themes and plans for your restaurant. If you are planning to sell liquor, then you will be needing a separate license just for that. In such a case, applying for it early is recommended since it tends to take long to get. Playing music in your establishment may seem like a small thing, but even that will need its own license. This is because of copyright laws that protects music.
Costing, Financing, & Funding
There are a number of options that you can take to make sure that your restaurant has the proper funding it needs. You may have saved up for years and now have enough capital to be self-financing. Alternatively, you may choose to get investors. Lastly, if neither of those options are right for you, then you can always try to score a loan from your local bank. In order to do so, however, you need to be able to prove that your venture can make money.
As far as investors are concerned, being like-minded in terms of goals for the restaurant is definitely a must. In defining just how much each investor is set to contribute, you will get a greater idea of how well things are going to go. One more thing to keep in mind is that while you may benefit from such a partnership now, there will come a time when you’d want to own your business in its entirety. Prepare yourself in setting up realistic targets that can help you buy out investors at a later date.
If you’d rather apply for a loan, now would be the time to come up with a business plan for restaurant financing, which should detail your sales tracking, cash flow management, and more. Be sure that all your related documents have been gathered in case there’s a need for a backup to your loan. Such documents will include your ownership docs, income tax returns, loan history, and so much more. There’s also the option of getting an accountant to aid you with your financial documents.
Staffing – How to Hire & Organize
There is an art to hiring, one that few can really pull off with exemplary success. As such, you’ll have to delve into the process of hiring and organizing prospective waiters, chefs, managers, and so much more. Below are a few tidbits that you might find useful:
The Methods in Searching for the Right People
Even in today’s modern world, there’s still a place for more traditional ways of looking for potential employees. Word of mouth, for example, can still get you far. By asking your family, friends, and others for referrals, you can find good prospects that are also trustworthy because of the social proof shown by those you already know.
Classified sections in your local papers can also be a big help when you’re looking to advertise a job application. Even in today’s digital world, people do still browse classified sections for a job announcement. For more up-to-date ways of attracting prospects, there are online listings, social media posts, and even platforms such as Linkedin where you can directly message candidates that you think would make an excellent fit. If your website is all set up, then you can post job descriptions of positions that need to be filled as well.
Having the Right Hiring Structure
For those who prefer having a more traditional or standard process, it would be best to follow certain steps. After a candidate has reached out to the ad or announcement, an interview is generally quick to follow. To prepare for that, you may want to draft an interview questionnaire and maybe conduct a background check on the applicant. Should he or she pass the interview, the next step would be the formal job offer.
Effective Restaurant Management
You can have all the resources and talent in the world, but without the right people keeping everything in order, your business may still spiral out of control. With a venture as varied and complex as a restaurant, know that there are still different departments, each with their own responsibilities. Here are two primary parts of restaurant management:
Front of the House Management
This part of management deals the areas and the actions that every customer is exposed to for the duration of their dining experience. It is their responsibility to create a positive first impression during the entry. More formal places may have their own waiting area, which is another responsibility to tackle since it would not do to keep too many people waiting. Places such as the bar and restrooms are also included, which means everything must be kept tidy and organized.
Back of the House Management
Consider this the central commander center of administration, since this is the part that deals with food preparation, customer service, expense tracking, conducting employee performance review, and so much more. As the restaurant owner, your own responsibilities will encompass both sides, so you can expect to deal heavily with the front and back as your business continues to develop.
Operations & Management Spreadsheets
It is fortunate that we live in a world where businesses have access to a little thing called a spreadsheet. To the few that aren’t familiar with what this is, a spreadsheet is a computer application that is used for analysis, organization, and data storage, usually in the form of tabs. Having this will makes a lot easier and faster for you as you continue to run your restaurant.
An example of what it specifically makes easier is inventory tracking. Taking note of what’s left at the end of the day is as simple as checking your tabs and adding or subtracting from it. The instant calculations provided by your spreadsheets can make analyzing your profits and losses much easier. One more thing that spreadsheets improve upon would be your cash flow statements, which are now quicker than ever to understand.
Art of Preparing a Menu
Building a profitable & delicious menu is a joint effort that requires a lot of creativity. Get your chef involved in the preparation and brainstorm how to get menu engineering right. Here are a few things that you may want to take into account as you go along:
Keep Consistent with Your Theme
A spanish-themed restaurant wouldn’t sell chinese food. Food joints with a blue collar feel would seem out of place offering caviar. You know what your business is all about. Designing your menu should start with making sure everything makes sense.
Feature Your Best Choices Prominently
You want to show off the best you’ve got to offer. Feel free to place them on parts of the menu where they are easy to find, like at the center of the page. Enlarge them as well, for emphasis. By doing so, you would be hard pressed to have any customers missing out on those dishes.
Flexibility is the Key to Success
People can grow comfortable with your menu, but inflexibility and resistance to change is the death of progress. Do not be afraid to shake things up and experiment.
Make Yourself Stand Out with a Signature Dish
This would be your main event; the star attraction. When people talk about your restaurant, this should be among the hot topics to discuss. Signature dishes showcase the talents of your chef and what your restaurant brings to the table overall. It doesn’t have to be too unique or out of this world, but it should remind people of you and your brand.
Focus on Advertising & Marketing
Your marketing can help make or break your business. After all, even if you have a pretty solid menu and an attractive interior, if people haven’t heard of you, who’s there to serve to? These days, there is a myriad of methods that you can use to accomplish your marketing. Each have their own costs, advantages, disadvantages, and can impact your business in different ways. Here are a few things that you may want to consider:
Social Media Marketing
This is one of the most effective and prevalent methods of marketing that you can engage in nowadays. As noted before, social media platforms like Facebook, Twitter, and Instagram, among others, are quick and effective ways for you to reach out to your audience. A quick post here or a picture there can be enough to connect to an untold number of people at once. Key paths to success here would be your level of consistency and how engaging your content is.
You may be wondering to yourself, ‘if social media is that good of a platform, why even bother with boring emails?’ To think we’ve reached an age where email actually feels outdated or old school says a lot about our recent technological advancements. Regardless of how far we’ve come, email is still a very effective, if underrated method to market your restaurants.
Restaurant Marketing & Sales Materials
Going all the way back to more traditional methods of marketing, there will always be a place for marketing materials such as pamphlets and flyers. In fact, you can even incorporate these materials into the other two methods of marketing mentioned above. Print them and show them to customers in real life, then share it digitally across social media and to those on your email list.
There’s a way to market yourself without having to do anything even remotely related to social media, printed ads, or emails. All you have to do is deliver. Consistency and quality customer service are two things you can do and the rest will follow. Remember that satisfied customers will keep coming back and you can bet that they’ll be telling or bringing their friends as well. Pay attention to whatever customer feedback you get so you can have a better idea of how to keep your paying customers happy.
Accounting – What you Need to Have
The administrative, creative, or culinary side of the business may have you preoccupied, but that shouldn’t be a reason to neglect your accounting. To make things run better, both in the short-term and the long-term, here are a few examples of things that you’ll need to see to:
Take Note of Every Expense You Have
Keeping a well-stocked inventory takes effort and money. There’s also occupancy expenses, operational expenditures, and restaurant insurance costs, among others. Know just how much you are buying per week and be sure to document each expense. This will give you a greater idea if your profits are good enough or if you’re just breaking even.
Make a Profit and Loss Statement
Having a P&L will make your efforts of organizing and keeping track of your finances all the more easy. When using this method, be as specific and detailed as possible. Some prefer to use this on a weekly basis, but some may opt for a monthly or even an annual P&L statement. It all depends on your preferences. Alternatively…
Hire an Accountant
Why waste time worrying about micromanaged finances when you can hire a professional to do it all for you? If this is a viable option, then by all means, go find someone you can trust to do all this. But if an accountant isn’t in the cards for now, you’ll have to note down every profit, loss, and everything else in between yourself.
How to Grow Your Restaurant Business
By now all the concepts, marketing, funding, and even all the food have been meticulously plotted out. With your dream a reality, there’s only one thing left to consider: expansion. Even if you don’t branch out into different cities or countries, there are ways to find growth for your restaurant. Take note that some of the original plans may have already included long-term aspects for your business. Another good thing is that now you won’t be alone. By then, you’ll have good people around you to help out. This will include business partners, your employees, and even a loyal fanbase cultivated carefully over time. By the time you reach that part where the current state of the business has peaked, a new action plan will be needed. Only this time, you’ve got the previous plans to serve as the foundation and blueprint. If you ever need inspiration or tips for successful restaurant, all you need to do is take a gander at what you’ve come up with before and you’re all set.
Would you like professional help in starting a restaurant business? Get in touch with Hotel & Restaurant Consultancy Ltd. and let us show you how.