If you have ever dreamed of starting a restaurant, it might be the best time to start working on your dream and make a plan to launch your own business.
As rising numbers of people want to dine out or take away is the proof that people are leaner towards eating that food that is prepared outside of course with good hygiene, the number of food-service operations has increased from 155,000 about 40 years ago to nearly 960,000 now. With the fact that 58% of American adults eating out at least once a week, the restaurant industry continues to flourish. It is undeniable that many Americans will continue to enjoy meals prepared outside of the home.
Starting a restaurant business takes a lot of work, but with expert planning, you can launch a successful restaurant business. But keep this fact in your mind that 60 percent of restaurants fail in the first year.
We are not telling you this to lessen your passion. We are surely emphasizing the point that if you want a successful restaurant, some serious time and money will be required to invest.
Why do many restaurants fail?
What could be the most obvious reasons for the failure restaurant business?
- Lack of planning: Before you ever prepare dinner for a customer, you will need to spend a lot of time thinking out every small detail of your restaurant. From kitchen appliances and menus to floor plans and staff selections, the planning stage will make or break your restaurant.
- Poor costumer experience: Another main reason for the failure of the restaurant business would be poor customer experience. If your customers are not appreciating heading to your restaurant, they will quit coming and choose better option available. Make sure that you hire a team of professionals and trained. Even if the customer is untenable at times, it is important not to lose your cool.
- Poor staff management: poor staff management comes under another very main reason for restaurants’ business collapse. If you are incapable to manage your staff, it will direct to a bad customer experience, overall dysfunction and a rise in costs. Poor staff management also leads to labor costs which will be out of control, which is one of the biggest expenses in the restaurant business. It is a better option to conduct frequent meetings with your staff to maintain translucency within the team. Make sure that you establish a friendly working setting for your employees as well.
- No Marketing: Marketing your restaurant is as crucial as preparing good food. Failure to market your restaurant correctly will make you lose out on customers. This is a huge blunder that most restaurateurs make and is one of the most significant reasons why most restaurants fail.
Set a budget aside for marketing purpose right from the beginning of your restaurant. It is also a great idea to hire a digital marketing agency or have an in-house marketing team to manage marketing campaigns for your restaurant.
- Complex Menu: A long all-encompassing menu may appear like the right thing for your restaurant, but it will only complicate the thinking of your customers and limit profits.
It is always good to go for a short and easy menu and excel in what you serve. It is recommended to create your menu in such a way that the same ingredients can be used in various meals, and which are also easily available. Having a seasonal menu is also an exceptional idea to bring customers, and is also comfortable on the pockets.
Restaurants can be also classified according to the kind of service they provide.
In most cases, it is the community and location of where the restaurant is located that determines the cuisine and the style of service to be offered.
Below is some classification of the restaurants,
Restaurant Industry Classification:
Realizing where a restaurant belongs in the industry can help you to learn the competitive landscape and allow you to make a better strategy for your market entry when inaugurating a restaurant. Restaurants businesses can be broken down into different parts, from basic fast food joint to a prestigious three-star Michelin dining experience:
- Fast food restaurants, also termed quick-service restaurants (QSRs), specialize in quick preparation and casual service. Seats are limited since most customers order at the register and take their food to go.
- Fast-casual establishments mirror fast food service since they do not usually provide sit-down service, but they typically provide freshly prepared food with nutritive quality. As a result, their food costs tend to be higher than QSRs. Another differentiator from QSRs is that fast-casual places often provide non-disposable utensils and plates.
- Casual dining gives a full-service, sit-down experience for customers at an affordable price. With a comfortable ambiance, consumers can come in, sit down, and experience a meal without breaking the bank.
- Family dining follows the same format as casual dining, but most establishments do not serve alcohol. Family dining normally offers breakfast, lunch, and dinner options, making them available for longer hours.
- Ethnic restaurants have a meaningful share of the U.S. restaurant market. They vary from quick-service places with restricted selections to upscale eateries with an extensive variety of menu items. Their menus typically include Americanized versions of ethnic dishes, as well as more genuine food.
Selection of a Food Concept
Restaurant customers want to be pleased with their dining experience. Concepts give restaurateurs a way to let customers know in advance what to expect and also to give some structure for their service. Here are some of the more popular restaurant food ideas:
- Seafood: Quick-service seafood restaurants usually offer a short range of options, often limited to fried seafood. Midscale and upscale seafood restaurants offer a wider range, prepared in ways other than fried, such as baked, broiled, and grilled. Seafood can be an unsafe area on which to concentrate, as rates are always fluctuating, and several kinds of seafood are seasonal.
- Steakhouses: Steakhouses are part of both markets: midscale and upscale. Midscale steakhouses are usually family-oriented and offer an informal environment with meals considered as good values. In terms of décor, comfort is highlighted and Western themes are recommended. Upscale steakhouses provide a more formal ambiance and may serve larger pieces of meat that are of more outstanding quality than those meals provided in midscale restaurants.
- Pizzeria: You have two main options when entering starting a pizzeria. One is a to-go restaurant in a moderate facility with a specialized menu highlighted by pizza and beer, limited seating, and a self-service ambiance. The other is a full-service pizza restaurant with a menu that highlights not only a type of pizzas, beer, and wine, but also Italian entrees like spaghetti, ravioli, and lasagna, side dishes such as salads, and a few desserts.
- Sandwich Shop/Delicatessen: One reason sandwich shops are so thriving is that they have high-profit margins. Sandwich shops and delis can also modify their menus immediately and effortlessly to adjust to current tastes. For instance, with the increasing interest in health and nutrition in the United States, sandwich shops and delicatessens have begun giving more low-fat, healthy ingredients in their sandwiches, salads, and other menu items.
- Coffeehouse: With more than 400 billion cups consumed every year, coffee is the world’s most beloved beverage. But beyond the beverage itself, people use coffeehouses and espresso bars for a diversity of reasons: to gather with friends, for a quick lunch and a drink to perk up the afternoon, or simply to start a day with a great cup of coffee. Most thriving coffeehouses have heavy foot traffic and high-volume purchases. Profit margins for coffee and espresso drinks are remarkably high.
- Bakery: With the rise of strip malls and competition from supermarkets that have in-store bakeries, “bread-only” retail bakeries have almost vanished from the United States. Bakeries today give cakes, scones, bagels, and coffee drinks, and sometimes even offer complete dining menus, including sandwiches, hot entrees, beer, and wine. Consumers love fresh bakery items, but the market is very competitive. As you grow your particular bakery concept, you will require to find a way to distinguish yourself from other bakeries in town.
After getting the concept of restaurant types and their food below are the tips for starting the restaurants.
How to Start a Restaurant? 11 Steps to Follow
Opening a restaurant needs balancing many parts and can feel like a difficult task. But the method is a more manageable action when split down. If you are interested in how to open a restaurant, we have designed an 11-step model to navigate you through the process.
1. Define Your Restaurant Concept
Your restaurant concept should be made into every perspective of your business, from the food itself to your method of customer service. Your concept should also be considered in the name of your restaurant, the design of your collateral, and your decor.
2. Produce a Business Plan for Your Restaurant
Your business plan is the foundation of your all business operations. Be sure to add an executive summary, company information, industry analysis, geographic analysis, target market analysis, food safety plan, sample menu, marketing strategy, management strategy, and financial plan.
3. Research Funding Opportunities for Your Restaurant
Estimate your restaurant startup expenses, as well as operational expenses, to learn how to fund your restaurant. There are several options to consider, from taking on an investor to applying for a small business loan. Be sure to determine your break-even point and create a financial analysis as well, to get an accurate conclusion of your predictive cash flow.
4. Licenses and Permission are Required to Open a Restaurant
Apart from the standard business licenses and approvals required to start a restaurant, there are other clearances that are required to get if you want to run a restaurant. Be sure to do your analysis on food safety regulations and make a list of standards you have to follow.
5. Register Your Business
You need to register your business with the IRS to get your Employer Identification Number, which you require to file taxes. You can sign up for one here. You might want to trademark thee name of your restaurant, to prevent it from copying you and cashing in your restaurant’s success.
6. Select the Appropriate Location
A restaurant’s location plays a make or breaks role. Visibility and foot traffic are two major determinants to consider during the selection process. You also need to evaluate the size and interior shape to decide if it is the best fit for your restaurant floor plan.
7. Order Restaurant Supplies
Restaurant supplies can get pricey so you want to be strategic when deciding what to buy or lease. List out all the things that you absolutely require which depends on your menu, versus what you want. Then make conclusions based on your resources and your financial analysis.
8. Hire the Best Staff
Make a list of how much staff you require to have your front of house and back of house efficiently. Then get to hiring. While you are doing that, you should also determine if you want to process payroll yourself or use payroll software. Just keep in mind that restaurant payroll can get very complex, especially with different state/federal/local laws and regulations around wages and tips.
9. Design a menu
Your menu is the main thing in your restaurant and should reflect your concept and brand. But it is also a marketing tool that can help persuade new customers to reach your restaurant. Your descriptions should be brief but attractive to your audience.
10. Create a Marketing Plan
Before you open a restaurant, it is necessary to develop a marketing plan that makes awareness, draws in new customers, and produces a loyal following. Marketing tactics that might include everything such as social media.
- Use social media:
Create Facebook, Twitter, and Instagram accounts to post news, photos, and foods about your restaurant. The photos and descriptions should describe your brand. Consider including pictures of food or behind-the-scene processes to bring in potential guests. Make sure to use high-quality photos.
- Build an attractive website:
Your site should be simple to navigate, and the design should signify your brand. Add some essential information about your restaurant, such as your address, contact number, working hours, and menu.
- Create a Yelp account for your restaurant:
Potential guests will surely be able to find your restaurant if it is placed on Yelp, as it is a directory for businesses. Guests can also leave views after visiting. Since it is a well-known website, joining Yelp will also boost your prestige, especially if you have a high rating and positive feedback.
- Posting an ad in the local paper:
By posting an ad will make people aware about your new restaurant. You can even go for a featured story or mention in an article.
- Use a mobile loyalty program:
You can sign up your restaurant for a mobile app loyalty program that will attract the growing number of consumers who use smartphones. Through this app, you can entertain guests by rewarding them for resumed business.
- Create an email list:
When sending out creative emails that communicate your brand, it is necessary to use related content for each group of customers. For instance, sending dine-in specials to reservation customers or sending delivery coupons to online ordering customers are both great approaches.
- Offer promotions to new guests:
Give first-time guests a free drink or a small dessert. Customers will remember your outstanding hospitality, and they will be more likely to recommend your restaurant and to return themselves.
11. Host a Soft Opening
You have learned the old saying “Practice makes perfect.” The same goes for restaurant openings. Go for the option to host a soft opening for a restricted number of people before opening the doors of your restaurant to the public. This “test run” strategy facilitates you to set in on particular meal times to see where your staff could be more useful. From private parties for friends and family to sneak peeks open to the public, there are several soft launch approaches. Here are a few common ones:
- Offer a “beta” menu that provides half of what is on your complete menu. It reduces pressure on new staff and encourages customers to come back to see the full menu reveal.
- Do not operate all day. Consider providing just breakfast and lunch for 4 days, then dinner on the fifth.
- Host a “sneak peek” happy hour with preferred menu items and signature drinks.
- Hold a friends and family only opening with complimentary meals, with the purpose of inviting them to help train your staff.
- Hold a soft opening for neighboring homes and businesses. This will help you get local fans, in hopes that they will return and recommend your restaurant to visit friends and colleagues.
Starting your new restaurant off the ground can feel like a difficult task. Nevertheless, as the restaurant industry continues to progress, and foodservice trends continue to change, there is always an opportunity for another extraordinary eatery. With comprehensive planning and successful execution of your different ideas, your restaurant business can be successful.