- Target Market
- Choosing the Concept
- Location, Location, Location
- Restaurant Design and Development
- Licenses and Permits for your Restaurant
- Hiring Staff
- Importance of Spreadsheets in Operations & Management
- Marketing Focus: Promotion and Advertising for Restaurants
- Restaurant Accounting – What You Need to Have
Starting a Restaurant Business
For every person who has ever experienced being in the hospitality business, getting to own and operate their own restaurant is a dream come true. While the thought of being your own boss and running your own restaurant seems so easy, opening a restaurant and maintaining it is in actuality nothing short of being a monumental challenge. But all is not lost as Best Templates provides you an outline on how to run a successful restaurant business that will surely generate more than a few effective restaurant business ideas. There may be reasons why restaurants fail but reading this article will definitely increase your chances of preventing the pitfalls and making you wonder where everything went wrong.
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Restaurant owners cannot just target every single demographic or market. There are simply too many of them to get an accurate gauge of the market. In defining target customers for your restaurant business, it is important to ascertain the qualities of a specific product or the restaurant that appeals to the target market. This way, management would be able to easily improve on such qualities to provide a better outcome in terms of sales revenue. A carefully researched target market will not only reap you profits in the long run but will also provide a base for your loyal customers. The following elements need to be considered when choosing a target market for your restaurant:
- Customer Demographic – Consider the type of customer who will likely be attracted to your restaurant. Will your restaurant likely cater to business oriented clientele or the hip and the trendy working class?
- Location – By evaluating your location and the nearby establishments that your restaurant will be serving, you can get the volume of which potential customers will be worth dedicating to.
- Pricing – Your menu pricing will also dictate the type of customers you will be targeting, be it for the elite who can afford more or for the middle class customer. SEE MORE
Choosing the Concept
After defining your target market, the next crucial choice every restaurant owner has on his plate is deciding what type of restaurant to open. Choosing the perfect theme for your restaurant business poses another challenge since you have to consider factors such as the different cuisines for your restaurant. Your menu is also dependent on your chosen concept. In light of this, the following are the major considerations when choosing a concept for your restaurant:
- Service Style – Upon deciding on the target customer, decide upon which service style suits your target customer best and which you are also comfortable with in terms of restaurant operations.
- Focus on Strengths – Closely related to the aforementioned, focus on where you and your staff are good at since this will most likely translate to better performance and results.
- Menu and Trends – Depending on the current trends, your menu needs to contain both classic and innovative elements that reflect your theme and at the same time provide a certain twist in conjunction with current food trends. SEE MORE
Location, Location, Location
As with most businesses, the major factor in starting your restaurant business is choosing a perfect location (Real Estate) for your restaurant. But choosing the location of your restaurant is easier said than done as much as food and service. Your location must, by all means, be at the right place at the right time. Few essential questions must be asked of any locations which include the following:
- Is the restaurant located in a safe neighborhood?
- Is it zoned for this type of business?
- Demographics – After having a target market, demographics play another crucial role in choosing your restaurant location. Cities with most restaurants in the world commonly have restaurants having locations within the proximity of their target market. This effectively puts them ahead in terms of marketing or advertising for the restaurant. Being near target markets having disposable income is like hitting two birds with one stone.
- Are repairs needed?
- Does the restaurant need updated equipment?
- Does the lease or mortgage fit the budget?
- Lease – What most restaurant owners fail to do in securing a lease is negotiating the terms of the restaurant lease and fine tuning the details of the lease. Things such as general maintenance, heating and ventilation can be included in the lease thereby minimizing capital expenditure. It pays to ask the landlord about these minor details. Always rent out space that you can afford and within your set budget limit.
- Is the restaurant located in a seasonal environment?
- Visibility – In choosing a real estate for a restaurant lease, another major factor that needs to be considered is visibility. Being visible to potential customers increases the chances of walk ins and potential impulse customers.
- Is there nearby accessible parking?
- Accessibility – Another major factor in looking for the right property is looking at availability of parking space conveniently located where potential customers can come in and out easily. Owning a restaurant that does not have parking space may affect the chances of a return experience. Convenience of access helps in raking in the numbers and adding to your revenue.
Building a Strong Restaurant Identity
In today’s challenging and ever changing restaurant market, first time restaurant owners are often faced with the dilemma of creating identity amidst a sea of competitor restaurants. By building up on brand basics, restaurant owners help solidify the foundations of their restaurant identity.
- Naming – In branding, your name reflects your identity. It represents what your establishment is about and what it stands for. In choosing a brandable restaurant name for name reservation which would later be part of the trademark for your restaurant, it helps to consider having a name written on your signboard that is unique to differentiate your restaurant from competitors. It also helps to incorporate a personal story behind the name which can generate additional curiosity to your brand. The following key areas considered in naming your restaurant are:
- Location-Based – The objective here is two-fold – ease in finding the location of your restaurant and easily remembered by customers.
- Clever Wordplay – If done right, your name not only will be remembered easily but will also generate the desired image or branding for your restaurant.
- Theme – Another effective naming technique is stating the obvious – the theme of your restaurant itself attracts the same people who share the same interests. SEE MORE
- Logo – Your logo is the visual representation of your brand. It should encompass and combine everything about your brand all into one distinct symbol or figure. And in every situation, it should give you a sense of pride every time you see it.
- Website – In the ever changing landscape of media and advertising, adapting to changes such as having a website, puts you in front of the pack. Find a hosting provider for your website and start off by choosing a domain name. Make it simple but catchy. Select a website theme that matches the overall concept of your restaurant and take it from there. Make sure to place your restaurant’s social media accounts as well. Social media impacts the daily lives of the majority of people which should be used to your advantage. Consider making use of technology as a part of your constantly evolving branding and advertising mechanism. It may not always pay off instantly but should considerably add value to your branding
- Getting the message across – Another challenge that presents itself when building brand identity is in getting the message across. It is vital for every restaurant to be able to reach potential customers and effectively communicate with the intended audience. Only through consistency in your branding efforts and good service will you be able to effectively get the message across to your customers which in turn will solicit customer loyalty. Good customer service provides additional merit to any brand.
- Content Relevance – Customers are more likely to be receptive to any of your marketing efforts if your restaurant provides useful content – something they can really use in their daily life and something they may find enjoyable or informative at the same time.
- Consistency – What do guests expect of you everytime they come? This must always be the same – ambiance, food, service; all of these factors help create the type of image you want to project to your customers.
- Engagement – Feedback and improvement go hand in hand. By listening to what guests and others have to say, it shows an image of the restaurant that puts importance and value of what customers and the general public has in mind and that your restaurant is constantly working on what matters to the customers. SEE MORE
The different elements that constitute branding allow a restaurant to effectively communicate its personality to the customer. From the color schemes, fonts and photography to events posted in social media accounts, the delivery of your branding efforts helps cement your reputation and identity as a restaurant.
Restaurant Design and Development
There are a lot of things to consider when coming up with the design of your restaurant. And it is through the development of those ideas that every restaurant owner begins to finally understand what and how the restaurant should be. Your restaurant development plan hinges on the choices you make as a restaurant owner and the type and feel of a restaurant concept that not only appeals to you but which you are also quite interested in. Therefore, in concept development, the following elements of design are considered:
- Branding – Branding is perhaps the most influential factor in restaurant design and development. The most common factors considered here are brand personality, the brand experience that is being promised, and where your brand intends to position itself in the industry.
- Brand Personality – This should reflect what the total customer experience is for your restaurant as this determines how your restaurant will be known by the customers.
- Brand Promise – Delivering on the expectations you set out for your customer makes or breaks your reputation as a restaurant.
- Brand Positioning – This is where you put your foot down in terms of where you see yourself amidst the competition. Being at the forefront of the pack means being the best in terms of quality, service, and customer satisfaction. SEE MORE
- Equipment – In designing the physical space of a restaurant, it is otherwise important to consider the equipment that will be used and incorporate functionality into the design. Major considerations include the restaurant storage and refrigeration needs as well as ventilation and other kitchen equipment in which the overall design of the kitchen will revolve around.
- Storage – Considering the rate of your turnover for inventory is critical in planning or designing the restaurant be it onsite or offsite storage.
- Refrigeration – The quantity of perishables projected to be stored as well as beverage has to be considered in connection to the first point.
- Ventilation – Proper ventilation has to be made in relation to the space of your restaurant – nobody wants to enter a restaurant fresh and go out smelling like grilled meat. SEE MORE
- Budget – More often than not, most restaurants fall short in achieving their desired image of the restaurant because of budget constraints. By failing to consider this important factor in the first phases of design, any restaurant owner risks overspending or not reaching the overall effect intended being unable to procure materials due to shortage of funds. Therefore, it is always a general rule to overestimate initial costs but with a set maximum spending limit on each area. SEE MORE
Importance of Having a Business Plan
Even with strong financial backing, any restaurant owner will eventually succumb to failure without having a sound and well made business proposal. As with most plans, your business plan will serve as your roadmap for success. Even well after opening, an effective business plan does not remain static. Instead, it should be a living document that evolves upon every turn of your business, capitalizing on each small success and leveraging itself for even more. That makes the business plan very crucial and important not just during startup but in the long run.
- Funding – Most restaurant owners, more often than not, find it too much of a burden to carry all the costs in starting up a restaurant. Thus, they file and apply for bank loans which in turn require them documented proof of how they would be able to pay off the loan along with the manner and frequency of payment. Herein the business plan comes into play. Getting funding whether through a bank or investors would be much easier once the reviewer sees a well made business plan with specific details of how income will be generated and the loan paid off.
- Forecast – Every business plan contains the all important sales forecast that every bank wants to see. This should show at least a net profit of 10% or more after the expense forecast, which includes the loan, has been deducted.
- Management – Ultimately, everything falls in the hands of management. Well made plans are just half of the equation as the other half of the actual plan relies on the execution of the plan. Management extends to the selection of the staff and in motivating them to share the same restaurant mission statement. Likewise, proper management of cash flow helps keep the business profitable and on track. SEE MORE
Licenses and Permits for your Restaurant
Opening a restaurant is no easy task. After deciding on a concept and design, a restaurant owner needs to consider the applicable licenses and permits needed in order for the restaurant to open up and start operations. But what permits and licenses are exactly needed to open up shop? The following is a basic list of licenses and permits needed to open a restaurant:
- Business License – For most countries, a business license is required to make businesses into legal entities able to operate and conduct business. Application for business license is also important in the computation of your taxes depending on the type of business entity you will be registering or applying for and what is approved in your license agreement. Upon registering your business, you are given an Employer Identification Number which becomes your tax identification number used in payment of taxes.
- Health Permits – Being in a business engaged in food and hospitality, any individual working for a restaurant needs to comply to stringent health and safety pre-qualifications in order to be permitted to do work in a restaurant or hospitality business. The health department basically issues a food service license to the restaurant and food handling permits for the employees.
- Liquor License – For restaurants serving alcohol, licenses vary from state to state and depending on that, a restaurant may need to apply for a liquor license and a beer and wine license. Approval process for such often times takes months so be sure to apply early to avoid being unable to serve liquor or be penalized for serving without any license. SEE MORE
Costing, Financing & Funding
When starting a restaurant business, you can do so either through self financing, partnering with an investor or getting a loan from a bank. As such, you need to be able to show that your business will be making money. A restaurant is not just about showcasing the culinary side but should be viable financially in a business setting. It helps to have a well laid-out
- Before Looking for a Loan
As mentioned earlier, before looking to find a loan, make sure to prepare all possible requirements and documents you may be able to present to backup your loan. A lot of number crunching is involved and it may be prudent to get the services of an accountant to help in the generation of financial documents. The following are the common requirements to present to any potential investor or during an application for a bank loan:
- Filled up loan application form
- Borrower information and current financial statement
- Ownership documents
- Business history
- Business license
- Income tax returns
- Profit and loss statement
- Projected financial statements
- Loan history
- Partner Resume (optional)
- Choosing an Investor
Partnership is the very foundation of marriage. And choosing a partner for business is very much the same. As such, it is important that you choose wisely who you partner with. Always define each investor’s contribution and that they share the same goals for the restaurant. Having a good partner is good but eventually, it is every business owner’s dream to own the whole business. So make sure to keep this in mind and set up a realistic target to buy out your investors. This may be risky but it will be very rewarding as well in the end.
- The Bank Interview
If you have decided to get a loan from a bank, think long and hard before you sign and provide personal property such as your house for collateral. Also, before the bank interview, make sure that all necessary documents are present. It is additionally good to have knowledge on the area you are setting up shop along with viable information regarding customer traffic and demographics of the location.
In the restaurant business, the choice of staff that management makes can either help the restaurant or pull down the business. Restaurant staff is one of the factors that help build a restaurant’s following. Customer retention helps increase sales and one of the main reasons a patron comes back is always about service. Depending on the size of restaurant, it is also very helpful to know when and how to hire a restaurant consultant who can evaluate the following factors affecting the hiring of staff:
- Form and Structure – Your hiring process should be standardized and thus have the appropriate forms following a given process or steps. Your job announcement, interview questionnaire, job offer, job descriptions, performance evaluation, and reporting should have standardized forms.
- References and Background checks – Through references, any interviewer can backtrack and verify the personality and experience for job applications be it for chefs, managers, and staff.
- Turnover – Taking note of turnover rate is particularly helpful in identifying which areas of your restaurant has potential problems and how they can be addressed immediately. SEE MORE
Effective Restaurant Management
Ultimately, the fate of a restaurant lies upon its administration. No resource is everlasting as no chances ever come twice. Effective management is placing where the skills match the need and where that resource is most effective. As with any company having different departments, management responsibilities fall under the two main sections or departments namely:
- Front of House Management – At the front line of every restaurant is the Front of House staff who stays with the guest during the entirety of their visit. It is important for front of house staff to be well versed in customer service. Front of house management ensures front of house staff hired are excellent at customer service and have had the required proper training. Front of house management also handles scheduling for front of house staff as well as their performance review and the operation of the POS system and accompanying softwares
- Back of House Management – While the front of house staff are the faces every customer sees, this does not mean that the back of house staff do not hold a role as important as them. In fact, it is what the back of house staff does that drives customers into the restaurant in the first place – the food. Back of house management ensure this and more. Back of house management is also in charge for expense tracking and performance review of back of house staff.
Communication between front and back of house is key in creating consistency not only in the quality of food but also in the brand of service a restaurant offers. It is the culture that management promotes that keeps the staff satisfied thereby also making loyal patrons out of happy customers.
Importance of Spreadsheets in Operations & Management
A common denomination when it comes to business today is the use of spreadsheets. Spreadsheets take away the time and effort needed in calculating repetitive tasks and high volume numbers. It also increases the efficiency and precision at which the following financial statements and other related documents are made and reported:
- Inventory Tracking – Compared to a manual count every time an item is received or taken out, inventory tracking is made easier and more reliable through the use of spreadsheets.
- Profit and Loss Analysis – Projections for profit and loss are clearly presented in a more effective and visual manner.
- Cash Flow Statement – Whether presented through a table or other visual representation, cash flow statements are made to be easily understandable through spreadsheets and are also easily shared to members of a meeting or board.
The Art of Menu Preparation
While there may be a ton of articles pertaining to building a profitable and delicious menu, do’s and don’ts in writing a restaurant menu and menu engineering, menu preparation in itself is an evolved art form that relies on the following common elements:
- Menu Layout – Always make a layout that is easy on the eyes and directs the attention of the reader to where you want them. This effectively takes away their burden of choice and gives you full control of where you want them looking.
- Menu Language – Your menu must speak the language of food. While being descriptive used to work, nowadays, customers are hyped by turning attention to natural, healthy and locally sourced ingredients
- Menu Showcase – From point one, every menu must showcase your most profitable item. Your bread and butter item must be the star of your menu layout and command attention the minute a reader starts browsing through. SEE MORE
Marketing Focus: Promotion and Advertising for Restaurants
There is without a doubt that marketing plays a huge role in the survival of a restaurant. However, restaurant owners need to be wary of not overspending nor underspending in marketing a restaurant. It is quite easy to lose focus and let these things slip. That is why marketing plans exist in order for restaurant owners to track the progress and effectivity of their marketing efforts such as the following:
- Social Media Marketing – In today’s modern restaurant scene, everything has a digital equivalent and social media plays a huge role not only in advertising your restaurant but also in the branding and identity of your marketing campaign.
- Customer Service – The quality of service your restaurant gives often speaks for itself. Good service always warrants a repeat visit for a satisfied customer. Even without any restaurant promotion or holiday promotions, satisfied customers will always keep coming back for more. Make sure to pay careful attention to answers in survey questionnaires, customer service surveys, customer complaints, customer feedback and ensure proper action plans are followed and documented in customer service action forms.
- Restaurant Marketing & Sales Materials – Although traditional, marketing materials still play a role in the marketing of your restaurant. Advertising material such as pamphlets can be used in email marketing as well as in your website & applications.
Restaurant Accounting – What You Need to Have
Watching your financials ensures that profit is being made and maintained. It helps keep costs to a minimum and identifies where profit margins come from. Often times, restaurant owners or managers get held up in operations and neglect accounting. Keeping track of profits and restaurant sales versus payroll, prime cost or expense tracking keeps owners updated of the restaurant’s financial standing. The most common items every restaurant owner needs to be aware of are the following:
- Sales – Keep track of your total and itemized sales for the day. These should be broken down into different categories or areas as needed.
- Payroll – It is always good practice to know your employees and being able to know how much they are being paid in relation to expenses.
- Inventory – Knowing what items you have helps in ordering for supplies and in planning of restaurant operations. SEE MORE
Generally, reviewing the mentioned items helps you keep track of where you are in comparison to your target or forecast. This allows you to adjust and provide measures in order to be on track of your goal. Reconciling accounts each month additionally provides understanding of your profits and losses for the month.
Growing your Restaurant Business
Having a sound, reasonable, and constant profit is one sure way of growing your restaurant. Success they say is not achieved overnight and as such can be reached after long, extensive hours of hard earned labor and sleepless nights of number crunching. Each restaurant owner employs a number of action plans for the goal of reaching such desired results. The following are tips for successful restaurant operations that produce significant results:
- Marketing Strategies – At the heart of every success, is a well devised and executed plan. Don’t just plan, be different – be fresh and creative. Take that something extra and make it unique.
- Applications – Use technology to your advantage. This is the digital age and making use of technology will elevate your restaurant to newer heights.
- Employees – The restaurant is like a vehicle where your staff is the engine. Hire only the most appropriate and fitting employees who will add value to your restaurant. SEE MORE
In growing any business, never skimp out on anything. As a popular saying goes “it takes money to make money”. Always strive to improve the quality of the dining experience every guest takes home with them after every visit. By putting your customer first, you are banking in on a future investment. One that grows into fruition upon making that customer a loyal patron of the restaurant and spreading the word to a multitude of other potentials.