How to Start a Restaurant Business
If you're thinking of starting your own restaurant business then to help you, we've listed the main areas to focus on for this business opportunity. In addition, we discuss writing a restaurant business plan and start up costs.
So whatever food you're thinking of serving whether a pizza, Italian, Seafood, Chinese or even a coffee or sandwich shop then use these guides to help you.
Your Restaurant Business Plan
Before you start, you'll need a business plan for your venture. This essential document shows yourself and any investor your overall business objectives and financial summaries. No bank will lend without one so you should think about planning at the outset.
We recommend using business planning software to help you prepare this document. You can purchase these online, or your bank should offer some free basic software on a CD.
Once you have your business plan ready, you'll see just how many people you need to get eating in your restaurant each day to reach your profit numbers. To most, this initial projection may be a shock as although the margins can be high (especially on alcohol) you'll have to get numbers through the doors. And that's where marketing comes in - which we look at later.
Planning - Location
The old saying of "location, location, location" for retail stores also applies to restaurants. The reason for this is it must be accessible and have the ability to shout out for business from passing trade. The location is especially important if you're planning to open in a tourist resort where people don't know the area and are looking locally for somewhere to eat.
Making it easy for people to access your premises by being close to parking is also something to consider or close to a tube or railway station or simply just in walking distance from a large residential area.
Local Market Place - Types of Food
It's all too easy to simply open up yet another Indian takeaway or pizza restaurant although you may be entering a saturated market. You may find no one wants to come to yours unless the current offerings are of poor quality. Therefore, you should study the local competitors closely.
Go and eat at all of them and see what happens in terms of food quality, pricing and service. See how busy they are at peak times and, if you can, speak to other diners to canvas their opinion. Perhaps you can undertake a survey via your local internet site or in the local convenience store to see what local people actually want.
If you're in a tourist hot spot go and speak to local hotels and bed and breakfast owners to see what their customers are asking for when they want to eat during the evenings. This type of research is critical to come up with the right offering to satisfy your customer needs.
Menu and Pricing
Once you have your research and know what type of restaurant you're opening, it's time to decide the menu and pricing. Your product offerings should align closely with the types of customers you want to dine. Pricing high will get different demographics than pricing low, and the profit margins will vary.
You'll want to get your sales per diner as high as possible so make sure you offer a good range of options including starters, main courses and desserts as well as wine, beers and soft drinks. Having fixed priced menus works well as people like offers.
Try not to have too much as your kitchen will need to stock every item and also have to make up many options each night. The trick is to make the kitchen staff's life as easy as possible whilst serving a great menu.
With any premises, the costs can be huge. Here are the most common start-up costs associated with developing a new restaurant:
- Securing your lease and legal fees.
- Health and safety certificates.
- Public liability insurance.
- Premises refit.
- Kitchen fit, ovens etc..
- Staff recruitment and uniforms.
- Furniture, crockery, table cloths, flowers, pictures etc..
- Initial stock of food and drinks.
- Launch marketing fund.
Associated with start-up costs is finding reliable suppliers. Try and negotiate credit terms, so you're not always paying for your products up front.
You'll need a launch marketing plan as well as ongoing marketing promotions to keep people coming back. A launch is almost a loss leader as you want influential people to come and dine and then talk about how great the evening was to others and to get free PR in the local papers.
So have a launch night where you invite all local dignitaries, journalists and local hoteliers (or anyone else who you think may help you long term) for a free evening. Get a good relationship going with your local press people so you can feed them information as your restaurant develops and grows so you can promote any special offers.
Customers love free stuff, so after launch why not offer free wine or dessert with every meal or buy one get one free? With every customer who dines with you make sure you get their address and/ or email details so you can keep in touch and send them promotional items.
You should also offer seasonal offers for occasions like Christmas and valentines day. These will be especially busy for you but will get people through your door.
Just keep promoting wherever your customers are. Provide promotional material for local shops and businesses with exclusive offers just for them.