If you’ve been planning for a while to start your own restaurant instead of working for someone else, maybe it’s time you sit down and begin to create an awesome business plan that will help you own the business of your dreams. When I first opened my business, I had no idea what were the most important aspects I should focus on and what matters could be attended at a later point in time. But that’s why I’m here so there’s no need to worry. And given that we’re talking about creating that all-important business plan of opening your own restaurant, here are the ingredients that will offer you the confidence you need to open that amazing restaurant.
Yes, starting a restaurant is extremely exciting, but it is also very time consuming. Moreover, during the years I’ve seen my fair share of successful restaurant openings and flops. In my opinion, a successful restaurant is one of the toughest businesses one can launch. As a matter of fact, 60 percents of restaurants fail within their first year.
By no means am I telling you that you should temper your passion. I’m simply stating that if you want to create a successful restaurant that will be here for years to come, you need to invest blood, sweat and tears into it. Therefore, this project will need your undivided time and attention. Moreover, having the necessary funds is a must.
So what do you think is the most common reason why restaurants fail? Does it have to do with the lack of money, not being able to attract an angel investor, not having the right people in the kitchen? Actually, the main reason is lack of planning. Before you can actually get in the kitchen and prepare a great dish for one of your customers, you’ll have to spend a serious amount of time figuring out all the details of your restaurant starting with kitchen appliances and menus and finishing with staff recruitment or floor plans. The planning stage is the one that will bring you glory or be the downfall of your restaurant.
To help you with the planning, funding and management of your new restaurant I’ve asked one of my closest friends to share some of his secrets that have helped him achieve success.
Before we get to the funding part and the management sector, we have to talk about planning. First of all, you should have the right intentions. If you’re trying to become a restaurant owner just to get rich, you’ll probably fail.
You have to love what you do. To be able to make ends meet you will have to make sacrifices, like working nights cleaning the place or helping out in the kitchen. This shows a great deal of determination and love. In turn, it will get you one step closer to achieving your dream.
To achieve success, a lot of your time and resources will have to be invested in the business. So before you go ahead and do that just ask yourself whether starting a restaurant is your true calling or simply an opportunity to create a business venture that might bring you a serious amount of money.
In addition, having a solid business plan is a crucial step in launching your restaurant. You simply cannot get a business plan out of thin air. Make sure you have a detailed business plan that will present the course of your success; this will be the road map of your business. Instead of creating that cliché long and dry business plan why not start with a “lean plan”?
For example, my friend’s plan included a list of all the things that he needed to purchase for the restaurant. This helped him both to keep track of his capital, but also to stay on budget.
To comprise an awesome business plan you will have to do your market research, take a good look at your competitors and your target audience, outline marketing plans and also offer a close budget projection. For more tips on how to write your business plan, go HERE.
We all know that location is everything for a restaurant. Get a spot that tends to draw crowds, is easily accessible and presents growth potential. Moreover, take into account that you will need a location that is in accordance with your budget. While the perfect spot may be hard to find, allocate enough time so that you get it right the first time. Whether you choose to rent space or build it entirely from the ground up, selecting the location is one of the toughest and biggest decisions as a restaurant owner.
Let’s move on to the menu. You probably have some of your best dishes in mind for your restaurant, but before you actually laminate your menu, make sure to test them out. For example, you could have a small get-together and have people try out your food before you open your doors for customers. Make sure you get honest feedback from people. You should ask them about several aspects such as: price, taste and location. While they might love the taste of the dish, they might not be inclined to pay what you’ll ask for that dish.
Once you know what you will serve make a list of potential suppliers and vendors your restaurant will use. Identify the products or services that you want to purchase from them, along with the costs for each product, the payment methods, the discounts they offer. This information will be very useful when you will get to the part concerning funding.
Hire essential personnel. Another important aspect that will ensure the success of your restaurant is high-quality staff. Before you start bringing in additional cooks or hostesses, hire at least one other manager. Whether you like it or not, you cannot do it on your own. There are just too many details to take care of. The sooner you accept this, the better off you’ll be. The person you’ll hire has to show tremendous passion and a vast experience in the field. This way, you now have a person that will help you make important decisions along the way.
Afterwards, go ahead and create a solid marketing plan. Word of mouth can only bring you so many customers. You need a marketing plan to ensure that you will always have new people coming through those doors. How can you do this? For example, you could take part in community events where you hand out food samples, offer discounts to new customers or even make good use of all social media channels.
Now that the planning is out of the way, we get down to business. The fact that you need to have enough startup capital shouldn’t be breaking news to you. As in the cast of every business, ensure that you are aware of how much money it will take to launch your restaurant. If you did your planning right, then at this point you should have a pretty good image of the necessary funding.
As a tip, you could divide your money in three piles. The first one should be for one-time costs such as equipment or even cash flow systems. The second pool should be used to cover the restaurant expenses for its first six months, while the third one is to ensure that you are able to cover all your personal bills for the next six months at least.
Expect to lose money during the first six months. Not every business can turn a profit overnight. Marketing your place, attracting a crowd and getting people to come back will take some time. Moreover, as a restaurant owner and not only, plan for unexpected bumps in the road. It’s almost impossible to not go over budget when you’re trying to open your restaurant, so make sure you save some extra cash that will help you cover unexpected costs. If you don’t really know where to start from, consider taking a business line of credit. Hitting a bump in the road every now and then is inevitable, so ensure that you know the numbers. For examples, some food vendors may be too rich for your blood. So instead of having a five days a week delivery schedule you could switch for a two or three days one.
Need more advice on how to get funding for your business? Read THIS section!
Having the employee materials on stand-by is a must. The best way to manage your staff as far as restaurants are concerned is by creating codes of conduct, job descriptions or even an employee handbook. Training guides can be extremely useful for employees in regard with their training for a specific position. Also, you should create recipes for each of your cooks so that every dish is nothing less than perfection. To ensure that you succeed, offer your employees the tools that will help them succeed.
Always be ready to fill in from time to time. Business owners have to have their egos in check for the sake of their business. If you think that as a restaurant owner all you’ll have to do is dress nicely and smile for your customers asking them how their food is, you, my friend, are in for one hell of a surprise. You need be ready to do every job, whether it’s seating customers or taking out the trash. You have to fill in where needed.
Be observant with labor costs. There are so many restaurants that make the same mistake. They feel the urge to endlessly hire. Yes, you need to hire people on your staff to achieve success, but don’t overdo it. Therefore, limit yourself to only hire the right amount of staff, especially within the first few months of your business when the restaurant isn’t bringing in a lot of revenue.
Keep a close eye on the food cost. You’re a part of the food industry now, so food costs should not translate into the loss of money. Keep track of your inventory, prepare exceptional food, avoid waste at all costs and keep your prices competitive.
Last but not least, the marketing process should be continuous. If you think that repeat customers will take you to the next level, you are dead wrong. Make sure you continue with the marketing process so that you are ready when your revenue stream isn’t all that fulfilling. Use social media to your advantage and make your presence felt. You could also buy some advertising space in your local newspaper or even host a small non-profit party.
For some people, running a restaurant is the best thing out there. You are able to create dishes that people will love in an astounding atmosphere, but this satisfaction can only be achieved with a lot of hard work.
Good planning and good luck!