The idea of opening a new restaurant is an exciting one. However, there are many factors to consider before and while in the process of doing so. Let’s discuss five things new restaurant owners should know.
- Proper location is critical to success
No matter the caliber of your food and service, your new restaurant won’t thrive unless it’s situated in the right place. The location you select should “meld” with your concept, target audience, and price range. For instance, if you’re planning to open an upscale French restaurant, you’ll want to choose a neighborhood that’s populated primarily by affluent adults, rather than by college students. Similarly, if your new restaurant is to be a quick service sandwich shop or café, your best bet would likely be an area near a college or university and/or office buildings.
- Consider the competition from multiple angles
With so many restaurants vying for consumers’ attention, the need to differentiate your new restaurant from the competition is greater than ever. Keep this in mind when scouting out locations; if there are too many similar establishments in a given area (e.g., drawing from the above example, several other fancy French bistros, cafés, or quick-service sandwich shops), cross it off your list.
Think, also, about what new innovative concept you can use to set your new restaurant apart from the pack. For instance, if you’re opening an ethnic restaurant, maybe you want to specialize in a regional cuisine. If you’re opening a gastro-pub, you might consider specializing in craft beer. One caveat to keep in mind here: Once you’ve chosen a concept, stick to it rather than trying to be all things to all people.
- Develop a business plan early
Many prospective new restaurant owners encounter hurdles because they waited too long to put together a business plan. Avoid headaches (and be ready to respond to possible investors, if applicable) by developing a clear business plan the moment you’ve solidified your restaurant concept and determined the type of location you need to foster success. A good business plan has six key components:
- Executive summary: This includes a mission statement, description of proposed concept, overview of anticipated costs, and anticipated return on investment.
- Company overview: A high-level overview of the new restaurant’s ownership structure, location, brand, service style, and unique elements.
- Industry analysis: An evaluation of target demographics, the local economy and infrastructure, the competitive landscape, and why the proposed new restaurant has a competitive advantage.
- Marketing plan: An explanation of how the new restaurant will be promoted via social media, loyalty programs, and website outreach, as well as through traditional channels like print and broadcast advertising.
- Operations plan: A description of everyday operations that covers staffing, customer service policies, the point of sale (POS) system, and other controls.
- Financial analysis: This includes an investment plan, projected profit-and-loss statement, break-even analysis, and expected cash flow.
- Allow ample time to obtain required licenses and permits
You’ll need several different licenses and permits for your new restaurant. Obtaining them will take time, and you may encounter some delays along the way, so it’s important to start the application process as soon as you’ve finalized your lease. In addition to the business license, the list of must-have licenses and permits includes a certificate of occupancy, a foodservice license (issued by a city or county health department), a liquor license (if your new restaurant will be serving alcoholic beverages), a music license (if live music will be performed on the premises), and a permit for your outdoor signage.
- A comprehensive POS system is a must-have
Only with such technology in place will you be able to easily determine which menu items are selling and which aren’t—and to make adjustments accordingly. A comprehensive POS system lets you control expenditures and minimize waste by tracking ingredient usage and generating orders based on pre-defined parameters, as well as schedule staff to ensure proper coverage and customer service, execute impactful customer loyalty and marketing programs, and much more.
Opening a new restaurant requires time and effort, but it doesn’t have to involve excessive headaches. Keeping the above-mentioned factors in mind as you go along will minimize the hassles.
