Start a Restaurant

“Businesses with fewer than 20 employees have only a 37%chance of surviving four years (of business) and only a 9% chance of surviving 10 years. Restaurants only have a 20% chance of surviving 2 years. Of these failed business, only 10% of them close involuntarily due to bankruptcy and the remaining 90% close because the business was not successful, did not provide the level of income desired, or was too much work for their efforts.”

–excerpt taken from an article written by Rob Holland, ‘Planning Against a Business Failure’

As a new restaurant owner (or soon to be), that quote must have sent chills up your spine. Everyday, people are pouring their entire life savings, betting their children’s education funds, and risking their marriage to fulfill a life long dream of opening their own restaurant. No doubt, there are risks involved – lots of risks. It’s important to not tumble into the traps that have already robbed the dreams of so many restaurateurs.

Making mistakes is a part of learning – as the old saying goes ‘learn from your mistakes’. However, time and time again entrepreneurs continue to make mistakes and not learn from them. Just like people, organizations tend to make mistakes repeatedly; are adverse in setting up a guard against making mistakes; and tends to focus on the bad while overlooking the good. Business owners often forget to look on the bright side to see what they are doing right.

Mistake #1 (and the biggest one): Failure to Plan

I cannot place enough emphasis on the importance of planning. This critical success factor is often overlooked by current jobs, life styles, personal schedules, and other important details that go into opening a new restaurant. Business and market planning should be the first and foremost step to take when deciding to pursue a new venture. By doing your due diligence and taking the time to research the full potential of your products, service and customer base will give you a clear picture of whether or not your dream is destined for success or failure. (more…)

Menu pricing is one of the most important decisions for any restauranteur. It may look easy, but the fact is that you cannot price it simply by your intuition. It requires consideration, observation and asking certain questions. For instance, do you remember your last visit to a market or a mall as a buyer? How many goods had an acceptable price enticing enough to motivate you to make a purchase? In reality, pricing must be an amount that someone else is ready to pay for your service or product.

Creating a restaurant menu is tricky business. Not only does it involve selecting attractive and popular dishes, but also pricing them competitively. Pricing is important not only to make the business profitable, but also to offer good value to customers to win them over.

Tips on Pricing the Food Items

Let’s see how to price the food items on the menu:

* Generally, successful restaurants keep the food costs in the range of 27 to 32% of food sales. These percentages can be higher or lower depending upon the type of restaurant. However, to be more accurate, it’s best to compare your cost percentage with restaurants having similar menus and services.

* While calculating the cost of food, all ingredients must be included. Work out the cost of each recipe for each menu item and don’t forget to include things, like spices and garnishes in the cost.

* Your recipe costs for items and sales prices will determine whether your food cost is in line with the industry averages. This will also help in monitoring your performance and analyzing problems and trends. (more…)

You know many of the risks associated with your restaurant such as employment practices liability, employee dishonesty and product liability. But what puts your restaurant at greatest risk? Two hazards that can quickly drive your restaurant into bankruptcy are a fire that damages your facility or being linked to a food borne illness.

According to the National Fire Protection Association cooking equipment accounted for 14% of the total number of non residential structural fires in the US between 1999-2002 and is the second leading cause of fires next to arson.

The CDC reports that the incidence of some food borne illnesses are on the rise from 2005 to 2006. Food imports into the USA have increased by 50% in the last few years. The FDA currently is only able to inspect approximately 1% of the 25,000 shipments that come into the US each day from 100 countries.

The potential of being linked to a food borne illness has probably never been higher due to:

Increased importation of food from all over the world
Decrease in the ability of the FDA to inspect imports
More sophisticated methods such as pulsed-field gel electrophoresis (PFGE) to link food borne illness to its source.
Traditionally high industry turnover rate which makes it difficult to train and educate employees in food safety procedures.
Legal doctrines of strict liability and constructive knowledge

Restaurants now more than ever need to be aware of the supply chain and take proactive measures to ensure the quality of the food they purchase and serve to their customers. It’s not enough to look at your insurance renewal and see that you have fire insurance, business interruption and first party food contamination coverage.

Too many restaurant owners feel a false sense of security, unknowingly being under insured and finding themselves with inadequate coverage. You cannot change anything about your coverage limits or policy provisions once a loss has occurred (more…)

There are some common mistakes restaurant owner’s make that you will want to avoid. These may be issues that you just haven’t given much thought to. However, they can greatly influence the bottom line for your business. The happier your customers are, the more they are going to come back. They will also want to let others know about their great experiences at your restaurant.

Too many restaurant owner’s focus on making the decor too elaborate. As a result it can appear to be cluttered. Your guests will like a simpler look in most instances, and it will allow them to focus on the overall atmosphere. They will be more concerned with how comfortable their chairs are then what you have placed on the walls for them to look at.

It is a nice gesture to have both tables and booths in your restaurant. Make sure customers get to choose which one they want to sit in though rather than a hostess mandating it. Some people don’t fit comfortably into a booth. You will also find some people with children prefer them as it reduces the chances of them getting down and wondering around.

Your staff should make sure they wipe down tables carefully so that they aren’t sticky. This is really annoying when you end up sitting down and there is something stuck to the table. Even though your staff is likely very busy, they need to pay close attention to such details.

Customers will be expecting a friendly staff that can easily meet their needs. Your employees are there to represent your restaurant so make sure they are comfortable interacting with people. Those that are too shy may come across as not enjoying what they are doing. Make sure your staff understands the reasons why they need to genuinely welcome guests to the restaurant. (more…)

Running a successful restaurant business is not an easy task. There are many issues that can come up and that must be dealt with immediately. In view of the daily chores that must be completed, most restaurants don’t bother to set any long term goals. However, you must spend some time on improving your restaurant and also set reasonable long term goals to succeed. Here are some tips for making your restaurant business a success.

One tip for a successful restaurant is the location in which you restaurant is situated. This plays an important role in your success. The location of your restaurant should be easily accessible by any means. The floating population of that location should be high. In such locations you would easily attain many customers.

Another tip is to have friendly employees in your restaurant. The employees should be very active and fast in serving and be ready to satisfy all of the customers’ needs. Some of the employees may remember the regular customers and can more easily satisfy them by already knowing what will make the customer happy. Such employees are an asset for any restaurant. The employees should be persons who love their work and are generally happy overall. Happy employees sets the customer at ease and will allow the customer to enjoy their meal even more.

Your restaurant should have a system or a process that is in place to supply the raw materials for the preparation of your menu items. The process should aid in cutting down the waste to a minimum. This is very important in the functioning of any restaurant. Buying more of any raw item would be a waste. Stocking more inventory should also be avoided. Fresh items should be available then and there. Proper procurement and careful planning of food inventory is a must. Menu planning, restaurant inventory and costing software is available to help with this task and should definitely be considered. This type of software will save money in the long run and aid in the overall success and planning of your restaurant. (more…)

Too many managers, employees, franchisees, owners, and corporate support staff spend far too much time trying to come up with the next great new program, or reinventing the wheel. While I’m not an advocate of stifling creativity or change, execution is the bottom line. Today’s “Google” society doesn’t want to know information, just where to find the information when it’s needed. Here are a few items from my Google file of restaurant success:

• CHART—The Council of Hotel and Restaurant Trainers, www.chart.org —A group of nearly 500 Hospitality Training and HR professionals working to enhance the people and profitability of its member companies. The group is an unbelievable resource consisting of conferences (twice yearly), regional training forums around the country (free), and an e-mail solution exchange.

• People Report, www.peoplereport.com —A consortium of restaurant companies who provide data on recruitment, hiring, training, and diversity which is compiled and shared with members to allow benchmarking and best practices. Curious how you are doing on the “People P&L?” Join People Report to find out.

• NRAEF, www.nraef.org —The National Restaurant Association Education Foundation supports everything from ServSafe, ProStart, and the Resource Center for Workforce Solutions to Daily Dose Language Training and providing Harvard Leadership Classes.

• ESL Resources, www.seddesaber.com —As the labor pool changes and shrinks, we must address the needs of our people. In many cases, that includes teaching the English language to build confidence and advancement opportunities. In addition to “Daily Dose,” there are a number of products and companies to help teach your staff English including Sed de Saber (from Retention Education).

• Go To (the best in) Class—Companies such as Hard Rock Café, www.hardrock.com , Zingerman’s Deli, www.zingtrain.com , and 2001 Malcolm Baldrige Quality Service Award Winner, Pal’s Sudden Service, www.busexcell.com , all offer classes teaching not only how they have been successful, but also how to apply the learnings to your business. (more…)