Start a Restaurant

Researching information for a recent business plan, I came across an interesting number of 54,000. What is the big deal about that? Over 54,000 new restaurant business licenses were applied for in the last twelve months nationally. That is over 4,500 new restaurant licenses every month, or 90 licenses per state per month.

Out of these 4,500 monthly licenses, I wondered about how many of these new applicants are experienced operators who are really qualified to open a restaurant. As a new restaurant startup specialist, I can sadly attest to the fact that very few of these persons are fully qualified, and as a result, my firm, Restaurant Consultants, Inc. stays busy aiding those who are wise enough to ask for aid in the early stages of a startup restaurant.

The truth is that few people (just starting up) are fully competent at each task in a restaurant. As a new owner operator, you will need to master these skills beforehand—or get help. Frankly, if you do not, you will personally pay the price of being less profitable, and possibly the ultimate price of going out of business. Let us look at a few broad areas where you may need operational assistance:

1. Concept Development: Can you create a concept, position it in the marketplace, and grow the concept through licensing or franchising? What is your exit plan?

2. Pre-opening: Are you able to produce a Feasibility Study, a Business Plan, a Demographic Survey, and schedule the opening around a timetable and budget?

3. Staffing: Are you familiar with employment law, hiring, training, establishing personnel policies and scheduling all of your staff around a budget? Did we discuss management training and development yet? (more…)

One of the biggest decisions you will make in your life, is whether to open a restaurant of your own. If you do decide to open a restaurant, you must have an understanding family, as you will be spending a great deal of time getting it started, and running it efficiently.

The idea of opening a restaurant may seem wonderful and glamorous to those who are on the outside looking in, but once you are involved in the day by day responsibility of running a restaurant you will learn just how wrong this is. You may be involved in chatting up the customers, but you will also need to be involved in the dirtier side of the business. You may need to get down and dirty when it comes to clean-up and bored to tears over the amount of required paperwork.

Most people think that having an MBA from a good college is all you need to open a restaurant. You will need more skills than you can learn in college to run open and run a successful restaurant. This is not to say that an MBA will not be of use to you, it is just that it takes so much more to open and run a restaurant than anyone can teach you in college. In other words– “You have to be there!”.

You will need the skills of a Construction Manager, an Architect, Accountant, Human Resources Manager, Graphic Designer, Interior Decorator, Marketer, and Mentor. Of course if you have a partner, you could split the skills up, unless neither of you have any skills, and then your in a very bad situation. Make sure you know a bit about everything before you sink any money into this endeavor.

If you don’t know much about construction, you may find that your contractor will think it is his duty to spend more money than he needs to. You also need to know what to look for in a competent Manager or Assistant Manager, your work team will suffer.

If you decide to invest in a franchise decisions like the name of the restaurant, design, menu, operating systems, and suppliers. This will help with some of your decision problems, but not all of them. You will still need to deal with employees and other day to day business. It will help if you do a bit of research on what it takes to open a restaurant. Did I say a bit? Learn everything you can about every aspect of running a restaurant. (more…)

First of all you will need to think about the type of restaurant you want to open. Primarily, restaurants are grouped into three categories: quick service or fast food, midscale where you will get a good meal for a good price, and upscale with plenty of charm and fancy cuisine. This will also be dependent upon the type of food you want to serve, and the type of customers frequent the area.

One idea is to open an ethnic restaurant such as, Italian, Mexican, French, etc.. You can open an ethnic restaurant in any of the three categories, but before you choose take a look at the demographics of your area. You may want to take a demographic survey so you can get information on:

• The ages of the customers that will eat at your restaurant business.
• What types of ethnic groups live in the surrounding area.
• The occupations and income levels near your restaurant business.
• How many people will be interested in the type of food you will be serving.
• What are the needs, in terms of services or products, of the people in your area? Will you get enough business in the area you are planning to put your restaurant business?

A competitive analysis will show you what other restaurant business are in the area and what type of competition they will give you. You can do this by going to the restaurants as a customer, and checking out the menu to see how much they charge for their food and drink. This will help you decide how much to charge for your fare. To start your competitive survey, you should check the phone book and yellow pages in that area that have a restaurant business in the same category as yours.

The type and size of your restaurant business will determine the amount or size of the following:

• What you will need in the line of equipment.
• How many pieces of dishware, glassware, flatware, linens and napkins, you will need.
• Cooler, freezer, and storage size.
• How large your building will need to be.
• How many employees you should hire.
• How much parking you will need.
• What you will need in the line of advertising. (more…)

How important is a business proposal? For one, it gives you a head start in starting up your desired restaurant business. You see, before the bank or the lending company will give their nod of approval for your proposed loan, you have to actually convince them first that you deserve the money. Without it, you wouldn’t have enough startup capital to buy the much needed equipment and supplies and pay your expenses, such as salary to your employees and advertising costs. Yet how do we exactly go about the business proposal? Consider the following suggestions:

1. If you are a novice in writing business proposals, then don’t be afraid to get some extra help from the experts. You can ask for different strategies on how to write them, such as what clicks and what doesn’t to the intended readers. Luckily, for those who are just too shy to approach anyone, there are numerous computer programs available on the market. Included in the package are some business templates that you need to slightly modify to suit your desired output. Also, these can be saved for future references, and changes are easy to implement.

2. One technique in writing a business proposal is to divide it into two parts. The first portion will focus on describing the different opportunities of your business as well as your plans on how to take advantage of them. The second part will show the current financial data, like the financial statements and tax returns. (more…)

Want to hear some good news? Your chances of success are better than most people think. According to the Bureau of Labor Statistics, the survival rates of all new businesses started between 1998 and 2002 find that 66% of them are still open two years after they started.

A Cornell University study of restaurants in three major markets showed a first year failure (or closure) rate of 27% with only a minor (4%) difference between franchised and independent restaurants.

Regardless of how you crunch the statistics, and I might add that quality statistics for the restaurant industry are hard to find, approximately 30% of all new, first year restaurants go out of business on the average. This means you have a 70% chance of first year success if you have a viable, well thought out concept in a worthwhile location. It is important to note that of the 30% of restaurants that close during their first year, most of those operators were under-educated, under capitalized (most common reason), or were not willing to make the time commitments necessary to get the job done.

Why am I concentrating on the first year aspects of survival? Because statistics and logic both say that if you make it past your first year, the percentages are in your favor beyond year one. How can you minimize the risk in your first year?

These Top Tips listed below will aid in insuring your survival:

Tip #1.
Know your market. The easiest and fastest way is to get a Feasibility Study done! I know of a restaurateur who was looking at placing a Mexican restaurant into a major metro area. His Feasibility Study revealed that a quickly expanding localized chain was inevitably going to greatly diminish his potential success, so he changed his concept, thereby avoiding an expensive potential failure. You too can avoid major failure by knowing your market, and concentrating strongly on your biggest competitor. If you can’t or don’t want to fight for market share, reconsider your concept niche or location.

Tip #2.
Find your niche. We have all heard this before, but you can’t be everything to everyone, and do it well. Select the market you enjoy and have experience in. If you know everything about the burrito business, and know for a fact that your burritos are superior in quality, then chase down that great location, know your market, and fill that niche. It’s important to minimize the competition in your chosen niche, and done right, you can own the entire niche market. Why compete when you can own the market? (more…)