Starting a restaurant business can be exciting, but it also requires careful planning and execution. The pandemic pushed the industry to the limit with many restaurants going out of business. So while the outlook is still pretty tough with profit margins squeezed by food and fuel inflation, there are gaps out there still waiting to be filled.
To succeed in the restaurant industry you cannot leave anything to change. It is often said, but never more true: if you fail to plan you may as well plan to fail.
Let’s dive into learning all the necessary steps that you need to know before starting a restaurant business:
The Business Plan
Creating a business plan is critical to starting a successful restaurant. The business plan is a document that will highlight your business goals, your target audience, and a marketing strategy that will help you achieve those goals.
The document should be comprehensive. Something that you can look back on whenever you need help. Something that can help you make important decisions.
The business plan consists of the following:
- Operational plans
- The menu/cuisine that will be served at the restaurant
- The finances of the business
It is essential to include changes in the government’s regulations in the business plan. The government might introduce new laws that affect the restaurant industry. Take them into consideration since they can play a huge role in your business’s success. You can download our Business Plan template here.
The layout of a restaurant is an important part of your customers’ experiences. It also helps in making your operations efficient. Modern restaurant floor plans have a dining area, a waiting area (depending on the size), a kitchen, a play area for kids (again depending on size and the target audience), service area and restroom(s).
The restaurant should aim to host the maximum number of people at once while ensuring the place is not suffocating. The service area should be close to the kitchen so that the waiters can serve food in a short time span. An interior with an open kitchen is also an option as it can provide customers with a unique, dining experience.
In short, the layout of dining restaurants should be aesthetic and functional at the same time. However, if you are planning to open a takeaway-only place, then this step need not be given a lot of time and effort.
Perhaps the most important step of all. If you have a menu that your audience likes, it means that you have well-researched your target audience. In order to attract customers to your restaurant, you will need to come up with an attractive menu.
The success of the menu is also dependent on the pricing. Price is not just about cost it is also a value signal. So if you want to appeal to high-end customers then your prices and associated quality and service should be reassuringly expensive. If you are mid-market then it’s sensible to also include some budget items on the menu. Whatever your price point you will need to ensure that there is a reasonable profit margin.
If you don’t have the budget to open a fancy place with a sophisticated menu, try keeping it simple. Focus on a few dishes that taste exceptionally well. It is better than having lots of average dishes. If you serve fish & chips, for instance, try to serve the best fish & chips in town.
Before you officially open your restaurant, invite people from several segments to try out your menu. People from different age groups. Food-lovers. Food critics. Get feedback from all of them. Incorporate the feedback into your dishes. In other words, do not launch your restaurant until your menu is perfect.
Be sure to include foods that are not only delicious but affordable as well. If you establish your taste, you will attract customers automatically. Don’t underestimate the power of word-of-mouth marketing (read more in our next point).
Marketing your restaurant business
Marketing is an essential part of any business, but it is especially important for restaurants. The importance of marketing cannot be overstated, as it will drive customers to your restaurant and help it to grow and succeed. So how should you market?
First off, have a launch event. You want to get as many people as possible through the door, feeling that they have a personal connection to your restaurant. You’d be amazed at how many people can walk past a new restaurant for months or years and not notice it is there. So focus on getting as many people through the door as quickly as you can. They are more likely to return and to tell their friends. Word of mouth is always the most important form of marketing for a restaurant, you are only as good as your reputation.
Social media is also now essential. Create your social media accounts and post regularly. People are likely to search for the social media accounts of your restaurant. However, social media is not the only place where people will search for you. Foodies will read reviews on food groups and on restaurant review websites, especially TripAdvisor.
You need to be present on such directories. Once you start serving exceptional food at your restaurant, good reviews will follow. Once foodies learn about “the new place” that serves “X food”, they are likely to come to try it out. If you impress them, then just wait for the word-of-mouth marketing magic to happen.
You need to be consistent and creative with your marketing efforts.
When it comes to opening a restaurant, you need to think location, location, location.
It’s a paradox in the restaurant trade that it can actually help to be located near similar restaurants. An area can become known for its Indian or Italian restaurants for example. The atmosphere around as well as inside your restaurant is important.
Choose your restaurant’s location in an area that is accessible to public transportation and where there is plenty of foot traffic. If you are opening a place hoping that people will drive from far to your place, then make sure that it is in an area that has plenty of parking.
The location depends on your target audience. For example, you cannot open a fine dining restaurant that serves customers in half an hour at a commercial location where there are offices only. Office employees are generally on a time crunch so they look more toward a grab-and-go kind of restaurant. A fast-food restaurant will work well here, for instance.
It comes without saying but the location should be clean and in a safe neighbourhood. In addition, the area should always have basic utilities such as electricity, water supply, and gas.
Your restaurant’s service will play an essential role in its success. Hiring the right team of employees is essential to have that great service. Make sure that you hire employees who have the skills and experience necessary to run your restaurant effectively.
Imagine, having friendly, courteous staff. Staff that always has the best attitude. Staff that are always energetic and ready to serve with a smile on their face. The restaurant experience is great. The place gives off a happy vibe. The happy vibe is because of the friendly atmosphere created by the staff.
It pays off to shortlist employees who have a positive attitude.
There will be situations when they face a tough customer who might be rude or intolerant. Stop believing in the statement “the customer is always right”. The customers can be wrong as well. However, make sure to hire employees who can handle those difficult situations.
Take your time in hiring them. But once you hire them, trust them and have their back. In fact, having a good relationship with your employees can lead to increased productivity and improved morale – some essential ingredients for your restaurant’s success.
To ensure that your restaurant is productive and efficient at all times, develop and implement a system of policies and procedures. The system depends on employees taking ownership. So, each employee should know what they are responsible for.
If a dish on your menu is prepared in half an hour by two chefs. Try adding another chef to the equation. Did the preparation time reduce? If yes, test out such procedures before developing the system.
Invest in a POS system. The order should be sent to the kitchen staff as soon as it is received. In this manner, you will be able to reduce the turnaround time.
Additionally, utilize data to learn about your best-selling dishes and your peak hours. Hire waiters part-time on weekends and on rush hours. This way you can save up on full-time employee salaries and also ensure customers get the best possible experience.
Starting a business of any kind can be risky and challenging, but it can be especially difficult in the restaurant industry. There are many benefits to starting a restaurant business. For example, being your own boss can be very liberating and rewarding if:
- You are disciplined and motivated.
- You manage your finances wisely and effectively.
- You cultivate good relationships with your employees.
Some key takeaways from this article: Do not just rely on social media for your marketing. Get creative with your ideas. Provide the best taste. Have the best atmosphere. Remember that people don’t just come for the food, they come for the experience. Make sure they have a good one.
Last but not least, remember that you are ultimately responsible for the success of your business, so you need to be willing to take risks and work hard to achieve your goals. If you apply these basic business principles to your restaurant business, you are likely to find great success.
Osama Zahid is a technology content strategist who is passionate about content marketing and all things SEO. He has helped various companies rank their content on the first page of search engines. In his free time, Osama loves to play football and travel.