Opening a successful restaurant is one of the greatest challenges of all. The National Restaurant Association puts the restaurant failure rate at 30%, which is among the highest in any industry.
Your initial business plan will determine how likely you are to succeed. There are several key ingredients you need to open a successful eatery. Here’s what you need to increase your odds of success for Opening a Successful Restaurant.
Start with the Concept
What makes your restaurant so special?
Your content determines your unique selling points, target audience, food, and ambiance. In other words, it defines everything that will make your restaurant what it is. Of course, concepts are often born out of passion, but you also need to be aware of your competitor’s and your community’s tastes.
Juggle some ideas and test them out on family and friends. Take your time with this step because it’s the one step that influences all others.
Location, Location, Location
One of the most common reasons restaurants fail is the choice of location. It’s a fine balance between reasonable rent and foot traffic. Inexperienced entrepreneurs often aim for the most visible location possible, but with higher rents, they’re already putting themselves under pressure to succeed quickly.
Find the balance by inspecting aspects like rental costs, accessibility, and how many competing restaurants are in the area.
Craft a Business Plan
Your business plan is your roadmap to success. Rather than being purely a box-checking exercise to obtain financing, your business plan is a living document that evolves as you continue your journey.
It details everything from your concept to the numbers to how you’re going to market your business. The U.S. Small Business Administration (SBA) provides plenty of free templates to guide you in creating your business plan.
Try to be as specific as possible, but if you can’t, then realistic estimates are a good place to start.
Take Out Insurance
Restaurant insurance is critical to obtain financing, complying with labor laws in your jurisdiction, and protecting your burgeoning business.
Workers’ comp, general liability, and a Business Owner’s Policy (BOP) are three essential types of coverage. In particular, BOP for restaurant owners protects your business if a public member is injured, damages your building, and compensates you for lost income.
Make sure you do your homework, so you know you’re working with an insurer who has your best interests at heart. Look for one with industry-specific experience, so you’re well-advised and supported.
Financing is essential for nearly every startup. However, you will need to source the capital to kickstart your business unless you have considerable savings.
Many options are available, including family and friends, bank loans, SBA-sponsored startup loans, angel investors, and more.
Be prepared to show off your business plan and answer pertinent questions. Unfortunately, the high failure rates in this industry mean it’s more challenging to obtain a loan to open a restaurant.
Test Out Your Menu
With the concept, location, financing, and necessary protections secured, it’s time to begin building your menu. Of course, much of your menu will already be set up by your chosen concept.
For example, if you’re opening a pizzeria, you’ll have all the usual pizza staples on the menu. Try to keep your menu small and simple at this stage. Becoming known for a particular food is always a better idea than trying to please everyone.
Again, solicit outside help and feedback on your menu. You can also take inspiration from competitors in your area.
Hire Essential Staff
How many employees do you need to start a restaurant?
Human capital expenses are among your biggest monthly outgoings. During the early stages of your restaurant, you need to hire only the staff members you need, such as cooks and waiters. If you have prior experience, appointing yourself as the manager can help ease the burden of taking on staff.
Hiring too many people at this stage can put a drain on your business, especially if you don’t experience immediate success.
Launch Your Marketing Push
Building up the nuts and bolts of your restaurant, such as tables, stoves, and refrigerators, is merely the starting point for what you can go on to achieve. Build it, and they will come? Not likely in today’s ultra-competitive business landscape.
With so many restaurants competing with yours, you need to encourage people to give you a try actively. But unfortunately, diners tend to be loyal, so convincing them to eat somewhere new is difficult.
Refer back to your marketing plan to identify the key marketing channels you’ll be using. Then, start your own website, create social media pages, and don’t be afraid to dabble in hyper-localized offline advertising.
Concentrate on a select few channels until you gain traction and find your voice. Avoid spreading your limited resources too thin at this point.
Few restaurants open their doors and become instant success stories. Estimates for how long it takes for a restaurant to be successful range from one year to five years. You need to be patient because building your pool of repeat customers will take time.
The key is to remain persistent and keep doing what you know is working. Avoid cheap gimmicks or compromising your brand in an attempt to reach for success.
You should also be prepared for hard work and a lack of time off during the first few years of your business. Running a restaurant is notoriously difficult, let alone achieving profitability.
Starting a restaurant is an opportunity to make your dreams come true. Unfortunately, however, this is an industry with a low success rate. There’s no getting away from this hard fact. However, investing in quality food, ambiance and hitting your target audience increases your chances of success.
Establishing the foundations of a well-known restaurant brand of the future from day one will increase your chances of becoming the next big success story.
What type of restaurant are you looking to launch?