From menus to management policies to marketing, there is a lot to consider if you are thinking about opening a restaurant.
While all restaurants are different, there are some commonalities between the simplest sandwich shop and the most exclusive of steakhouses. To be successful with any restaurant opening, there are some things you just can’t afford to take lightly. Taking extra time to focus on these 10 areas of business will give you the best chance of grabbing market share and becoming profitable when opening a restaurant.
1. Your Target Market
How can you make sure your ideal customer walks through the doors of your brand new restaurant if you don’t know who they are? Getting the clearest possible picture of your target market will help with virtually every aspect of your business. Consider the age, income level and lifestyle of the customers you wish to cater. Where do they live? How do they spend their time? What do they value the most? Know the answers to these questions and you will be able to clearly envision the types of people you expect to fill your tables and visit your counters.
2. Your Differentiating Factors
Which would you rather hear people say about your restaurant on opening day? “It’s your basic Mexican place” or “It’s a Mexican restaurant where they have live music, make their own chips and salsa and have huge margaritas”? For your restaurant to be successful, it needs to stand out as valuable in a diner’s mind. Make sure you understand how to differentiate yourself from the competition in a way that your target market will appreciate. For example, if you’re opening a casual dining establishment that caters to busy professionals, you might offer complimentary newspapers in your restaurant each morning. Make an effort to study the regulars’ in your favorite food establishments to come up with ideas on how to best serve your ideal customer.
3. Your Location
Destination dining is a big trend nowadays, as more and more patrons like the idea of ‘discovering’ that out-of-the-way gem that their friends don’t yet know about. So, if you have two Michelin stars or an industry-leading marketing team, you may consider opening a restaurant in an obscure suburb behind a laundromat. For everyone else, this is a terrible, terrible idea.
Most restaurants fail because they don’t get enough business, and most restaurants don’t get enough business because they aren’t a convenient option. Of course, this is even more of a factor in the case of fast casual and quick service concepts, where choosing the right restaurant location can mean the difference between a thriving restaurant and one that was barely able to close out their first year. If you’re scouting a restaurant location, make sure to analyze the foot traffic in the area (head down to each potential spot with a thermos of coffee and measure traffic throughout the day). Most importantly, don’t forget to check out the zoning laws applicable to your building and tailor the location to the market you’re trying to serve.
4. Your POS System
One of the most overlooked aspects of opening a restaurant establishment is investing in technology that can help busy business owners simplify day-to-day operations. Today, a good POS system is as important as a reliable grill in a busy restaurant. Choosing the right restaurant POS system will help you cut down on kitchen errors, manage inventory, control costs, prevent theft, track the popularity of your menu items, reconcile tips, keep accounting books accurate and so much more. Consider your POS system carefully, remembering that you’ll come to rely on it for way more than printing and processing checks.
5. Your Policies and Procedures
The most successful restaurants have policies and procedures for everything from opening to greeting customers to dealing with complaints to handling deliveries to cleaning up. Before opening your restaurant make sure to implement systems for every aspect of your daily operations and for handling unforeseen circumstances. Make your policies and procedures crystal clear by putting them in writing to ensure that every member of your team (including you) lives up to them.
6. Your Cleaning Practices
Every restaurant is subject to a strict set of rules regarding hygiene, sanitation and safety. Being in violation of any rule can lead to fines and legal liability, and perhaps even more importantly, can ruin your restaurant’s reputation. A good example is the fate of Chi-Chi’s, the popular Mexican restaurant that once operated more than 200 U.S. locations. The already struggling Chi-Chi’s had any chance of survival shredded by an outbreak of hepatitis A at one single location in November, 2003. Stick to the rules and don’t ever cut corners when it comes to sanitation.
7. Your Pricing
Whether you’ve opted for upscale dining or casual comfort food, your menu pricing strategy needs to make financial sense. Make sure to crunch the numbers before your restaurant’s doors open. Factors that will affect your pricing include direct costs, overhead costs, preparation costs, indirect costs, and menu pricing ranges. It’s also important to note that the cost of food fluctuates over time, meaning you’ll need to cushion your prices to maintain profitability – and monitor your suppliers like a hawk. When in doubt, price high, always keeping in mind your target customer and business model. After all, selling a $100 burger might not make sense for Bob’s Burger Shack but depending on your business’ value proposition, location and target audience a $10 burger might be perfectly reasonable. The important thing is to come up with a pricing model that doesn’t short-change your business, you can always make adjustments in your pricing as the business evolves.
8. Your Menu
Your restaurant menu will likely be fluid, changing many times as you begin to see what your diners enjoy the most; however, it’s important that you put your best foot forward to keep guests coming back. Resist the temptation of creating a huge menu with something for everyone. When first opening a restaurant, providing fewer options that cover a large spectrum helps control costs and keep the kitchen running smoothly. You can always add variety later by offering daily specials.
9. Your Staff
Turnover is very high in the restaurant industry, but don’t make the mistake of looking at employees as disposable. At any given time, you want to staff your restaurant with the best available people, not just warm bodies. From the dishwasher who needs to be a team player to the restaurant manager who needs to be personable, professional and responsible, fill every position with care.
Every team member will play an important role in determining your success. Find the right, experienced head-chef and you’ll often find that he or she will take care of building your back of house team from his contacts and previous teams.
10. Your Customer Service
Whether you’re serving burgers at a counter or $45 steaks in a lavish dining room, strive to create a unique experience for your customers. Being committed to putting customers first is vital to the success of any restaurant. At some point, your team is going to make mistakes. The kitchen is bound to get backed up, you may accidentally overcharge a guest, problems are going to happen. But if you have a track record for excellent customer service, your patrons will be more forgiving when issues arise. Set the example for stellar customer service and expect your team to follow your lead.
There’s obviously a lot more that goes into opening a successful restaurant business, but if you follow these basic ten steps, you’ll start off on the right foot. If you have any insights about starting a restaurant, make sure to let us know in the comments below.