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A Comprehensive Guide to Opening a Restaurant

A Comprehensive Guide to Opening a Restaurant

There are few things in life as challenging as starting a new business. Opening your dream restaurant definitely makes the top 3. But it’s your dream, and we’re telling you to go for it!

But really though, what’s it going to take to get this dream up and running? First things first: passion. We would be lying if we told you there is a hidden secret to finding success in the restaurant business. This industry is filled with long hours, setbacks, and unexpected turns. Therefore, every restaurant business that aims to survive this cut-throat climate will need an owner who is not afraid to roll up their sleeves, and get their suit a little dirty before the cash starts rolling in. A struggling restaurant with a passionate, driven owner can have amazing turnarounds.

Now what does that passionate, driven owner need to do to prior to opening? We have designed a comprehensive guide to opening a restaurant so you are ready to take on the ups and downs of owning your dream business!

What’s Your Concept?

Another way of asking this is: What is your vision? Do you see your business as the solution to a lack of restaurants in the community? Will this be a small family-run venture, or will you aim to expand overtime and potentially franchise? What is the atmosphere of your restaurant – luxury or casual? These are the questions you must answer before you even start the planning process.

Why is that?

Well, a restaurant in a high traffic urban area, with two dozen employees, a 4-page menu, white table cloths and candles will require a much different budget and business plan than a single menu restaurant in quiet suburbia. The concept behind Blaze Pizza franchises is much different from the concept behind Island Prime in San Diego. See what we’re getting at?

Once you have developed your concept, you can move into the planning process.

Quality Is the Best Business Plan

If there is one thing all entrepreneurs can agree on, it is that it’s nearly impossible to build a successful business without a quality business plan. There are many components to a business plan, all with varying content and depth depending on what type of business you are running. Let’s go over what areas you should be considering when developing your business plan:

1. Competitors

What makes the restaurant industry so competitive is that it is overwhelmingly concentrated. Should this deter you from opening your business? Definitely not! But does this mean you need to analyze your local competitors? Absolutely.

What is fueling their success? What could they improve? Are they satisfying all dietary needs and desires of the community? Answering these questions about your competitors will help you see what works in your area, as well as what possible threats could arise in the future.

2. Unique is Better Than Perfect

What sets you apart from the competitors we just talked about? There are thousands of variables that play a role in making one restaurant different from the other – ambiance, type of cuisine, quality of the food, specialty items, quality of staff, rewards programs, etc.

Keep in mind that these variables can change and evolve over time based on what your customers are responding to. Having an adaptable plan is extremely important to preparing for changes in your area and the industry.

3. Be Halfway to Everywhere

You’ve heard it time and time again, ladies and gents – “Location, location, location!” When you are competing in an industry that offers fast food, food delivery, and now inexpensive, efficient online grocery shopping, your location is more important now than ever. Even high end restaurants must fight to remain relevant as convenience becomes a bigger priority to Americans.

What’s that coffee shop we see on every corner? Oh yeah, Starbucks! It seems like there is no city untouched by the Starbucks brand. You can’t escape it. That is most definitely intentional. Starbucks’ shops do not end up in those locations randomly, they are put there after extensive studies on foot-traffic and demographics.

Something to consider when looking for locations is what other businesses or residential areas are in that region. Your target market will most likely correlate to the demographics of the area, or the demographics of the people other businesses are bringing into the area.

4. Sometimes All You Need is a Billion Dollars

You may be an excellent chef, or pro marketer, but the business can’t operate if there is no money in the bank. Knowing the resources required to get your restaurant off the ground is probably the area where most aspiring business owners find the big issues. The thousands of variables included with determining a start-up budget prevent us from giving you the perfect dollar amount for success. What we can tell you is to stay organization and log everything. This can be as simple as keeping your financial statements (income statement, balance sheet, cash flow statement) in order. Trust us when we say paperwork will be your new best friend in this process!

5. Hire the Best of the Best

When starting a new business, it is extremely tempting to post job listings online to reach potential candidates. This process is a great start but there is so much more that needs to be explored as well to reach the ideal candidates for each role within your restaurant. Always be sure to utilize references (personal and professional) as well as personality tests so you’re getting the right candidates on the bus AND in the right seats. It doesn’t hurt to audition potential candidates either. Sure, front-of-house staff need to be friendly, professional, and detail-oriented, but your back-of-house employees need to do well under pressure and no personality test will give accurate results for this area unfortunately.

As a restaurant manager and/or owner, your resources are limited when it comes to personnel matters. Your primary functions include turning out delicious eats, providing exceptional customer service, and ensuring a visible and positively represented brand in your community. You’ll quickly discover best practices for proper hiring in your restaurant – and then stick to them!

6. Mo’ Money, Mo’ Problems

As a business owner, you will have to decide how long you are willing to wait to break-even. What sacrifices will you have to make start making a profit? This may include reducing your own paycheck, investing in the ingredients rather than the restaurant décor, and most likely having very long days. Making a living off a start-up restaurant takes a lot of hard work, determination, and time.

7. “We’re Eating Where?”

Marketing makes the world go round. The attraction of being the new restaurant in town only last so long, so how are you going to tell people you are not just the newest but the best?

Once you have established your name in the community, consider increasing your presence on social media, a low-cost expense to help raise awareness. Others find success in hosting events, or inviting bloggers enjoy some free food to start a buzz and generate some PR.

Like everything else we have talked about here, the most important thing is to be prepared. If a local news station or business expresses interest in featuring your restaurant, have photos, menus, and business cards ready to send out!

8. Determine Non-Negotiables

Every business has them. What are the pieces of your business plan or concept are you not willing to compromise on? We previously discussed how you will have to make sacrifices to break-even and make a profit; non-negotiables will not be up for discussion.

Are you willing to reduce your menu size? Reduce your marketing budget? Shorten hours of operation? Cut employees? These are all tough decisions that most restaurant owners will face at some point. Prioritizing what aspects of your business you’re willing to change first and refusing to change until necessary will help you further develop your plan.

Bon Appetit!

You have signed the contracts, hired the staff, designed the menu, and developed your marketing plan… what now? The Grand Opening! But wait… have you tested the process? This is the step many restaurants miss the mark on and pay the consequences.

The solution to this is called a soft opening. Open your doors to the public with little to no advertising – some businesses even host a small family party or charity event to generate some PR. This allows you to test your staff, Aloha POS systems, and table turnover time before you bring in the masses.

Breakfast Republic exercised this idea at their new store in San Diego; they offered their full menu for free at their opening. Why? So they could place their employees in the high stress environment of a breakfast rush hour while operating the computer system, bussing tables, and running food.

An unsuccessful grand opening can lead to poor reviews and overwhelmed employees. Taking it slow will result in happier customers (and employees) come opening day!

A Final Word of Advice…

Don’t let all the steps and paperwork intimidate you, the experience can be extremely rewarding. There is no love more true than man’s love for food… get out there and satisfy that need, dominate the market, and build your dream into a reality!