How to Open a Restaurant — Ultimate guide
How to Open a Restaurant and run your business
If you want to start up your own food business, most likely you have already done some research about the average cost to open a café.
In any case, beginning a food business such a restaurant or even a pop-up implies entering a profoundly serious space, not only for the cost of opening your own business, but also for the fierce and deceitful competence, legal issues and the most unexpected customer service quandary.
In this guide, we will talk about how to set up your own restaurant business and how to stay away from the regular mix-ups in this niche and how to plan your financials, so you can stay afloat. By following these directives, you will know how much does it cost to build and maintain a business in the food industry and even can learn how to devise a plausible financial plan.
Choose a segment or a niche in food industry
Most probably you have been thinking about the nature of your future food business already for a while, giving a thought about opening a small café, a catering business, a fully fledged restaurant or even a food truck. Or you might have already worked in the food industry for quite a long time, so you have a clear vision of your future business as a solo entrepreneur. What ever is the case, a solid financial plan and clear market strategy is indispensable to make your business thrive or just to keep it alive and doing alright.
There are a wide range of possibilities for food industry, even for restaurants there are almost infinite choices for the type of food and place decor or food conception, and it takes of various abilities to keep them running easily
As mentioned before a thoroughly thought market strategy and a well-built financial plan are the key requirements to open a successful food business. But first, look around and check out what food, administration, or comfort do you see as absent in the area you want to start up your eating place? What is needed to open in order to cover customers needs? Would your market be best served by opening a fancy restaurant, pizza shop, a grill house, a bistro or just a pop-up stand?
Your ability to determine where your restaurant fits in the local area and what exact needs it covers, specially if they weren’t attended yet by the present food industry segment, will depend on how well you know the market. Some tips on opening a new restaurant can be obtained by exploring an existing food shops, others can be found online. Nevertheless, all this information would be useless if you cannot put it together into a conceivable financial business plan or strategy for a start up opening.
Restaurant Industry segments to take into consideration at the first steps of starting your restaurant business:
- Fast food restaurants, which are usually franchises restaurants, can be a good optionif you know nothing or just a few things about the food business and have no idea about what exactly you need to open a restaurant.
- The next option is a fast-casual establishment, similar to a fast food restaurant, with the difference that they usually serve fresh better quality food as well as offer non- disposable plates and utensils, which means their prices are higher. The cost of starting and running your own fast food establishment sometimes might exceed the franchise one.
- Casual dining establishments offers, on the contrary are focused on full-service. Customers can come in and enjoy a sit-down meal time in a comfortable environment still at an affordable price, which also will positively affect the cost of running such a place.
- Family dining restaurants are very similar to the previous with the exception that they do not serve alcohol or do it at a very reduced rate. Also, these establishments are open for longer hours as they usually serve breakfast, lunch, and dinner and also have a higher cost to build.
- Fine dining restaurants are mostly an entertainment place rather than a necessity. Obviously their prices do not correspond to the real cost of their meals, but customers pay not only for the top quality food, but also for the experience itself. These places require a lot of care and creative attitude from the owner or co-owner, which will directly influence how much they have to invest to keep it up.
Write Your Business Plan
Once you decide what do you need to open in order to assure a secure place in the local market for the street and indoor dining, you have to move on to the income and loss estimations. To guarantee a success not only on your kitchen table but also on your bank account you should start by creating a workable restaurant start up business plan. It is a recipe you cannot miss out or fail to follow in order to make your business thrive.
Take a look at the 12 biggest steps to starting your own restaurant that you should be answering as part of the business planning process for your future restaurant:
- What kind of restaurant do you want to run? The best way to define your product is to explain to your friends and relatives, landlord, investors or potential customers what are you going to do and how you want it to be. It may be just a couple of sentences, but they are the core of your business plan for the new place.
- Define your potential client portrait. Think who do you want to serve? What are these people tastes? How do you want to interact with them? Their social status, interest, role, even the car they drive — every single bit of information is a valuable piece to device your restaurant start up business plan.
- Not to overlook, after you include the purpose and the type of your dinning place into the business plan template, you should go around literally or virtually and study your competence. It will certainly help you to take some perspective on what you want to do in your business and refine your financial benchmarks.
- Location comes along with the type of the restaurant and your target audience plan, so, of course, it has to be a sensible choice for your business plan template. You will not put up an expensive steakhouse in a working class neighborhood.
- Here comes the flesh of your restaurant business plan — your value proposition. Basically, you have to answer what makes you different from the rest of the restaurants in the area? Or better, what makes you special? Ironically, it is the toughest part of any business plan strategy.
- Marketing strategy is another stone on the way to a successful business plan for restaurant industry. How will your customers find you? What ways of advertisement will you need: social media, paid advertisement, word-of-mouth? It is a good idea for your restaurant to be included into review apps like Yelp, OpenTable or Resy.
- At this point you have to ask yourself “what do I need to open a restaurant right now”. You do not need to answer right away, take your time, look around, read, gather information, but write it all in your business template plan. Because these things will define the cost of your start up business.
- Here we go into a deep finance and marketing, and maybe you will need external help to put it all together into a conceivable business model. At this stage you have to be able to determine how much you will spend on building o preparing the place, what is the cost of maintaining it, how to cover expenses, how to generate revenue and, eventually make more money on daily basis.
- Along with the previous point it is important to clearly understand how to make your business profitable in the shortest amount of time possible, it is to say, how to reach a turning point of positive income. For which concepts such as revenue forecast, initial investment and basic accountancy spreadsheet are essential if you want to run a successful business.
- After your financial and marketing plan template is sound and safe, you even can hire an external consultant to revise or to make it, you can go and relax for a while.Take this time to think about your values as business: what are things you are willing to compromise and which are non-negotiable for you as a person and as a business place. It is helpful to know where your area of comfort lays.
- When all tough planning and strategic work has been done and settled, with or without help of external consultancy, you can finally get to work and hire people. Staffing plan is no less of a puzzle than a financial budget spreadsheet, but necessary too. It will include all the people you can rely on, who will help you stand up your business.
- The ending point or your goal is the last step of the business consultancy or marketing plan, but it is the key. Many restaurant owners do not think about their endgame at the beginning, meaning their whole business is losing the opportunity of scaling or eventually selling for a much better price. That is why knowing what is your end game at the start of your business will help you make the right decisions along the way.
How to take care of your budget
Knowing your financial possibilities at all times is essential for any business, but specially for the restaurant industry it can be a lethal mistake not to have your own accountancy balance sheet where you can register every incoming assets and expenses.
A budget template can make your life as a restaurant owner much easier, even if you already have contracted external consultancy services to help you out. You do not need to understand much about accountancy itself if you have a specialized program, which you can use every day to esteem you cash flow projection.
In general, once you open your restaurant, you can try different ways to take care of your financial planning and budget spreadsheet, but it is better always to be in charge, so you will avoid unpleasant moments of misunderstanding with your providers or accountants.