Tips to consider when opening a new restaurant
Restaurants have been severely impacted due to Covid-19. Sadly, many had to shut doors for good while some managed to pull through miraculously. Unfortunately, it has been a very disruptive time for the hospitality industry and continues to be a very palpable one.
Even though the industry has not yet fully recovered, restaurants had to adapt due to new consumer trends, bringing with it new opportunities. So, If you are holding on to your dreams of opening up a restaurant due to Covid-19, we have created a list of tips you should consider before taking that life-changing step towards a bright future.
Before we dive into the tips, it is worth mentioning; opening a restaurant is not a ‘get rich quick’ kind of business. Most fail due to insufficient planning. Restaurants require long hours, dedication, passion, and, most importantly, consistency. So, if you haven’t asked yourself the all-important question ‘why you want to open a restaurant’, then it would be wise to take some time to think through it properly before jumping into the deep end.
1. Understanding your ‘Why’!
Entrepreneurs generally do not understand what it takes to run a business until they get involved in one. It is long hours of back-breaking work, and not for the faint of heart. The only way to succeed is to have passion and dedication for the industry. Your passion is what will cause your staff to serve with a smile, helping drive those all-important sales to an upward trajectory. Passion is not only cooking excellent food. It comes from your deep desires and ambitions in life. You may want to buy your mum a house or want to eradicate child hunger. Whatever it is, first figure out your why, and your passion will follow. Once you have a combination of these two, there is no question you won’t succeed.
2. Type of cuisine you want to sell
Having a clear idea of the type of food you want to sell will be a huge decision. You may wish to niche into one particular type of food or have a mix of different cuisines. Knowing what you’re going to put on your menu is crucial to the success of your business.
You may already have an idea of which food to sell, but it may be the case that the majority of people don’t want to buy it, and therefore your business won’t be profitable.
Thorugh research into this would help you a long way.
3. Target Market
Your target market will help how you shape your business. For example, you may target kids, teenagers, or people in their 70s. Whatever you decide, it will influence the kind of food you serve, the timings you open, to the décor of your restaurant.
Customer is king, and this holds. Therefore, ensuring your target market is pleased is crucial, as without it you will soon be history.
4. Build your concept
Once you have chosen your target market and the type of food you want to sell, now you can start thinking of how you want to present it. This will require a lot of imagination, and you may already have a concept in mind. Making sure your food, target market, and concept are congruent to each other will be crucial. For example, if you are selling chicken and chips in a restaurant build for Michelin star type of food, you are in for a disaster unless you tweak the recipe and make it more relevant.
Your concept will be part and parcel of the type of image you want your customers to have when they hear about you. This leads us to our next tip.
Branding is how you will showcase your food to your customer. Through a solid concept, you will have a better chance of creating a winning brand. So it is through your overall concept; you will be able to come up with a relevant name, along with a logo, colour schemes, type of furniture, etc.
All this will help you in attracting customers by showcasing it via social media. People who will visit will spread the word of the fantastic experience they have had, and the next thing you know is everyone knows you by your brand.
When people see the yellow M sign, they know what to expect from that restaurant. Spend time on this as you will spend a lot of money on promoting this brand. If you change this later, you will lose all the momentum and traction and will essentially be starting from scratch again.
6. Business Plan
Like any other business, starting a restaurant requires a solid business plan. This is pretty daunting for those who are unfamiliar. However, a restaurant business plan will break down each aspect of your business so that it is easy to understand for an investor to grant you a loan.
Below are some components you can use to expand on.
a) Executive Summary – In this section, you will explain what kind of business you are in, your target market, and some financial highlights. This is a brief synopsis of your entire business plan, and maybe a good idea to write it last. Often, investors will look at this first and make a judgment before they even delve deeper into the rest of the document.
b) Overview and description – This will be a more detailed version of your executive summary.
c) Menu and Concept – Write in detail about your menu, what it entails and how it influenced your concept. For example, what sort of target market will you attract, statistics to help back up your claims, etc.
d) Business structure – In this, you will explain the business structure you have chosen, i.e., Sole trader, company, partnership, etc. The reasons why and how your roles will be divided if you have other business partners with you. If it is just yourself, make sure you provide enough info on how you intend to manage every aspect of the business.
e) Employees – How many employees you would need, for how many hours, etc. How do you intend to train them, and what sort of roles will you be employing for. Again, a map of each person’s role will help visualise this better, not only for you but also for the investor.
f) Marketing strategy – Ensuring you know your target market and a carefully laid out strategic marketing plan will ensure the investor understands the potential of your business and can be the make or break between you getting the loan or not.
g) Financial Projections – Without understanding where you are currently or in the next five years, it would be difficult for the investor to understand if your business is viable or not. Detailed financial projections are also vital for yourself, as they will help you benchmark against your actual figures.
7. Get Funding
Most of us starting a new business will lack the funding required to get the business off the ground. However, without any security, you will find it difficult to secure funding. To tackle this government has introduced start-up loans, which help start-ups get off the ground without any security. They can offer up to £25k and a business advisor’s help to make sure you succeed in your business.
Please find out more about them here.
8. Highstreet or Online
Covid has changed the way restaurants function. Being able to have food that is easily deliverable along with dine-in would be a win-win scenario. Many customers are expecting this, and if you don’t have an online presence, those sales will go over to your competitor.
Make sure you weigh up your options, as having a high street shop may not be all that relevant in today’s world. Think carefully about how you have structured your restaurant and decide which option would prove to be the most profitable. Whatever you decide, make sure your fixed costs (Rent, mortgage, etc.) are kept to the minimum.
There are a few key food suppliers in the market who are well known, and it would be wise to compare their prices to keep your costs down and ensure you are getting the best possible deal. (Check out our article ‘Top 7 Finance tips to boost your restaurant profits!)
In terms of kitchen equipment, if you can get away with getting second hand, then it’s always a good choice, as you will save a lot of money. If not, look into asset finance or lease options. This should help you with your cash flow.
10. Employees are the backbone of a restaurant
Ensuring you hire the right staff is essential for your restaurant. If your concept is more upmarket, then this becomes even more important. Employees who understand the concept well and fit into the culture will drive the business forward as they become the face of the restaurant.
After hiring, making sure your staff stays is an even bigger task. You don’t want to train your staff and then end up losing them just because you couldn’t keep up with the market expectations. Making sure your staff is trained regularly and incentivised well in accordance with your competition will keep you ahead of the game and your staff motivated.
Many restaurants will open and expect people to walk through the door without much time or money invested in marketing. Sure, if there is a good amount of footfall, then yea, you might get enough people coming through, but even this may take time.
Without having an online presence, you will lose out on a big chunk of the market. The majority of people look for restaurants online. They will check for reviews, pictures, videos, menus, etc. Once satisfied, they will call in for a booking or go on uber eats to have the food delivered.
Make sure you have a website, along with a presence on Google and social media. This will keep you in the top percent of the market and will propel your business a lot further than your competition.