Opening your own restaurant can be a dream come true, or a pipe dream if you’re not fully aware of what the process truly entails. While it can be a daunting proposition, it’s also a common misconception that as many as 90% of restaurants fail in the first year. The truth is restaurants actually have a lower failure rate than any other service business.
Perhaps it’s because nearly half of diners go out to eat multiple times a week, which keeps demand high and pushes restaurant growth. Or, maybe it’s because those who launch a new eatery know exactly what they’re getting into and dive into the business with eyes wide open.
To help you get a sense of exactly what to expect before heading down the path to ownership, here are 7 things to consider that can help your restaurant become a dream come true for you and your community.
- Time and commitment level. It’s no exaggeration to say that owning a restaurant is a 24/7 job. It starts with the fact that all of those times when you might be going out to eat, that’s when you’ll need to be at the restaurant, helping to deliver great service to patrons. And, then there’s inventory management, prep work, personnel issues, financial work and many more tasks that typically must be done when the store is closed. For an eatery that’s open 11-11 for lunch and dinner, that doesn’t leave much time during normal waking hours to get those behind-the-scenes jobs done. It’s critical to be aware of the time commitment required, and that you have a great support system in place to help you make it work.
- Financial backing. Opening a restaurant can be an expensive proposition, with startup costs ranging from $175k to over $750k with a median of somewhere around $375k. With an average of anywhere $100 to $800 per square foot in opening costs, unless you’ve recently hit the lottery, most people will need to get some help from investors, banks or other lenders. The best place to start is by developing a business plan. You’ll need to nail down much of your plan in detail, in order to have anyone even consider making an investment.
READ ALSO: Compeat’s Tips for Opening a Restaurant
- Location. Choosing a location for your store is perhaps one of the most critical decisions you’ll make. Not only are logistical factors like parking, easy entry/exit, utilities and cost important considerations, but so is the vibe of the surrounding community and how well it meshes with your chosen theme or style. You’ll want to make sure that your restaurant fits, literally and figuratively, within the space. For example, a raucous sports bar concept may not be quite as good of a fit in an arts and theater district as it could be near a public sports venue or even local schools’ athletic facilities. Or an upscale fine-dining establishment may not work in a grittier, more industrial part of town. Choosing the right fit for both your theme and your budget is a key factor in whether your eatery will draw a crowd.
- Theme/style. These days, diners are looking for more than just a meal—they’re looking for an experience— and have no problem paying for a great one. This is your chance to be creative, push the envelope, and offer something new that’s not available anywhere else in your area. Whether it’s a unique type of food, a guest chef program, a tribute theme or historical throwback, dinner and a show, or a device-free dining experience, giving guests a memorable and Instagram-worthy (see #5 below) is essential for making your restaurant stand out among the many choices available. Do some research in your area, and find out what’s missing, and what you think you can do better than anyone else.
- Marketing. Getting the word out about your new hot spot is absolutely critical, so you must think about marketing strategy from the get-go. Social media has become a key ingredient in restaurant marketing, not only for organic hits like patrons posting photos to their own accounts, but many restaurants are now spending for social media ads that gets them in front of their target customer. Some also participate in community events and charity sponsorships to help get the word out through causes they believe in. You might even consider some unique service models, like take-and-make meal kits that extend your reach into the in-home dining market, or an all-day breakfast offering.
- Staffing. One of the toughest challenges in the restaurant business is hiring and retaining staff to serve your customers. Turnover is notoriously high in the restaurant industry, and with unemployment at an all-time low, there are far more job opportunities than there are candidates willing to work hard as a server or back of house hand. As you’re planning, you’ll want to make sure you 1) can pay an attractive wage and 2) hire enough staff to not work your people into the ground. One of the biggest keys to attracting and retaining employees is creating a work environment where they feel valued, appreciated and part of a team. And, happy employees deliver better service to customers. Creating that atmosphere can make a huge difference in your restaurant’s success.
- Technology. Unless you’re planning to open a restaurant with a tech-focused theme, you might not consider technology beyond a POS system in your startup plans. However, implementing back-end management software from the get-go can dramatically reduce the behind-the-scenes workload and help your establishment run more efficiently. Surprisingly, many restauranteurs don’t make checking in on business performance part of their routine. Only 68% review sales reports on a regular basis, just 45% check-in on their labor stats, and 32% review menu reports regularly. And, 17% don’t check any of these! That probably explains why a lot of restaurants fail. Not monitoring your performance is a recipe for disaster—you’ll have no way to know when things are heading south, until it’s too far gone. By leveraging back-end inventory, personnel scheduling and other purpose-built management solutions, you can keep a better handle on how things are going to make course corrections faster, when needed.
Getting started in the restaurant business can be a daunting proposition, but it can also be one of the most rewarding career choices. Restaurants are where friends and families gather to celebrate the special moments in their lives and creating an ideal environment that adds to the festivities and to the memories of those special occasions is extremely gratifying.
As Thomas Edison said, “Opportunity is missed by most people because it is dressed in overalls and looks like work.” If owning your own restaurant is your dream come true, buckle up those overalls, roll up your sleeves and get ready for an exciting, exhausting and exhilarating adventure!