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Things To Consider Before Opening A Restaurant

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Things To Consider Before Opening A Restaurant

Subject: Special Article: What to consider before opening a restaurant? We have discussed the following points in details: Budget,Location, Concept, Chef, Staffing,Name, Logo,Business Plan,Secret Sauce,Advisors,Opening and Closing hours.

Want to start a new restaurant business? Great! But, have you given the idea some careful thought? Or is it just a fly by night affair? The point is, talking and planning with your friends over a drink is easy. But implementing those plans in real life is quite a deal. Get a little serious, and jot down the doables. Otherwise, you will lose track of what you should do and what you should not. The Restaurant Academy will guide you to the necessary points to consider before opening a restaurant. We have discussed the following points in details:

1. Location and Concept in the restaurant 

I hope you have a target customer base in mind when you think of a location for your restaurant. The same goes for the theme and design, i.e., the concept as well as the menu of your establishment. If you try to target all types of audience, none of the two factors can help you. Targeting Europeans and Americans in an Indian restaurant offering spicy food is going to spell doom for the business. Again, a restaurant for the elite is best located in a posh area. Similarly, a veg restaurant will not see footfall at a place filled with non-vegetarians. Then again, while a Punjabi Dhaba can look vibrant and colourful, a fine dining restaurant is usually simple and sobre. I can come up with ample examples of location and concept mishandling.

Talking about locations, how many guests are you ready to welcome at a time? Ponder over it and calculate the amount of money you can dole out. We all want to serve as many people as we want to, but unfortunately, we get restrained by limitations. The price of a plot depends on its location. An upmarket locale wants you to pay a fortune.

Another significant aspect of a restaurant is its parking lot. For fine dining and mid-level restaurants, parking is a must as your target customers will definitely drive-in with friends and family.

Hiring staff for your establishment? Again, the target customer base comes into action. Does your staff speak the local language fluently? Do they know any other language? Also, are they certified by accredited hotel management institutes? You cannot possibly employ less trained professionals if you wish to target educated customers looking for a class.

2. Staffing in the restaurant 

How many employees you can afford is important in this case as the strength of your employees determines how efficient your business can be. You also need to figure out if you are going to work as a staff in the restaurant.

Is the competition sending you employees to ruin your business? Are you sure the new staff is actually searching for a job and not a spy from your competitors?  By the way, did you check the competition? How many restaurants in your area offer the same type of cuisine, service, concept and facilities?

Finding a great chef is the biggest quest for most of the restaurants. A chef is the biggest artist in the world who needs to make sure all three senses (Visual, Taste and Smell) of a guest are taken to their peak. Anything, if missing by a whisker, means the show is over.

Secret tip: Family members in business - You might think that hiring family members may make your business a success as all the secrets and all the income will stay safe in the family. 

But you have to remember that many families have broken due to conflicts in the business. Even though the initial stage has been a real hit, the venture either flopped later or some shareholders separated to form a different venture. You don’t want to break your family on account of money, management and share of responsibility.
 

3.Budget in the restaurant

Make sure that there is enough money to not just start the venture but take you through the entire process for at least 2-3 years. Keep enough deposits in the bank, talk to your financial advisor if needed. The money goes over what you planned in most of the restaurant opening budgets.  So, having money ready at your disposal is a must before creating the business and not the other way round.

Be wary of the following:
A. Fixed Cost
When it comes to setting up a restaurant, you cannot ignore the importance of kitchen equipment without which the business cannot function. Licenses, such as that of food safety, trade, establishment, lift, music, environment clearance and signage cost a hefty amount. If you are offering alcohol, you need a liquor license as well. 

Keeping a hawk’s eye on every incident at the restaurant is not easy with the naked eye.  Therefore, installing security cameras at crucial spots like the entry, the dining space, near the reception, at the cash counter just outside the washroom and inside the lift is crucial. You can hire security guards but then you have to pay them a monthly salary. Can you afford it? God forbid! On the occurrence of a mishap, you cannot trust the naked eyes of personnel all the time.     

Website Cost - You simply cannot reach out to the target audience without being on the Internet. Therefore, having a responsive website, and conducting effective digital marketing is essential for higher visibility. You need to decide that you can work with the one-page website or 10-page website. Website is a crucial part of this century. Our advice is to go with the same company for the domain name and hosting package.

Restaurant System - Managing payment, promotions and orders manually is time-consuming and not very cost-effective. The POS system of a restaurant streamlines the work by reporting, controlling costs and developing the overall profitability. You will have three options here, go for old school paper style, cash register machine type or the pos system for payment also.
Rent and Property Taxes - Paying rent for the establishment and property taxes if you have bought the plot also demands a lot of money.
A contract for Business, Insurance - Get the business insured. You never know what is waiting for you around the corner!

There is a big difference between or and and in the business contract. Sentence: We will provide a storage facility or container outdoor for pieces of equipment. We will provide a storage facility and container outdoor for pieces of equipment.

B. Variable Cost
Unlike the fixed cost, variable costs, such as employees’ salaries, electricity, maintenance & water charges, vendor products and maintenance keep occurring as long as the restaurant functions. While you can use the budget for the initial round of variable costs, the revenue earned each year manages the costs later.

Don´t create a restaurant first and then create a budget. Make sure you know the numbers for your business.

4. Name and logo of the restaurant

The name of the company is the face of your business. Adhering to the business type while naming the business is essential to add some spark to the success of the venture. For instance, naming your restaurant - Gourmet - not only attaches itself to the industry but also shows what type of food you are serving. We sometimes say,´´ What's in the name?´´ but here there is a lot in the name. Please take your time before considering the name of the restaurant. It should say something related to the business.

The logo is the symbol of the restaurant. Have you thought about your logo’s copyright? Don’t let others snatch it from you and later call you the miscreant. Moreover, the logo’s colour does have an impact on the restaurant’s appeal. Remember the famous restaurant business has Red, Yellow and green in them. Red provides maximum alertness and increases appetite, yellow is the sign of happiness and green is connected with freshness. I have made a special video explaining the colours of the restaurant. Please watch it. Big companies do spend a lot of money on making sure they get their logo right.

Name article:How to find the right name for your restaurant business?
Logo article:How to create a logo for your restaurant business?

5. Business plan in the restaurant

When you are on the verge of creating a new business and are only a few steps away from realising it, focussing on the business, fuelling your ambitions and securing outside financing become significant. The business plan is also a useful tool to gather investment from outside by impressing interested investors. For such times, talk to a financial advisor and draft a business plan.

Decide whether you want to have investors or not. In that case, they may want shares in your company. Think about it and then make the decision. If you want to catch the investors’ attention, nothing can beat the business plan. Put your Executive summary, company overview, market analysis, management financial projection, market and public relation strategies together.

6. Key decisions in the restaurant

A number of things need your attention in the beginning. Consider small things like Would you be doing a Food delivery as the food taste changes after 20 minute. It's a small but crucial step. The food business is so popular that aspiring business owners and existing restaurant owners can go to any level for success. Imitating a venture’s model is quite common in this industry and if your rival is gifted with enough money, he can launch it with a bigger budget.
Besides, have you given a thought to the profit you want at the end of a month, a quarter and finally, a year. 

You have to decide between four big questions:
Quality: Can you deliver the same food every time?
You can make videos or write manuals for the employees.
Speed: How much time does it take for the food to come out of the kitchen?
Cleanliness: How tidy is the place?
Affordability: Can this be afforded by people every day or is it a luxury restaurant?

7.  Life will change

Now, the most important thing - are you sure you want to own a restaurant business? Why I am asking this? See, life throws different situations at us and not all are happy ones. If you are an employee at a restaurant, you can take a break and give yourself and your problem sometimes. However, in the role of a business owner, you hardly have the time or opportunity to give yourself time, especially in the first few years. Customers want to relax and stay away from their problems when they come to your restaurant. Trust me, they do not care if your girlfriend left you or a relative just passed away. Business is an animal, which kills people. If you are not up for it, do not indulge. 1 happy guest will bring 10 people but one pissed guest will make sure 100 people won´t come.

8. Opening and closing hours of the restaurant
Check the customers’ pulse. You did not get me, did you? Wait let me explain it.

What are the opening and closing hours of your restaurant? Do they tally with the lifestyle of the townspeople? If your open-air eatery is located in a quaint hill station, and you close it at midnight, nobody is going to come. Who would take the trouble in the cold to visit your restaurant? Then again, a European town will have more waking people in the middle of the night in December than a Bangladeshi town. Try to get a grasp of the mood of the folks and the months when they enjoy the most. For instance, in West Bengal, India, the time of Durga Puja is the prime time for all restaurants. There is no pause in the footfall at eateries during this time.

9. Your restaurant business specialty

Po had a secret ingredient in his soups. What secret potion do you add to your restaurant? Add something special to your restaurant so that people love to return again and again. 

This is the WOW Factor we are talking here. Something out of the box and maybe one-click service, maybe telling men their wife birthday is coming and if you would like to book a table one day prior) Make it so cosy that couples consider it their haven. Expanding your magic, you can offer flowers to the female guests when they are leaving after experiencing a wonderful time at your eatery.

10. Seek for an advisor for your restaurant

Running a restaurant in a sole proprietorship is hard. Maybe your leadership skills are awesome, but are you aware of the hospitality industry’s nitty gritty? If not, then you probably need someone to support you in understanding the industry and grasping how to manage a business. Handling your venture all alone may soon turn out to be problematic when you have to talk to investors, government bodies, suppliers and employees. On the contrary, having an experienced person to advise can fetch you a lot of time to delve into other things asking for your attention.

AB BONUS TIP FOR NEW RESTAURANT BUSINESS:

  • Consumer protection rights:
    You need to know in detail every right of a guest. I believe you remember the Mac D Coffee incident. If not please check it, this is crucial for both parties. It takes only one tiny mistake for the restaurant show to finish.

    Nearing the end, I would like to ask if you are contributing anything to the society that has given you everything. Every business leaves a footprint on society. In your capacity as a restaurant owner, you can generate employment in the local community and adhere to environmental norms to keep the atmosphere pollution-free. Last but not the least, distribute unconsumed food amongst the homeless.

    The restaurant business is an extremely low margin one. You have to know how much profit you can make if a customer spends a rupee in your business. Most restaurants earn a profit of 6 to 10% per amount spent by a consumer. Thus, the profit comes to 6 to 10 paise from every rupee. 

Before investing money, check the market and then go ahead with the plan. You never know, success might soon come knocking on your door!
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Author: (Abhi Chauhan-The Restaurant Academy Professor. ''Chase the vision, not the money; the money will end up following you''-Tony Hsieh)
Date: 28/02/2020

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