Starting a new restaurant can be an exciting and rewarding venture, offering the opportunity to showcase culinary creativity, create a welcoming space for customers, and establish a thriving business. However, behind the allure of beautiful food and a bustling dining room lies a complex journey. The world of restaurant entrepreneurship comes with hurdles, from conceptualization and location selection to financing, staffing, and regulatory compliance. It’s a path that demands careful planning and strategic decision-making.
Some good news: contrary to popular belief, the claim that 90% of restaurants fail in their first year is found to be inaccurate. A comprehensive study conducted by economists in 2014, using extensive data from the U.S. Bureau of Labor Statistics (BLS), reveals that only 17% of restaurants close in their first year, a significantly lower rate than many other service-providing businesses, where 19% typically fail. The study also demonstrates that the failure rates of restaurants have decreased over time, indicating a more stable industry than previously believed. It’s important to note that restaurant closure doesn’t necessarily indicate failure, as various factors such as personal issues, property changes, or new ventures can lead to a restaurant’s closure.
What Do You Need to Consider Before Starting a Restaurant?
It would be best if you still had a solid plan and implemented best practices to ensure your restaurant is a success. Take a look at these critical points:
Concept Development: This is where the restaurant’s concept, theme, and style are defined. It includes decisions about the type of cuisine, target audience, ambiance, and overall dining experience.
Business Plan: Creating a comprehensive business plan is crucial for securing funding and guiding the development process. It should outline the restaurant’s objectives, financial projections, marketing strategy, and more.
Location Selection: Choosing the right location is critical for a restaurant’s success. Prospective operators must consider factors such as demographics, foot traffic, competition, and accessibility.
Legal and Regulatory Requirements: Restaurants must comply with various local, state, and federal regulations, including health codes, liquor licenses, zoning laws, and more. Ensuring legal compliance is essential.
Design and Layout: The restaurant’s interior and exterior design, layout, and décor should align with the chosen concept and create a welcoming atmosphere for customers.
Menu Development: Creating a menu involves selecting and pricing dishes, sourcing ingredients, and ensuring it fits the restaurant’s concept and target market.
Kitchen and Equipment: Identifying the necessary kitchen equipment, appliances, and supplies is vital for a smooth culinary operation.
Staffing: Recruiting, training, and retaining skilled staff, including chefs, servers, bartenders, and management, is essential to the restaurant’s success.
Marketing and Branding: Developing a marketing plan to build awareness and attract customers is a key component of restaurant development. This plan should include creating a solid brand identity and advertising strategies.
Financial Management: Managing finances throughout the development process is crucial. This includes budgeting, securing funding, and tracking expenses.
Construction and Renovation: If the restaurant space requires construction or renovation, this phase involves hiring contractors, obtaining permits, and overseeing the construction process.
Menu Testing: Before opening, many restaurants conduct menu testing to fine-tune dishes, prices, and portion sizes based on customer feedback.
Pre-Opening Marketing: Building anticipation and excitement before opening through marketing campaigns and promotional events. 89% of dining research is done by mobile before visiting a restaurant, so get your social media profiles and mobile-friendly website up and ready before you launch!
Training: Properly training the staff in all aspects of restaurant operations, including customer service, food handling, and safety.
Opening: The restaurant officially opens to the public, and operations begin. Initial customer feedback is important for making adjustments.
Ongoing Operations: Once the restaurant is open, it requires ongoing management and monitoring to ensure its success. This includes maintaining quality, managing finances, and adapting to changing market conditions.
Want to learn more about starting a restaurant? Check out our guides below:
Ensuring Success with a Restaurant Consultant
Synergy understands that the road to restaurant success is more challenging than it sounds, and we’re here to provide guidance and support to help turn your culinary dreams into a flourishing reality.