The procedure for opening a restaurant from begin to finish can be, and ought to be, an arduous one. It requires an enormous amount of research and determination, and it could easily get overwhelming. Often clients ask, “What should I do?” It’s the perfect question, but not easily answered. Why? There’s a whole collection of things that have to be accomplished simultaneously in starting any business, but particularly one as complicated as a restaurant.
So, where do you begin? The ideal place to begin is with a strategy, of course. Without one, it is like shooting from the hip. Just trusting your instincts is a recipe for failure. “If you do not know where you are going, you’re unlikely to get anywhere worthwhile.” So you start with a business plan, a proven base of success and the road map for your fantasy becoming reality. A quote worth remembering and putting into practice is, “Failing to plan is planning to fail” in The 7 Habits of Highly EffectivePeople, Stephen R. Covey).
Let us outline two important steps required to make a successful business strategy:
- You must get an idea of the sort of restaurant you want. That means coming up with a well-thought-out idea, visualizing it with images, and describing in writing. Your whole business plan will evolve from this: the best way to bring that dream restaurant to life; the best way to give it its distinctive personality; and what makes it different from other restaurants.
- Study successful restaurants so as to formulate a model that matches what you are thinking about. You don’t need to replicate them just determine why you believe that they are successful. Is it their food? Is it their friendly support or atmosphere? Most likely it is going to be three, fitting together to form an entire concept: excellent food, prompt and attentive service, and a comfortable, if not unique, atmosphere.
I like to use the illustration of a three-legged milking stool to drive this point home. If one leg is weak, then the entire stool is weak and collapses, hopefully not with you on it.
Once I suggest learning from observing other successful restaurants, keep this thought in your mind. Your restaurant idea has to be uniquely yours. Blend the best parts of other successful restaurants in your own creative version of what you want. Perhaps it is the personal service and exceptional food presentation that you’ve enjoyed at one restaurant, or the decoration theme at another. Blend all the components which you feel make those restaurants powerful to your total idea of food, air, and service, and you’ll have created your own first.
First, create a summary of what your business plan will include. Remember, BE SPECIFIC! Writing a business plan forces you to consider where you’re going, how you intend to get there, and it’s a reliable road map to success. By organizing your thinking, you’re more able to interpret your ideas to paper (or a computer screen) and observe a rigorous plan of action start to take form.
THE BUSINESS PLAN
The Executive Overview: Your executive summary should be short and two-fold, including:
1.) A well-thought-out, condensed version of the business plan, a blueprint in creating your restaurant idea.
2.) The executive summary provides a banker, or prospective buyer, an insight into your thinking and an implied promise for gains. Condensed and importantly, the executive summary gives your prospective investors the gist of the business plan without needing to digest the whole document and generates a direct interest to read further.
The Business Structure: Describe the legal business entity that you have chosen to run your business. Your accountant and attorney will advise you according to your personal conditions.
Restaurant Service Categories: How are you going to deliver service to your clients? Are you thinking of table service, with a bus and wait staff, or the limited staff of fast-food or fast-casual support systems?
Your service concept will establish the qualifications required of the workers you will hire and the pay scale appropriate to each.
Service: What mindset and personality need to your service team screen? How can they interact with your clients? From behind a counter, in a fast food setting, or up close and personal, bringing and taking orders straight to the table with a grin. Fantastic company and a nice attitude of your wait staff go a long way in bringing your clients back.
Menu: Write out your menu. Be specific, using a thorough description of each menu item and projected pricing. Explain why you have chosen the menu items and how they relate to your own service system. Creating a Caesar salad table-side doesn’t operate at a fast food restaurant. The menu and your own service system will be the base of your restaurant.
Client Profile: In this segment, you may describe your intended clients, clarifying who your target audience potential clients are: their age, gender, income, occupation, marital status. Current as clear a profile of your targeted client as possible, with a sharp eye on demographics. Write out everything you think it is, then encourages your supposition with details to back up the way you perceive the demographics.
Contest: What are the other restaurants in the immediate area of where you are? How does your idea for food, decor, service, and air differ from them? Which kinds of restaurants do the very best business?
Marketing Strategy: Summarize your marketing plan, point by point. Show how it meshes with your own concept. A profile of your target market is vital, especially the particular market within a one- to three-mile radius of your restaurant place. By embracing a hands-on, personalized strategy in your marketing efforts, you’ll prevent the unnecessary expenses of a mass media campaign.
Location: Explain why you chose the location of your restaurant and why you believe it’s best-suited to entice customers. Highlight the important demographics of your place, and the menu, theme, and decoration closely fit the profile of your target audience.
Assets: List the owners/partners of your organization and the proportions each will receive. Define what role they’ll play in the organization and include their resumes. A bank will undoubtedly need to determine the financial statements of each and their last two years’ tax returns.
Control: State in detail exactly what your management plan will be. Will the principal owner, or owners, be the general manager or are you going to hire an experienced GM? Either way works, so long as you, the owner, are focused on doing the proper things, and making certain your boss is doing things correctly, that is, those things which produce a restaurant profitable. State the critical positions of your management team.
Operational Systems: Define your operational systems, the navigational instruments, and rudder of your great ship. They set the course, steering the boat on a smooth and straight course. How are you going to ensure training, consistent ongoing operations, and controls that are effective? This should be outlined in your Business Plan.
Financial Prerequisites: Prove your financial needs in four main areas
- Construction build-out price per square foot.
- FF&E (furniture, fixtures & equipment), for example, decoration package-pictures/paintings, etc..
- Professional fees: legal, accounting, architectural, licenses, licenses, and miscellaneous fees.
- Working capital: sufficient for opening stocks, pre-opening expenses like training, and staying power while the business revs up.
Interior Floor Plan and Elevation Renderings: In this part of your business plan, you’ll have to present a floor plan and elevation rendering of your restaurant.
Sales, Profit and Loss Projections: This section should reveal, in spreadsheet format, revenue projections, which are crucial to establishing a budget. The amount of rent, food costs, and labor costs subtracted from earnings will determine nearly all your bottom line.
If you’ll scrutinize and research all these steps, and adhere to this business plan outline, you will learn the information required to provide you the best opportunity for success.