Culture affects your team too, from who gets hired to how co-workers interact to how much people respect each other. There are a lot of restaurants out there. Partnering with the right people can make it much more likely for your restaurant to survive, and the inverse is true too. Business partnerships are like marriages, but actually more complicated, with nastier divorces.
Picking the wrong partner s can ruin everything. Many restaurants fail because the owner partnership fails, often because of the inability to resolve disputes. Choose partners slowly and wisely! Just proceed cautiously. Money, money, money. Did your smoker break? Major theft or vandalism? Water main burst? Or even a couple slow months in a row could stretch your finances to the breaking point unless you have a little emergency cash to cover everything.
Owning a restaurant is a daydream for a lot of people. A great restaurant can survive in a lousy location, but picking the right spot will make your survival much more likely. Changing locations after opening and getting established will be super expensive and damaging to your clientele. So how much more per square foot is that lease than a comparable space in a less hot area of town? How many more dinners would you have to serve per month to make up for that? Will it really be worth it?
The most exciting locations can come with the scariest lease amount! Sure, people will travel for good or novel choices, but the locals are the ones who can be your best regulars. Parking can be a real pain in the butt. Will you have to have valets running cars to a lot down the street? Would having valet only turn off your potential customers?
Does your building include adequate parking? On the street or in lots? Paid or free? And does that indicate market desire, or too much competition for your niche? Are there any other businesses very close to your potential location that could feed you clients, like a theatre that lets people out for a late dinner service, or a museum? Every town has some of those cursed spots, where a business will go in, then last 8 months and shutter, then a restaurant will try it and last just a year, hemorrhaging money the whole time, then another failed restaurant or two.
When you are looking seriously at a property, go talk to your potential neighbors, both residential and commercial. Ask them what all has been there in the past, and how long it lasted. Sit and watch the traffic to see how many people walk by or drive by. Try driving there at various times of the day to get an idea for traffic. Use Google Street Views to review the evolution of the spot over time and get an idea of how often it was vacant versus how often it looked busy.
Study your options and analyze what it will really be like to go in there. And be aware that new spots can open anytime because so many businesses fail and spaces become vacant! Fun, right? You have got to get the word out about your new restaurant. Or if you have or are buying an existing restaurant with a healthy customer base, you have to spread the word still so that you are in a healthy position to fend off local market changes and new competition.
You have to have an online presence today, with a modern looking website, social media accounts, and results in the search engines. It may be a pain to set all that up and feel frivolous, but it is crucial, especially as a new restaurant just trying to get established.
Get an Instagram and take high quality photos of your food, your staff, your space and share them. Use hashtags to try to get your initial followers, or try following people who follow similar local restaurants to get their attention.
A site builder like Squarespace or Webflow can make it easy to build a handsome site that matches the quality of your restaurant. More about websites below Have your web developer or you submit your site to Google and all the other search engines so that it gets found quicker and can get a chance to start ranking for relevant search phrases.
Start building up an email database so that you can send customers info about specials, new items on the menu, anything to try to get to get them to keep coming back. Like I just said, so many restaurants have terrible websites. You can do better than that! Think how many people are using an iPhone as their main computer now anyway, and how often restaurant choices are made on the go.
Make sure the menu can be read from a phone easily, and make sure your telephone number can be clicked to call, and that everything just works. Hours - Post your hours, duh. Address - Make it easy for them to find your location once they find your website. Images - Quality pictures of your space and your food will help convince people to come spend money at your establishment! Clarity - Just make it clear with your website what kind of food you offer, where you are, and why people should bother coming in.
When you go around and ask diners how their meal was, you can encourage them to review you on Google and Yelp. Or just have a sign up on the exit door or above a urinal captive audience! Having a ton of good reviews online will help with social credibility, which can help bring more people in.
You can learn a lot from this, and the way you handle online reviews becomes part of your image too. How do people look for new restaurants in their area? Many check on online directories like Yelp, or by finding their location on Google Maps and simply looking around the map. And all your reviews will show up there too, another reason to encourage good reviews! You can get a lot of traffic from Yelp without giving them a dime. Look at these pictures below.
Would you know while driving by that one is a delicious bakery and one is an outstanding asian fusion place? Make sure you have signage hanging perpendicular to the restaurant too so that people going PAST it can read the sign, and not just people looking AT it. It would be awesome if you opened the doors to your new restaurants and people just came in and sat down to eat. You have to put a ton of effort into getting people to your restaurant and building your brand.
Many restaurant managers underestimate this. If you can see people coming in from a specific tactic, double down on it. Not sure something is actually helping? Why should people choose you over the chain restaurants that they trust? Why should they try you over other local places that have a similar offering? Your marketing needs to address differentiation, and you need to market to differentiate! Do your local newspapers write about new restaurant openings?
And not just the major newspaper for the city, either. Keep in mind that there are a lot of smaller, neighborhood focused newspapers, plus business focused papers and in some cities the free weeklies. Running a PR campaign to these papers and reaching out to journalists who have written about new restaurants before can help you get some free press and awareness. Similar, go DIY and search for food bloggers and restaurant reviewers in your city and reach out to them.
Influencer marketing is somewhat BS but it came into existence because it does work to an extent! Include both traditional media and online marketing efforts. If you do decide to hire an outside marketing firm probably a good idea , make sure you ask local restaurant owners for recommendations of who to hire and more importantly who NOT to hire. Choose the right agency before you open your doors!
And remember that everything is marketing. Does your delivery driver cut people off in a branded car? Is your toilet paper super cheap? Is your trim work a little dirty around the walls? Everything is marketing, as everything can contribute to what people think of your restaurant! Create a special offer for the bike shop in your neighborhood and see if they will leave cards out by their register. The quality of your food is really your best marketing effort, though, so making sure the dining experience is incredible is what will create the best kind of marketing: word of mouth.
Sure, entertainment, service, ambiance, convenience, community and a myriad other factors come into play, but the numbers ultimately matters when it comes to food costs. Keep in mind that your food cost may change depending on the season, the provider, and other factors.
Another major cost other than food is going to be staff, including your non-tipped staff. Tuesday night is not the same as Friday night, and brunch rush on Sundays may be way different than Saturdays because of all the church people who flood the local restaurants at pm. Surprisingly slow night? Cut people. Extra slow lunch shift for no clear reason?
Take a more holistic view of your food costs. Would it be better to ditch that item for a similar petite filet that may move faster?
If you take a more holistic view of your menu and consider the difficulty of the dishes, versus how often they actually get ordered, versus storage and shelf life of the necessary ingredients, you may realize that some of your proud plates may be fairly unwise to have on the menu, taking up space in the walk-in, and keeping easier more profitable dishes from getting ordered. Really look at your menu.
What are your most profitable menu items? What almost never gets ordered? A good POS system can help you obtain and digest this data easily. What does it cost to make each menu item?
These changes can really affect your bottom line, so be educated and prepared. Be diligent about setting money aside. Make it a requirement that when you do your books on a weekly or monthly basis that you assign your money for these uses.
Even if everything is going well, entropy exists. Your bathroom walls will look worse with time. Furniture wears out. Things will need to be fixed, replaced, repaired. Be sure to set money aside for that, too.
It takes a lot of money to open a restaurant, and it arguably gets harder once your doors are actually open and people can come eat at your establishment. Before that happens, you need to have all the ingredients for all the menu items for anyone who walks in, plus funding for all the staff needed to serve those people.
Keep enough startup capital available to run a marketing campaign too. And keep in mind that some restaurants get to profitability sooner than others and some die expensively faster than others.
Have an adequate accounting system. Learn basic restaurant accounting at least. Your restaurant needs enough cashflow to pay staff and all the bills, with profits generated by the right balance of food cost versus menu price, as well as the right number of staff with neither too few service and morale suffers or too many finances and morale suffers.
Keep proper books! If you have staff that are too quick to comp dishes, it can hurt your bottom line and also indicate there are other issues that you need to look into and correct. Data can be powerful in your business. Investing in a good account that you trust that has industry experience can be more than worth it. Keep checking your numbers.
Never let finances go on auto-pilot. Cashflow is important and your servers are your salespeople. Pay attention to who can really SELL dishes to people and generate higher tickets. Keep them in your employ. Also, even if you trust everyone that works with you, keep an eye on finances often enough that you could catch an embezzler. If you rarely do your books, you could give someone months of free rein to pilfer you before you catch on.
But if you diligently review your books weekly, you can spot abnormalities more quickly and realize there is an issue. Establish multiple revenue streams: food trucks, catering companies, corporate contracts. Cash is King and your only job is to generate a lot of it. Your kitchen is already cooking, so take full advantage of all the sub-businesses you can use it for. Can you do drop off catering to help pad the till? Depending on what kind of restaurant you have, you may be able to establish extra income sources that will bring in more cash to help you survive initially, or long term.
A food truck is a relatively big capital cost, but would it make sense both to get your restaurant in front of new people and to bring in a new source of revenue? Can you do catering also? Can you get any corporate contracts and regularly cater office lunches or anything else? You already have a big expensive kitchen, why not use it to the full potential? What else can you sell?
Opening a restaurant is a very expensive endeavor, and you may be dead in the water immediately because of the cost to open. We touched on this in the last section, but the issue of startup capital is so huge that it warrants more focus. It could cost a million dollars to build out your location. Perhaps more. Opening a Sonic Drive-In franchise can be more than a million dollars, for example. Ideally, have a year worth of cushion. The most common problem of all new small businesses, of any sort, is that they underestimate the need to start and operate the business.
Even high-profile investors expressed disappointment in Planet's performance. Meanwhile, privately held Hard Rock is entering its most aggressive expansion year the company has seen in a long time. Hard Rock is on track to open one cafe a month through the millennium.
Hard Rock opened in St. The restaurant openings bring Hard Rock Cafe to 94 locations in 32 countries. By the end of the year, Hard Rock Cafe will have locations -- 49 corporately owned and 45 franchise locations. And Hard Rock continues to expand the brand's recognition through entertainment-related business ventures, such as building hotels and concert amphitheaters, releasing record compilations under the Hard Rock record label, Hard Rock live concerts on VH-1, and retailing Hard Rock beer and veggie burgers.
Analysts say where Planet Hollywood took a wrong turn is that it paid too much attention to merchandise and not enough attention to food.
Two-thirds of Planet Hollywood's sales per restaurant stem from merchandise. What Planet Hollywood and other themed restaurants are forgetting is they are restaurants, says Jonathan Valania, senior editorial consultant for the trade magazine Tourist Attractions and Parks. Others say it was a combination of too rapid expansion, too high overhead and overpaying for restaurant sites that caused Planet problems.
Valania explains the overhead to build a themed restaurant is much higher than a typical casual restaurant because of the entertainment components, he says. And the eatertainment industry as a whole is overcrowded. From Rainforest Cafe on down, same-store sales are weak for an industry that has become stagnant, says David Manuchia, principal of Orlando consulting firm Restaurant Partners Inc.
Even the latest themed restaurants, says Manuchia, are picking too narrow a niche and don't have a broad enough appeal. Despite a 10 percent decline in same-store sales for Rainforest Cafe during the third-quarter ended Oct. A qualitative analysis indicated that effective management of family life cycle and quality-of-life issues is more important than previously believed in the growth and development of a restaurant.
A quantitative analysis of restaurant failures in Columbus, Ohio, lays to rest the oft-repeated statistic that 90 percent of restaurants fail in the first year. Contrary to that figure, between and , just 26 percent of independent restaurants failed in their first year, and the cumulative failure rate in three years reached 60 percent--far off from the legendary 90 percent figure. Interviews of a convenience sample of current and former Columbus restaurateurs found that independent restaurant failure seems to stem more from internal factors than from external events.
Chief among the factors that promote restaurant success are a clear concept that is passionately and consistently espoused, the restaurateur's ability to commit huge amounts of time to the business whether by balancing the time demands of the business with those of a family or by being single , and a willingness to adapt to changing situations.
Such commonly held factors as having a clear strategy or having sufficient capital did not protect restaurateurs from failure if they could not articulate their concept or commit themselves wholeheartedly to the business. Moreover, successful operators entirely discounted the value of advertising or promotions, in favor of maintaining connections with customers and community.
The restaurant industry and its analysts have long pondered the enigmatic question of why restaurants fail. Restaurant failures have been attributed to economic and social factors, to competition and legal restrictions, and even to government intervention.
In the current complex environment of the restaurant business, we believe that it is imperative that prospective and current owners understand why restaurants fail see "The Myth of the Restaurant Failure Rate". Most hospitality research has focused on the relative financial performance of existing restaurants instead of examining the basic nature of restaurant failures, and most of these studies considered only bankruptcy reports.
These change-of-ownership transactions are treated as legal matters instead of actual bankruptcy procedures and may not be included in public records. Furthermore, because the focus of academic research has remained primarily on bankruptcy studies, the qualitative
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