The restaurant business is not for the faint of heart.
It takes dedication, passion and plenty of long hours to run a restaurant that doubles as a profitable business.
Running a restaurant requires plenty of research, business acumen, and people skills.
It is in no way a ‘get rich quick’ type of industry. Instead, you will spend most of your time dedicated to making it a success.
For a few pro tips on how to open a restaurant, this article outlines the essentials.
How To Open a Restaurant With Success
According to research, close to 60% of restaurants fail or fall under new ownership within their first year.
Up to 80% close down completely within their first 5 years.
Sounds dramatic right? So what is the secret formula for opening a successful restaurant?
Many will say your success hinges on a true passion for the industry. While this is not untrue, there are plenty of other factors.
Generally, a successful restaurant’s profit margins range between 3-5%. That’s why building a strategic game-plan from the start is a must.
1. Establish Your Target Market
When establishing how to open a restaurant, your target audience will make or break your success.
Who is going to be eating at your restaurant and what kind food will they be looking to order?
It’s important to consider your target audience as a whole, rather than trying to cater to various groups.
Are you aiming to cater to families, hipster millennials or a more upmarket clientele?
Do some research on the trends your target market follows and implement these in your menu and pricing.
2. Develop Your Restaurant Concept
What is a restaurant without a theme? The concept of your restaurant will give your establishment its overall vibe and help to determine your menu and pricing.
The concept of your restaurant also relies on who your target market is and what they enjoy.
Establish yourself as one theme (i.e. a bakery, pizzeria, a steakhouse or breakfast spot).
This way you can concentrate on doing one thing extremely well!
3. It’s All About Location
If there is one factor which will determine the success of your restaurant, it’s your location.
A location should be established based on the following:
- Where your target market lives, works or socializes
- Established competition in the area
- Opportunity for something new and interesting
- Will your type of restaurant suit the area?
- Amenities close to your restaurant – access to public transport, parking, and nearby attractions
- Whether the area is considered a ‘prime location’ and higher rent costs
Ultimately, you should secure a location which also suits your budget.
There is no point in renting a building which will chew through your entire monthly profit, leaving you at a loss.
4. Build Your Menu
This is the heart and soul of your restaurant and will ultimately keep your customers coming back for more.
When designing your menu, keep your restaurant concept and price structure in mind.
Tailor menu options to your target market.
If you’re a family-focused establishment, ensure your prices are reasonable and there are menu options for children.
Focus on quality over quantity when it comes to the number of your menu items. It’s better to do a few dishes perfectly than a bunch which are average!
5. Secure Licenses and Permits
Another useful tip on how to open a restaurant? Get your licenses and permits in order. Within the hospitality industry, these can generally take months to process.
It’s vitally important that you begin the paperwork for these as early as possible.
Licenses may include a liquor license, workers compensation, a music license and sign permits.
6. Invest in Technology
In today’s world, the success of your restaurant will hinge on the technology you choose to invest in.
You will need to consider a point-of-sale system (pos). Unsure of a pos system meaning? This is what drives your food ordering and cash register system.
Other items to consider include tracking your staff hours, online reservations, and adding your restaurant to dining directories.
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