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The Restaurant Biz: What You Need to Know Before Opening Your First Location

By: SmallBizClub



According to a study by Ohio State University, up to 60 percent of all restaurants fail within the first year while as many as 80 percent fail by their fifth year. However, if you are thinking about opening your first restaurant, the facts are not all gloomy. Last year, almost two million new restaurant jobs were created and the restaurant industry contributed almost $783 billion to the economy. You can be among those successful restaurants by simply following these few tips.

Choose a Concept and Stay True to It

You may have recipes you have created over the years that you know will sell in a restaurant, or maybe you have been told you make the best ribs, steak, crab cakes or something else you think could work in a restaurant. However, having a good recipe is not enough to make a restaurant succeed. Before you open your first location, create a concept for your restaurant. A good concept is based on your chef, your menu and your location as they all work together to create a dining experience. You need to determine if you will serve in an upscale atmosphere or a casual setting. Your location should also suit your concept as it may be difficult to create a successful vegetarian restaurant in cattle country, for example. Your concept must also be different than any other restaurant in the area.

Develop a Business Plan

Too often, people enter the restaurant business because they love to cook or love to serve people, forgetting about the business end of running a restaurant. In nine out of ten cases, restaurants fail because there was no business plan in place. Your plan should include a description of your concept, your target customers, your menu and pricing, as well as marketing plans. You will also need to identify start-up capital and an estimate of long-term income and expenses. You should also include a hiring, training and retention plan for employees.

Purchase the Right Equipment

You cannot use the same appliances in a commercial kitchen as you would your home kitchen. Home appliances are not rated for heavy commercial use and could lead to disaster in your restaurant kitchen. Instead, fill your new restaurant with commercial grade appliances that can be easily obtained from affordable providers. It is also important to remember that health codes may require specific commercial items in a restaurant kitchen, so be sure to research those codes when you choose your location. In fact, before starting the process of creating your restaurant, contact your local building code office to make sure the building you have chosen is zoned for a restaurant and what requirements are necessary.

Choose the Right Staff

The National Restaurant Association says that restaurants have a turnover of almost 63 percent, compared to just over 42 percent in other industries. Choosing the right employees is critical to the success of your restaurant. If you are a chef with no business experience, hire management who can help you with the business side of your restaurant. Choose staff who are customer service oriented as one bad server can result in a significant amount of lost revenue. Be firm with all staff regarding rules and procedures. The best way to know if an employee is right for your restaurant is if they have the same beliefs you do when it comes to serving customers.

These simple steps can help your first restaurant location become a success. You can beat the odds and be one of those restaurants that is not only still growing after five years, but expanding.

Author: Hannah Whittenly is a freelance writer and mother of two from Sacramento, CA. She enjoys kayaking and reading books by the lake. For your restaurant appliance needs, Hannah recommends Budget Restaurant Supply.

Published: December 19, 2016

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