If you are planning on opening a restaurant, you need to put the chances of success in your favor. By just taking a look at the number of restaurants that fail within the first year should make you a little wary.
Your big dream can easily turn into a nightmare if you don’t thoroughly know what you are getting yourself into. Your fantasy of doing what you love and having a place to call your own can quickly become a complete disaster.
Being an employee at a restaurant does not mean that you are automatically cut out to be a restaurant owner; they are two very different things.
What does it take to be successful? The fact is that your fate may be sealed before you even open the doors if you don’t take the time to learn what you are doing. It's time to take off those rose-colored glasses and become realistic about what it is going to take to succeed and the commitment you need to make. Below you will find some of the main pitfalls new restaurants often make. These mistakes are expensive mistakes and ones you do not want to learn on your own.
1) Bad Location and Zoning Issues
There are many things to consider when deciding on the location for your restaurant. Paying attention to details and spotting faults will prevent you from making a costly mistake. You will want your restaurant to be easily seen from the road, but you must also consider the ease of access from the main road and that there is ample parking space for your guests. If the entrance into your parking lot forces a customer to drive down the road and make a U-turn, or if they can’t find a place to park, you have an obstacle in the way that may cause a customer to find it too difficult to patronize your business.
Before buying a building or signing a lease, make sure that you check with the local zoning board to ensure there are no zoning changes in the works that will affect the future of your business. Do your due diligence and research the trends in the real estate values in the neighborhood.
Upward trends can be a sign of good things to come and indicate a customer base with more disposable income, while downward trends can be signs for concern.
2) No Clear Vision of Your Concept
Your vision will allow you to establish your brand--the way people will think about your restaurant. If you are confused about what your restaurant concept is going to be, your staff and your guests will feel the same. Without a clear understanding of what your restaurant is, it is impossible to develop an effective marketing strategy. You need to be able to give an elevator speech about your restaurant and concept; you will want to be able to give anyone you meet a short summary that quickly and simply defines your restaurant and its value proposition. Once your vision is defined you will be able to determine your target market, your brand, and convey your restaurant's culture.
3) Not Knowing Your Target Market
An amazing concept and impeccable food and service will not overcome a location that does not include your target market. Your vision will determine what will be your target market. If you are going to have a chance of success, you will need to find a location that facilitates your target market. Are you targeting families with children, business professionals, the late night crowd, or sports fans?
Find a location matching these demographics is an important step in your decision making process. Once you see a location that fits your budget, be sure to analyze the area and consider the average age of the people in the community, the density of the population, income level, education level, local businesses, and even take a look at the crime rate in the area. Make sure it is an area your patrons feel safe and will want to go.
4) Having Too Little Cash and Reserves
A huge mistake made by first-time restaurant owners is underestimating the amount of money they need to have available during start up. So many do not plan for the unexpected. Thinking that opening is go to go with out a hitch is a rookie mistake. The following are some of the main obstacles that can affect your starting cash.
Delay in opening
Construction costs
Permits, insurance, licenses, and utility deposits
Opening food and liquor inventory
Higher than budgeted payroll costs (starting payroll will include additional hours due to training, and over-staffing to ensure good service)
Marketing costs (website, print advertising, social media set up).
The truth is, sh*t happens. Even if you are able to open after running over budget, the stress will have detrimental effects on you and your staff’s morale. Set aside enough cash to float your business for 6 to 9 months after opening, Give yourself some padding and so your business is not doomed before you open.
5) Not Paying Attention to Details
You don’t have a second chance to make a first impression. It’s a bunch of little things that add up to a reason why your customers won’t come back. Remember, a customer will start making judgments on your restaurant from the time they first pull into the parking lot.
Make sure that the parking lot and exterior of your restaurant is clean and well manicured. An open dumpster with the smell of rotting food can immediately turn off a customer. A meticulously cared for and inviting entry way, along with clean bathrooms are a must, but don’t underplay the importance of the staff's appearance, spot-free menus, and grime-free, filled salt and pepper shakers.
6) Not Having Written Systems and Procedures
What will make or break your restaurant is consistency. A customer needs to have the same experience every time, regardless of who is working that day. Nothing is worse than having the best bouillabaisse of your life one visit and then being disappointed with a totally different dish the next time you come in. Opening and closing procedures, service procedures, prep sheets, and recipes should all be written down and followed by every staff member. Remaining consistent will allow you to establish and maintain a regular clientele. Websites like Restaurantowner.com have downloadable operational documents that you can customize for you own needs.
7) Not Having a Marketing Plan or Budget in Place
It doesn't matter how many friends, family, or connections you may have, nobody knows enough people to fill a restaurant on a daily basis. Your Grand Opening only happens once and you need to take advantage of this great opportunity to create brand awareness and rev up the business. A Grand Opening marketing strategy should be designed to introduce you to the community, persuade people to come see what you are about, and generate buzz. If you can get your customer database started early and begin your social media campaigns started before you open, you will be ahead of the game when opening day arrives.
Once open, you need to have a plan for keeping your marketing current. A shotgun approach to marketing is going to be a waste of both time and money. Marketing needs to have purpose and concrete goals in mind. I have seen restaurants that have a terrible location but are still successful thanks to creative and consistent marketing strategies. Most of you are probably saying that you are restaurateurs, not marketing gurus, which are why it is important to have a budget that includes finding someone who is.