In a culture where sharing food is one of the ways to build a social and emotional connection, opening a new restaurant seems like an appealing business idea with guaranteed return on investment. Full of optimism, many entrepreneurs ended up overstating their chances of success, disregarding the fact that 90% of new restaurants fail in their first year. Nevertheless, you should not be discouraged or give up on your dreams. This list of the ten things you should consider before you open a restaurant will pivot the way for you, and make this bumpy road easier to navigate.
Whether you’re considering taking out a loan from the bank, from your family, or financing your dream yourself; you have to have a clear business plan written down. Not only to secure a loan or investment, but also to understand your position in the market. Laying out your plan will help you to know your strengths, weaknesses, opportunities, and risks. Good planning could save you predictable hardship and avoidable hustle.
In a very competitive industry with new restaurants opening every month across the Kingdom, you have to know how you are going to differentiate your business. Having a clear concept in your mind is key to stand out. From the moment the consumer enters the door until they leave, customers should be able to breathe in the concept at every step. People are not looking only for a place to eat any more, they are looking for a whole experience, your concept should be crystal clear for them to vibe with it.
Hygiene and cleanliness has always been a big concern for customers when it comes to the food and beverage industry, but in the post COVID-19 era this concern has grown larger. Gaining customers' trust in the four pillars of trust: physical, emotional, digital, and financial trust, is key in the road to recovery from the pandemic effects on the market. Customers need to feel safe and trust that their health is not being compromised or put at risk.
Many entrepreneurs mistake and think that marketing starts on the day they launch their business or only a few months before it. However, in reality the marketing process starts from the moment you plant the seed of your idea. It starts with selecting your target customers, their age group, income, and socioeconomic status. Choosing your target market would help with creating a concept, coming up with a name, setting the price, selecting the location, and branding.
In an over-crowded industry with heated competition, you have to stand out. Learn about your competitors and understand their strengths, weakeanes, opportunities and threats just as you understand yours. This would help you to learn how you can overgrow them, and cut a slice of the market share. Whether you’re going to compete in the high-end or the affordable pricing segment, you need to learn what your competitive advantage is and capitalize on it.
Having the right technology and systems in place is very critical to your business success. They’re essential technologies to start your business on the right foot such as: point of sale, automated inventory management software, online ordering services, and air purification technology. Based on your restaurant concept and special needs, you might need other technologies as well to support the back and front end operations. Utilizing the best technology could help you gain a competitive advantage and become ahead in your game.
Choosing the right supplier is paramount to have a smooth and reliable value chain. Avoid delay and inconsistency by sourcing from the best suppliers who would cater to your exact needs. From food, to utensils, and technology your suppliers have to be available for you when you need them.
Opening a restaurant requires a large investment at start, you will have to spend for a long time before you could break even. It’s estimated that the initial expense could be around $175,500 and could reach six figures depending on the location, size, and number of other factors. In order to not run into financial problems within the first year of operations, you need to have a clear breakdown of your experience and an emergency fund on the side.
Creating an excellent menu is not only about hiring a top-class chef. The menu is a big part of any restaurant’s marketing strategy, branding, and the overall concept. Make sure that your menu has unique dishes but old favorites too. Creating the menu is a business decision as much as it a creative decision.
The last advice is the most important and the one takeaway you should always keep in your mind; location, location, location! Whether you’re opening a restaurant or any other type of business, the location could make or break your business. In case of restaurants, make sure that you set your restaurant in a visible location with easy access, and a spacious parking space. If your customers can’t find a place to park, you might end up losing them for a competitor.
Beginnings are alway hard, but once you pass the initial phases of opening a new restaurant, and build a loyal base of consumers the rest would follow. Remember that 80/20 rule, that states that 80% of the sales are driven from 20% of the customers. This could apply more or less to the restaurant world, but the sure thing is that the 20% of your loyal customers could bring more customers with word of mouth and social media! So make sure that you offer them a whole experience from start to finish, to become a food destination and a success story.
