This article is not meant to be encouraging, a pat on the back. What I am about to tell you is not a recipe for success, but trends that I have noticed. Not everyone is cut out for this type of work. There is a truly a special breed of person that is drawn to this industry. This is meant to give you a realistic view of what to expect if you want to open a restaurant or a food business in general. It’s not just a matter of hard work, although you will probably never work harder in your life. It’s not a matter of being smarter than everyone else, because a lot of very smart people have run their restaurants into the ground. I certainly don’t have all the answers even though I have been a part of some very successful restaurants (and a few not so successful ones, as well).
I have seen several approaches to opening a restaurant. The person that spends tens of thousands of dollars on market research determining the demographics, mean income, age, gender, marital status, etc. with little discernable difference to someone that bought a grill and a couple of lawn chairs and started selling his wares by the side of the road.
This is an industry that is wrought with low pay, long hours, low profit margin, generally bad working conditions, high rate of redundancy and need for consistency, highly regulated by the government, subject to seasonality, customer opinions, social media, high competition, and price sensitivity. Why on earth would anyone want to subject themselves to this type of environment? This is what is known as a “labor of love” and anyone that has spent time in the industry knows about the rush of adrenaline that you get during service, the camaraderie and friendships that are forged through the shared experience of a successful service.
So, If I haven’t scared you away and you still want to give it a whirl here is some advice:
Concept!
Get one and stick with it. This is your major point of differentiation. If you open as a pizza parlor and three weeks later you’re serving tacos you are going to confuse your customer. A confused customer is less likely to come back or provide a positive recommendation; after all if they’re confused what can they say except “I didn’t get it.” Make sure that your concept is consistent along all channels of marketing, for example if you are selling a $5 burger and fries you probably don’t need linen tablecloths and napkins, likewise if you are selling a $45 halibut plate with French ramps and muscat grape gastrique you’re probably not going to need a drive-through window. Make sure that your staff is clear with the concept, especially the table or counter staff as they are the customers’ first point of contact. They are the face of the restaurant.
Location
Are you a destination or are you heavily dependent on foot traffic? Would you like to be around other restaurants where you know people will be wandering around looking to see what strikes their fancy or would you prefer to be the only game around? These are considerations that only you can decide. Sure a lot of people will have opinions about where you should be. Your realtor will tell you one thing; your customers will tell you another. Sure I would love it if all of my favorite restaurants were located within a block of my front door, but realistically I don’t want to eat the same thing every day and even my most frequented restaurants I only go to once or twice a month. Location is also going to help determine the amount that you can charge for your product. If you are selling Hamburgers on Michigan Avenue you’re more likely to have to charge significantly more that if you were selling the same product in Logan Square or Humbolt Park. Location goes hand in hand with concept so that is a consideration when doing your initial business planning.
Financing
…And this is where things get sticky. Most restaurants and food companies are bootstrapped, meaning that the owner supplies all the capital needed to get the business off the ground. Banks tend to shy away from food service and products, especially start-ups. Angels and Venture Capitalists are generally only interested if you are doing multi-units and sales will at least double every year, and even then there is no guarantee. Why is it so hard to get money to start a restaurant? After all, everybody needs to eat. We live in a culture that is more suited to eating out and grabbing take out, than to have a meal at the kitchen table as a family unit. Well let me tell you, reason one, food is perishable. No one wants to lend money and try to repossess 18 cases of spoiled romaine lettuce. There is no secondary market for slightly used applesauce. So the financing chain goes like this: You will have to supply a significant portion of the startup capital yourself. This is what we call “skin in the game.” Any potential investor that you approach is going to want to know what you have invested in the venture before they consider putting any of their money into it. The next link in the chain is the three F’s: Friends, Family and any other Fool with money. They are your next most likely sources. These are the people that know you, would support you and believe in you. As far as getting credit from suppliers, most typically first orders are COD until credit can be established.
Marketing
Well you made it to the Grand Opening. All things fell into place and you are open for business. People are lined up outside your establishment and it seems like everything is going to be even better than expected. The newspapers are writing about you, people are blogging, reviewing you on Yelp, checking in on Foursquare. You got the buzz, baby! So why should you spend time and money on promotion when things are already running so smoothly? Very simply, people love the newest and latest and that’s you. But a month from now when something newer comes along and all of a sudden the crowds start to gravitate to the newest trend, you don’t want to be left trying to play catch up. It is important when you get that tsunami of publicity that you ride it and capitalize on it, support it, nurture it and realize that it won’t always be there for you. Figure out who your core, loyal customers are and what is the best way to connect with them. Then connect with them often. Use them as one of your marketing channels. They are most likely to refer their friends and colleagues to you and that tends to have a better hit rate than direct mailings, Television ads, radio ads, billboards, etc.
This article is not intended to give you a comprehensive view of what you need to know to open a restaurant but really to get you thinking about how to make it a successful venture. Remember that the average life of a restaurant is about 5 years at which time many restaurants have hit maturity and don’t get the draw the way they used to regardless of how much they spend on marketing. It is not uncommon to see a restaurant totally rebrand or close and open as something else.
Keeping this in mind, should you decide to enter into the industry, please heed this humble advice: No one can do everything themselves and the culinary community tends to be very tight knit. Do not be afraid to ask for help from your peers or CCV. Most restrauteurs are happy to share their experiences and there is a lot to be learned from other peoples’ successes and mistakes. This can be a very rewarding and also a very turbulent experience and I hope that I’ve given you an idea of what to expect.
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