Top 6 Tips for Starting a Restaurant Business

Guest post by our friend, Alice Jackson, from Designhill.

Planning to start a restaurant? Take a dig at the below statistics:

  • As per National Restaurant Association, total restaurant industry sales have grown 5% in the past year, with $746 billion spent in 2015 compared to $783 billion in 2016.

  • Again, 90% of Americans prefer going to restaurants as compared to 66% who likes going grocery shopping.

  • 56% of adults say they would spend money on an experience like dining out at a restaurant as compared to doing grocery shopping or purchasing items from stores.

Having a restaurant can be one of the most exciting and rewarding experiences of your life. However, starting a restaurant is a profitable but risky business venture. Lots of research, planning, money and hard work goes into making a successful restaurant. If you have made up your mind to start a restaurant, then here are top 6 tips that can help you in the startup process.


Image Source: OnDeck

1. Look For A Killer Location

Choosing a good location is one of the most important factors for a successful restaurant. While selecting a restaurant location, you need to consider many factors such as:

Accessibility - No matter how exclusive your restaurant is, don't expect your potential customers to travel far to locate you.

Customer Parking Facility - The chosen site should have ample parking space as well as easy access for customers.

Proximity to other businesses - Considering neighbouring businesses is also of great importance as it can work for or against you.  

Terms of the lease - Be careful about the leasing terms, sometimes a good site may come packed with unacceptable leasing terms.

Future Development - Check in advance with local authorities or planning board to know if there is anything that can affect your business in future, such as road construction or additional buildings.

So, if you want your restaurant to be successful, get the location right.   

2. Secure Funding

You need to find enough financing to start a new restaurant business as we know that a restaurant business is capital intensive. Though you need to plan for profit, don't count on it for the initial few months of opening. Well, there is no fixed amount, how much capital you need depends on the type of business, marketing, the facility, kind of equipment you use etc.

Image Source: HERB

Here are some suggestions that will be of great help in raising funds.  

  • Your own Assets – Take a good look at the assets including savings, investments, equity in real estate, and other valuable belongings. Sometimes you have more than you realise.

  • Friends & Family - You can get help from your friends and family, but make sure you present yourself professionally and put everything in writing to avoid any kind of risk later.

  • Partner up - You may find someone as a business partner who has financial resources and is interested in working side by side with you in business. Or someone who is only interested in doing investment but does not want to be involved in the running of the restaurant.

  • Govt. Programs - You can always take advantage of local, state and federal programs that are specially designed to support startups and small businesses.  

  • Bank Loans - Taking a bank loan is the most common form of funding for startups though it comes with its own challenges. But once formalities are done, you can even get a hefty amount.

With all these resources, you will be able to gather enough credit to get your restaurant up and running.

3.  Plan On A Serving Style

You need to pick one service style for your restaurant. Restaurants can be majorly divided into three main categories: upscale, midscale and quick service.

Quick Service - As the name implies these restaurants serve quick meals at a relatively low price. They are also referred as fast food joints and usually serve fries, hamburgers, pizzas, chicken and hotdogs. They also offer drive-through windows for takeaway.

Midscale - Again as the name implies they occupy the middle ground between upscale and quick service. They offer full service and good value menus. Examples of these restaurants are buffets and salad bars.

Upscale - Upscale restaurants pride themselves on offering an elaborate food menu with high-quality service. Fancy fine-dining restaurants fall into this category as they offer excellent food at the highest price.

4. Create A Menu

Selecting a food concept - A food concept is the other important thing to consider when starting a restaurant. Deciding a food concept will help you structure and organize other aspects of your restaurant. Some potential food concepts include steak-house, family style, casual dining, coffee house, bakery etc.

Craft a menu - Once you have selected a food concept, the next step is to craft your food menu. If you are not sure about the prices and exact recipes for the chosen food, don't worry about that, just try to get a sense of your menu and how it reflects your food concept.

When planning a menu, consider what potential competitors in the region are offering and at what price. Also, consider if there are any requirements for special equipment for the preparation of menu items.

Image Source: Mommysavers

5. Gather Supplies

Reliable Food Service Vendors - You need to hunt for reliable food service vendors who can provide you quality products at a competitive price and also ensure consistent and prompt delivery.

Get in touch with local producers - You can also approach local food manufacturers for buying food in bulk. But before signing any agreement with food suppliers, don't only look for a cheap deal; rather, keep a check on food quality and service provided as well.

Hiring Staff - Professional and well-trained staff are essential for the success of any restaurant. Before you begin hiring, figure out how many people you need to hire and take out time to thoroughly interview applicants. Be clear about job descriptions for each position and what will be the pay scale. Once you hire, don't forget to invest in training them.

6. Marketing & Promotions

Every business needs a marketing plan and your restaurant is no exception. Before you start making an elaborate marketing plan, keep this thing in mind that word of mouth is still the most effective method of advertising. As per a survey by National Restaurant Association, four out of five customers are going to choose a table-service  restaurant on the basis of a recommendation from a friend or family member.

Image Source: Morgan McKinley

Focus on your Target Market - It is not possible to appeal to 100% of the market so it is more effective to focus on your target market.

Plan a grand opening - A grand opening is the best time to create buzz about your restaurant in the press and among people. Though you need to loosen up your purse string, it can give you a good opening.

Email Marketing - Email marketing is a great medium to give away exciting offers and deals to your target audience. You can personalize your e-mails according to your target audience or use customer reviews to make your e-mails more trustworthy.  

Advertising - You can take advantage of traditional advertising by getting paid coverage in local newspapers, magazines, radio stations.

Social Media - Social media is the perfect platform to create hype about your upcoming restaurant. Devise a social media strategy to promote your restaurant by offering some kind of incentives.

For Example: Receive 10% off your next bill with a Zomato review OR Complimentary drink or dessert for checking in to Foursquare while at the restaurant.

Create a catchy Logo - Lastly, don't forget to create an eye-catching logo for your restaurant. Keep a restaurant logo that pleases the eye of potential customers and is also associated with excellent food and top-notch service. Don't make the mistake of going to a local designer to save a few bucks, get it designed by an expert logo designer for best results.

Some other promotion methods include discount coupons, gift certificates and sponsorship at local events.

Wrapping it up: Once your restaurant is up and running, focus on providing an amazing dining experience to get more business and retain new customers. Once people enter your restaurant, take them on a journey that leaves them with good experiences and memories.

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