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10 Things to Know Before Starting a Restaurant

Marlon has been a long time blog writer. He has contributed content to many sites and is also active in SEO and SMM work.

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Keens Steakhouse

Keens Steakhouse

The Secret to Running a Successful Restaurant Business

Having the desire to become a restaurant manager or a restaurateur is almost just like running for office as a politician, you have to be a people person. What I mean is that you have to have good PR (public relations) skills as well as customer service skills if you want to succeed in this business. You will be doing more than just cooking (assuming you’re both the owner and the chef) or managing your employees, because you’ll also be entertaining your guests most of the time. This plus all the other responsibilities will demand a lot from you as a restaurant business owner.

Why it's Important to Know what you're Getting into Before Starting a Restaurant Business

Whether you’re already an experienced business man/woman or you’re just starting out, you’ll need to arm yourself with a whole lot of good and useful information about the food industry. That’s because passion alone to drive your business to success is not enough and you need to be able to see where you’re going, otherwise you’ll fail. You have to ask the right questions and think about the probabilities and possibilities in your business and get ahead of the curve by anticipating problems and clamping down on those problems with the best solutions before they even start to happen.

Below you will find 10 things to understand before you start your restaurant business:

1.) Realistically speaking, owning a restaurant is not a business, but rather a full-time job – The prospect of owning a restaurant maybe alluring as you would assume it’s a profitable business, the truth; however, can be quite unexpected. One restaurant owner said that before they open at around 5:30pm they go to the market to buy fresh vegetables, herbs and spices 3 hours earlier! Preparing the meals is also a hassle, because you have to serve them while they’re hot, then when you close at 11pm, you’ll have to clean up and list down the things you need to buy and do for the next day. He said he rarely thinks about his income or profit as most of his attention is given to managing the restaurant.

Even though your restaurant may be open only 5 – 6 hours a day, the time you will spend making the necessary preparations will cost you a surplus of 3 – 4 hours on a daily basis. It’s actually more than a fulltime job, so you’ll have to ask yourself, “am I prepared to sacrifice 8 – 10 hours of my time each day just to see through this business?” But if you think you’ve got what it takes to be a restaurateur, then by all means, go for it!

2.) Guests may not be as plentiful as you'd expected – It’s always wrong to assume that once you’ve got your restaurant setup, people will just flock to it like migratory birds. In reality the chances are really 50-50 and it can go both ways that is why you need to do a feasibility study and choose the best location to establish your restaurant before you decide to funnel cash into contractors to have your restaurant building erected. Assumptions in business will cost you a fortune, so be very careful with your expectations. It’s better to be realistic about it and make calculated guesses, so when the time comes you can rely on the outcome of your estimates. You'll be able to see clearly that they are more or less closer to what you’ve predicted. You can then make adjustments with your calculations later in case it’s over or under the number you’ve computed.

3.) As much as possible, avoid hiring family and friends – Your family members and friends might take offense when you switch roles from being a friend or a brother to becoming the strict restaurant manager. Or they might think that it’s okay to be less than industrious and hardworking, because they know you personally and that you’re mostly a kind and gentle person. If you feel that you really have to hire a family member or a friend, because you want to help them out, then sit down and talk to them first. Make sure that they understand clearly that in the restaurant things are different and your personal relationship will have to be suspended temporarily in order to give way to certain priorities. This needs to be done so you won’t suffer any misunderstandings later on.

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4.) Have a clear business plan – A business plan is like the blueprint of a building, it teaches you precisely how to establish and run your business by achieving goals and milestones. Without proper research, you might miss things like licensing, health codes and tax laws. So it's absolutely important to have a business plan as it is the most important thing you'll need to start your restaurant business. You’ll also need to plan out on how you will pay your bank or creditor from your income. All these things will have to be considered in your business plan.

5.) Secure your finances – This is where the hurdles occur and if you’re not prepared to finance your restaurant business, then you will have to go to banks, financial institutions and investors to borrow money. For small business owners they usually use their own money to fund the restaurant while others, who have a chef to brag about, go for broke. Starting a restaurant business should not be a problem as long as you make sure that you’ve secured the finances need to run it. Just remember though, in the first few months or years of your operation you may be required to prioritize payment to everybody else, except yourself. This means that you have to sacrifice not getting any paycheck for while in order to profit later.

6.) Study and gather information about your competitors – When you start a restaurant business, you have to anticipate that you will be directly competing with other restaurants near your location. There is a reason why your competitors have remained afloat in the food industry for a long time now, and it would be wise to learn from their experience. So do your homework and find out about your competitors, but you must never copy their style or food selection and come up with your own delicious menu. I always say that the best way to compete with other businesses in your industry is to be unique.

7.) Make sure that your menu is unique – If you’re a chef who is aspiring to put your seal on the food you cook, then you must already understand why the food selection in your menu has to be unique. More than that you must also improve on your cooking experiments time after time in order to surprise your fans. Famous chefs actually do gain a fan base and become famous like Gordon Ramsay, Marco Pierre White, Alain Ducasse, Heston Blumenthal and many others. However, if you’re not a chef and your concept is more on the contemporary side, then just make sure that you have a good kitchen staff. If you can afford to hire a chef also, then that would be great!

8.) Decide on which concept you will take – There are various restaurant types and concepts such as the fastfood restaurant, fast casual dining, fine dining, food trucks, pop up restaurant, cafeteria/staff canteen, inn/tavern, sandwich bar, restaurant buffet, pizzeria, trattoria, self-service restaurant, snack bar, café, bistro, osteria and steakhouse. It would be nice if you could add a unique twist to your restaurant concept just to up the ante a little bit and stand out from the crowd. For instance, if you’ve decided to run a steakhouse that also serves burgers, fries and a lot of other side dishes; then perhaps you can also include a live band or stand up comedy performances to entertain your guests while they enjoy their meals. Anything out of the ordinary could make your restaurant great.

9.) Your restaurant’s location is extremely important – The next thing to think about is the location where you will setup your restaurant. It has to be near or right in the middle of the bustling crowd. It’s simple biology – people who move around so much (those busy people to be precise) use up a lot of energy (calories) and over time they’ll need to recharge. Humans need food for sustenance and with your restaurant built on the right spot and at the perfect moment, people will go there to rest, eat and socialize. Who knows? Maybe when they’ve had their fill, they will even give you a good Yelp review afterwards. A good location will give you a better chance at bringing in customers which will help you profit.

10.) Assumptions are bad for business – Making assumptions is a negative quality for any business person, therefore you should replace it with educated or calculated guesses, because those have numbers that you can rely on. Even if there are errors in your calculations you can still see how far away it is from your presdictions, thus you will always have a margin where you’ll know that within that space between the two extremes of right and wrong is your chance at getting it right. Other things that you mustn’t assume is that being a business owner guarantees you lots of freedom and free time. It’s actually the opposite and you may have lesser day offs than your employees.

A Restaurant Business can be Good If you Know How to Manage It

Also your family and friends might praise you a lot for your cooking skills, but your guests might have a different opinion. You may get your ROI (return-on-investment) months or years later than expected and you might incur cost overruns in the interim and so on and so forth. It may be best to set your expectations low just to be sure, so that if things get shaky, you can quickly recover and come up with a contingency plan. Incidentally, if they will go as planned, then you can celebrate your success!

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