Starting a restaurant and running it is a challenge. Having a great menu or heavily advertising may get you started, but it may not keep the doors open long-term. Achieving success at the very start is even harder, and if you copy the standard business model, you won’t get there.
Here are the key ingredients to startup success in the restaurant industry.
Get Your Legal House in Order
The first thing you should do is hire a qualified CPA to have your taxes done right. You should know before you open the doors what health rules you need to meet and make sure you ask what would bring unwanted scrutiny from the health department.
It Isn’t What You Make but What You Keep
There’s an old maxim that it isn’t what you make but what you keep that matters. It doesn’t matter if your tables are full if you don’t earn a profit. The fact that you’re running double time to meet the demand doesn’t keep you in business if you’re spending a dollar more per plate than you’ve paid for it.
The best way to avoid this mistake is to keep track of costs – and not just at the aggregate level. How much does the food and labor for a given meal cost? How much are you charging for the meal? Your ticket can’t just cover the cost of food and labor. Factor in overhead expenses like marketing, rent and insurance into every meal in order to truly clear a profit. Create a formula for setting prices that include both the costs of the ingredients and labor and overhead costs so that every dish earns a profit.
Have a Marketing Plan
Don’t rely on word of mouth marketing to bring in new customers. Use a mix of ads, coupons, social media mentions, and promotions. This is critical for non-chain restaurants. You’ll also need a marketing plan to create a brand for your restaurant.
Determine your ideal customer base and market to them. Don’t try to be everything to everyone. Instead, have a simple but delicious menu. Having fewer choices on the menu makes it easier to manage the shopping list and the kitchen while maximizing quality. If you only have a few items on the menu, you’ll go through ingredients almost as soon as they arrive, guaranteeing that the meals are as fresh as possible.
Consider the Layout
Many restaurants run on a very tight margin, necessitating high volume to stay in business. You don’t have to run things cafeteria style, but the restaurant needs to be large enough to generate a profit given its overhead. Aim for an expansive but elegant layout. Select the right furniture. Your tables need to be attractive, right down to the restaurant table bases.
Pay Attention to Your Numbers
There are bills you have to pay before you open the doors, and they’ll just keep on coming. Maintain proper cash flow to stay open. If necessary, research your options for a short-term loan. Negotiate with creditors and suppliers. Pay attention to periodic bills like your quarterly taxes and bills so they aren’t lost in the shuffle.
The key ingredients to fast success in the restaurant industry are not doing what everyone else is doing. Follow these tips, and you’ll generate a steady stream of customers and cash flow.