What Should Aspiring Restaurant Owners Know About Running a Business?
You might be surprised to learn that there were almost 333 million small and medium-sized businesses (SMBs) worldwide in 2021. Although owning a company means you can be your own boss, that doesn’t make it any less intimidating.
Entrepreneurs often pursue business opportunities based on their interests or passions. For example, a former bodybuilder might open a local fitness center, or a talented artist might lease studio space to sell paintings. The old cliché, “if you do what you love, you never work a day in your life,” certainly rings true for some people.
If you love food or consider yourself a foodie, then opening your own restaurant sounds like a dream. However, you might also question your ability to run an establishment, especially if you’re a young or inexperienced entrepreneur. Here’s what it takes to open an eatery and what considerations you’ll have to make.
Understanding the Restaurant Industry
Launching a new restaurant is one of the more common routes entrepreneurs take during their professional careers. Around 14.5 million employees in the American workforce are restaurant workers, according to the National Restaurant Association. This industry is highly competitive, so making your place stand out from the crowd is important.
There’s high demand for high-quality restaurants, but novice restaurateurs will face barriers to entry when opening a new establishment. However, there’s no shame in asking for assistance, which is why some people hire a restaurant consultant to help them oversee the process.
Like any business, owning a restaurant comes with its pros and cons. Finding dedicated, reliable employees to wait tables might be hard, but you benefit from setting your own weekly schedule. You’ll have to deal with unsatisfied customers, but you’ll still see positive reviews of your business on social media sites.
It’s also crucial to keep up with current industry events and the obstacles new restaurants are running into. Supply chain challenges and labor shortages due to the COVID-19 pandemic are two issues impacting the restaurant industry. While these problems are out of your control, they’re the things you should be aware of before buying space for a new business.
7 Factors to Consider Before Opening and Running a Restaurant
You probably have several questions about opening a restaurant and what things you need to cross off your checklist. Here are some essential elements you’ll need to remember.
1. Name, Cuisine and Location
These three elements seem obvious, but your restaurant’s name, location and cuisine will play a role in how successful it will be. If your establishment is in a remote location, you’ll have little to no foot traffic. If your town has 10 Italian restaurants, offering a different type of cuisine might be wise.
It’s also important to decide if you want to build a restaurant from the ground up or lease space in your community. Either way, you’ll have to make these decisions early in the development process.
2. Menu and Ingredients
Your menu and ingredients are also important to your restaurant’s success. As the owner, you can decide what’s on the menu, what ingredients chefs use, where you buy your ingredients and what specials you want to offer. You should purchase fresh, high-quality ingredients for your menu.
Now is also a good time to see what your top competitors offer and how much they charge customers. Your menu should have enough options for all types of people and their unique tastes. It’s also important to consider dietary restrictions you might need to accommodate.
One of the most important elements of launching a business is having enough money to make it happen. Your restaurant is less likely to succeed without sufficient capital.
Aside from having enough money, you or an employee should be able to manage the restaurant’s finances. For example, you might need to take out a loan before finding the right space. Several years ago, 52% of commercial real estate agents said their clients failed to secure financing for a property. Be sure to have a solid financial plan early on.
4. Hours and Staff
Another thing you’ll need to figure out is the hours of operation for your restaurant and how many employees you need. Unfortunately, restaurant owners struggle to find workers, and the industry is too familiar with high turnover rates.
You’ll need to hire people for various roles, including hosts, servers, cooks and dishwashers, to help run your restaurant. Look at similar establishments to determine how many employees you’ll need. See how many employees your competitors have and hire accordingly.
Marketing is an essential part of any business. You can create social media accounts, buy billboard space or purchase an ad in the local paper.
There’s no shortage of marketing strategies to choose from. Still, you might have to experiment with a couple of tactics before finding the one that works. Ensure you keep marketing a priority on your to-do list — spreading the word about your new restaurant will help attract new customers.
6. License and Permits
You’ll need to apply for the right licenses and permits before operating. Depending on your location, your local government might have certain restaurant requirements.
Contact township officials to determine what licenses and permits you need to operate your business. It’s also important to meet federal requirements before a soft opening.
You’ll have to spend quite a bit to purchase all the required equipment for your restaurant. Aside from necessary kitchen equipment, you’ll also need to buy tables, chairs, barstools or other furniture for your guests.
Do you have enough utensils? Which napkins will you need? Will you use tablecloths? Is the entrance accessible? All these questions should be answered before launching your restaurant.
Owning and Operating Your Restaurant
You’re probably excited about owning your own restaurant. Still, it’s important to consider these factors and not let your feelings get the best of you. Developing a new concept and preparing for the grand opening will take time, money and effort. If you’re passionate about food and serving guests, it’ll be worth it.