Opening a restaurant is a dream for many, but very few realize the amount of work that goes into doing it, successfully. You may have a great concept or even experience working in an eatery. However, if you don’t know much about the business and management side, you may find you’re in over your head.
Deciding What Kind of Restaurant to Open
Do you want to open a full-service, fine dining establishment, an intimate bistro, or a fast food location? These considerations will depend on the amount of experience you have in the industry unless you plan to rely hiring seasoned restaurant managers. The type of restaurant will also determine your location, what kind of equipment you’ll need, and how much financing you’ll have to get.
Financing Your Restaurant
The food service industry doesn’t have a high profit margin in relation to the cost of running the business, and there’s a high rate of failure if you don’t have a detailed business and marketing plan. That’s why it’s often difficult to get a startup loan for this type of business. Financing options are usually limited to partnerships, finding financial backers, or buying a franchise. Each option has pros and cons.
– Partnerships work well if you can find someone who has abilities and resources you lack. You should make sure that you’re going into business with someone you can trust, and that they share your goals and vision for your restaurant.
– Finding financial backers can be difficult if you’re an unknown entity without a plan or much industry experience. Investors want to know that they’re betting on an enterprise with a good chance of success.
– Franchise opportunities range from family dining to fast food joints. You’ll have the benefit of capitalizing on a known brand with a set way of doing business and a proven track record. You also have support from the parent company while still remaining an independent business owner. This is a good option for people with good credit but not many resources and limited industry experience.
Whichever financing option you go with, make sure that all of the legal details are ironed out in advance, and that all responsibilities are understood up front. For example, franchises have strict guidelines to follow, often right down to using certain vendors and specifications regarding portion size and appearance. Not adhering to these can cause you to lose you franchising license.
If you’re entering into a partnership, how will responsibilities and profits be divided? In the case of investors, will they give you free reign to make business decisions or are they going to want a say in how everything is done?
What Business Equipment Will You Need?
Aside from professional-grade kitchen equipment and any specialty items like pizza ovens, you’re going to need a system to track inventory, calculate payroll, and handle all of the business aspects of customer service. Technology and changes in POS systems allow restaurant owners to manage everything through one simple tracking and reporting system.
Customers or servers can place orders, have them appear in the kitchen, and calculate tabs, taxes, and tips from one interface. The same system can generate a bill, update inventory in real time, and compile sales information by employee number. This makes it easier for you, your kitchen manager, and accountant to control costs, analyze trends, and have financial data ready for tax time.
Running a successful restaurant requires a combination of great location, quality food, and business savvy. It’s not for dilettantes or the faint of heart, but the rewards can exceed your expectations.