The Ultimate Guide for Starting a Successful Restaurant

Conservative estimates from industry experts indicate that up to nine out of every 10 new restaurants fail during their first year. Read on to learn how to make sure that your dream restaurant stays operational and profitable.

Market Research
The restaurant industry is extremely competitive and businesses open and close their doors every day. Thoroughly research and understand the market before investing any money. Incorporate this business intelligence into your business plan. In some areas, there will be an established network of popular restaurants that indirectly keep newcomers out. Opening a business in this area will require unique services and products that meet the needs of niche customer markets. Consider consulting with industry experts and using real-time data to understand local trends, demographics and business conditions.

Understand Restaurant Margins and Cash Flows
Financials are important to every new business, but they are the lifeblood of all restaurants. This is because restaurants operate on a very narrow profit margin. Product, staffing and equipment costs are high and complex. Therefore, precisely analyzing food markups and daily expenses will enable you to maintain tight control of cash flows and ensure that there is sufficient financial liquidity to keep the business operating. It will be difficult to estimate sales and revenue in the beginning, but after a few months restaurant owners will be able to make accurate estimations of weekly cash flows and net profits.

Become an HR Expert
Staffing a restaurant is an ongoing headache because turnover rates are high and many employees work multiple jobs. Although it is almost impossible to offer high salaries to hourly employees, be sure to offer incentivizing and meaningful benefits. For example, some restaurant owners allow employees to take excess food home or purchase food products at manufacturing cost. Allowing employees to eat free food together is one of the best ways to increase rapport, team work and employee satisfaction. Ensure that the front-of-house staff is knowledgeable about the food products. Employ an experienced chef with an excellent reputation. Most importantly, take classes to learn about proper human resource practices and techniques.

Go Local
While it isn’t necessary to only use organic or locally-sourced ingredients, be sure to use as much locally fresh food as possible. Supporting local businesses and reducing the use of processed, wholesale frozen foods are excellent advertising points. For starters, work with the chef to offer limited amounts of specials and seasonal menu items. Most food or restaurant experts who are part of the organic or natural food movement will be more than happy to help with advice and support. Solicit customers to find out about potential local foods that they would like to see on the menu.

As a final note, social media platforms are becoming the best ways to promote restaurants through offering exclusive content, discounts and promotions. Social media is also a great advertising tool to inform customers about upcoming events and new menu items.


Evan Shaner