Opening a new restaurant is hard enough. Don’t make it harder on yourself. A lot of would-be restauranteurs fall before they ever get off the ground because they make mistake after mistake. Eventually, those mistakes bury them. If you’re just getting started, then here are a few mistakes you absolutely must avoid if you want to be successful.
Thinking You’ll Make Money Immediately
Most restaurants don’t make money immediately. It takes time to build up that goodwill between you and your customers. Most experienced restaurant owners know the restaurant business is tough. The odds are stacked against you. Even successful chain restaurants have problems turning a profit immediately.
It usually takes 2 to 3 months before you see a positive return. Sometimes, it can take much longer. Even if your sales are strong from day one, you’re constantly battling the usual costs: food, labour, and waste.
Until your new managers and employees become acclimated to the business, expect the whole thing to be a loss. This is why successful restaurant owners keep money in reserve.
Not having a good handle on your operating costs is one of the biggest reasons why restaurant owners fall. When you have no cash on hand to tide you over during lean months you’re at a serious risk of going out of business before you can turn a profit.
It’s common for first-timers to underestimate food cost. Depending on your business, you can expect to spend thousands upfront just to get started. Sometimes, restaurateurs underestimate building or renovation costs. Soft costs like permit, liquor licenses, insurance, and pre-open payroll are also easy to underestimate. Unless you’ve successfully opened a restaurant by yourself before, consider hiring a professional or at least consulting with another restaurant owner who has been there.
In most cases, you’re going to want to take your existing budget and add 15% for contingency spending.
Lack of Systems For Your Operation
It doesn’t matter if you’re a great cook. Your employees need to know how to prepare the food. They also need to know about local and state health and safety regulations. For this, you’ll need documented systems and procedures for everything. You’ll need training manuals and protocols so employees know what to do in every situation.
Most restaurants serve a limited menu of items, and the actual running of the business involves a series of highly repetitive tasks. This repetition creates consistency. That consistency is what your customers expect and pay for.
It’s not just the food though. Every aspect of your restaurant business involves hundreds, if not thousands, of tasks that need to be coordinated.
If you’re running a franchise, you’ll start out with detailed recipes, checklists, and processes and procedures for everything from lettuce prep to cleaning restrooms and the kitchen. If you run your own non-franchised operation, you’re going to want to have something similar in place so there’s no question about what each employee’s responsibility is.
Not Having an Opening Day Strategy
Here’s a secret from the pros: don’t have your “grand opening” on opening day. Odds are you won’t be prepared for it. Your employees probably aren’t “up to speed” on how to prepare the food and take orders. There’s nothing worse than getting damned and not knowing how to handle all those customers. If you totally screw things up, your “grand opening” might just be your last day in business.
Focusing On What You Like Instead Of What The Customer Likes
Customers come into your restaurant because they have certain wants. They don’t care about how you like your food cooked. They want it prepared a certain way. That doesn’t mean you have to cater to everyone’s needs. However, you should understand your general market’s demands and try to meet them.
For example, if your business is in a “blue collar” neighborhood, don’t try serving them fine French cuisine. They won’t buy it.
Most restaurants fail. That’s a fact, but you don’t have to be a statistic. If you go into it with your eyes eyes open, willing to take the risk, then there’s a chance you might succeed. If you’re well-capitalized, have a good marketing strategy, and focus on the customer’s wants you’re way ahead of the pack.