The restaurant sector in the US has seen tremendous growth in the last few decades. In fact, it has more than doubled in size and revenue since 2000, reaching an all-time high of $800 billion back in 2017. Moreover, the latest reports show that the restaurant sector is offering strong post-pandemic recovery.
While there’s no denying that starting your restaurant business right now is a lucrative opportunity, there are hard lessons to be learned in every new business. Each industry presents its unique legal considerations and complications.
When we’re talking about the food industry, that’s a whole another league, given the dense forest of information (as well as misinformation). Moreover, there’s a higher risk of legal consequences, and the volatility of the supply chain is another aspect that can be affected by a multitude of factors.
Why Does the Restaurant Industry Have Barriers to Entry?
Let’s say that instead of starting a restaurant, your passion is to sell handmade jewelry. In that case, the barrier to entry is pretty low because your product won’t make anyone sick.
However, in the restaurant industry, safety is always a huge concern. National and State government organizations are closely regulating and monitoring the food industry to ensure public safety. However, the onus is always on the producers and the merchants to stick to rules and be obsessive about quality.
If all of that isn’t daunting enough, running a restaurant also requires you to balance the inventory to avoid spoilage and waste delicately. Inventory system for restaurants is a popular idea already, and restaurants that are not paying enough attention to it will struggle.
Losses due to inventory mismanagement can prove very costly and even fatal for new businesses. All this discussion isn’t to discourage you from starting your own restaurant business but rather to warn you of the perils.
However, just as there are risks in the restaurant business, the potential upsides are numerous as well. In fact, for entrepreneurs who are passionate and informed about their business idea, thy sky’s the limit.
Moreover, the pandemic has further led to an increase in food entrepreneurs, which can only be a good thing.
Restaurateurs Need These (Not So) Secret Ingredients For Success
Well, starting a business, any business, needs a step-by-step guide. However, the need to have such a plan is even more important if you’re starting a restaurant. Why? Because there’s simply too much to cover! From setting up the kitchen, deciding your menu to curating the décor and training the staff, it’s important to get everything absolutely on the spot.
It’s also important to note that every state differs in terms of food laws and licensing requirements. Moreover, some industries such as alcohol and dairy have their own set of additional rules.
It’s important only to take this information as a general guide and ensure you get the specific information from relevant authorities specific to your business and state. With all that out of the way, let’s dive in and take a look at the secret ingredients required for a successful restaurant business!
1. Finding Your Niche
There’s no shortage of food entrepreneurs shaking up the industry, but finding your niche is important. In most cases, food business ideas are born out of hobbies or passions.
People who love to bake will be more inclined to open a bakery. Some want to share recipes passed down to them from their parents and grandparents with the world. Making your passion or hobby into a food business is a great place to start because you already have some, if not much, experience testing and honing the recipes.
However, it’s not enough to just have an idea. You also need to conduct market research to assess its viability. Is there even a market for the product you’re trying to sell? If it’s a saturated market, how can you make your product stand out? Is there an untapped sub-audience or niche that you can focus on?
Answering these questions will help you refine your idea into a potentially profitable one. You’ll also have to consider if your dishes can be freshly made. Regarding the ingredients: are there any legalities you need to consider? Fragility issues or shelf-life problems? These are all important considerations before you choose which dishes to offer on the menu.
Of course, it’s not a given that you already have a restaurant idea. In that case, you can look into food trends. Some of the most popular food trends in 2021 are mental health cooking, “flexitarian” diets, carb alternatives, elevated desserts, fusion cuisine, and much more.
Make sure your decisions are backed by research. You can start by looking at search volume and Google Trends and checking out the competition.
Keep in mind that not all competition is bad. The right type of competition will bring awareness to the product you’re trying to sell and help improve the entire category. Technology is reshaping the food industry in many ways, and healthy competition is one of those ways.
2. Sourcing the Materials
When it comes to sourcing your ingredients, it’s important to do your homework. It’s important to begin by tracing the supply chain so that your packaging claims match with what’s inside and you can work with trustworthy companies.
You can check out the FDA food ingredient and packaging guide, including information about allergen and food additives. The Food Processing Magazine also offers an ingredient supplier guide for food businesses in the US.
If you’re planning on offering organic products, you’ll need to ensure that your raw ingredient supplier also has the proper certification before making these claims for your dishes.
Developing a relationship with your supplier is crucial to improving trust and making them feel like they have a vested interest in your business. Learn more about the local partnerships that every food business should make.
Moreover, it’s also important to see your suppliers as your partners as they can sometimes make suggestions based on something new in the market. The quality of your ingredients will be crucial to the quality and the taste of your restaurant’s offerings which is why sourcing is vital for a restaurant’s success.
3. Location, Location, Location
We cannot stress this enough, but your location will be a crucially decisive factor regarding the success or failure of your restaurant. You may already be familiar that restaurants have a high rate of failure.
60% of new restaurants close within the year and 80% shutter within their first five years. Why is that? You may be wondering. The number one reason for new restaurants is location. Restaurant owners who open restaurants in locations where they have no business being will, of course, suffer.
Your restaurant idea may be amazing, but if your location isn’t suitable, you will struggle to find your customers. When it comes to location selection, you should look for one which would be easily accessible for your target audience.
4. Getting the Marketing Right
A successful restaurant is not just about generating profits, but it’s about becoming a benchmark for your target audience. In other words, you have to get the marketing right to create brand value for your restaurant.
It’s important to tell a story and help your customers relate to it. Your branding, labeling, and packaging should be on-brand with the product you’re trying to sell.
Creating the Brand Value
Many restaurant owners jump right into the marketing aspects without first paying attention to brand value creation. Brand value creation is all about creating your restaurant’s unique identity. It’s about focusing on what sets your restaurant apart from others.
The most basic elements of your restaurant’s brand are the name and logo, but a lot more goes into it, such as packaging, labeling, etc.
Creating the Marketing Strategy
Once you establish your restaurant’s brand, you can now focus on distributing it among your target audience. Keep in mind that regardless of how good your plan is or how delicious your food is, or how calculated you are with your finances, or how impeccable your service is, all of that is in vain if your target audience doesn’t know about your restaurant.
From online marketing to offline marketing, you need to utilize numerous marketing tactics to get the word out. This can include running promotions, collaborating with other businesses or influencers, attending festivals, spending on advertisements, etc.
5. Online Ordering Platform
Many experts have predicted that the restaurant industry needs to continue offering online ordering convenience to their customers post-pandemic. Even if dine-in is feasible, takeaway and delivery are going to be the dominant form, and your restaurant needs online ordering to be successful.
When it comes to facilitating online orders, it’s important to have an efficient online ordering system. MenuCRM offers a website platform that powers digital ordering and automation for online delivery. The system is an affordable entry point without any payment processing fees.
MenuCRM makes customer ordering smooth and simple; offering added features such as loyalty rewards, custom pricing, and a Menu that can be managed and edited simply.
More than 800 restaurants and businesses are already using MenuCRM, so book a quick demo now to see how it can benefit your online food business. Get in touch today for more information.