Are you planning on starting your own restaurant? That’s a brilliant idea! The US restaurant industry has been seeing healthy growth in the past few decades. This sector has seen its sales more than doubled since 2000, reaching an all-time high of $800 billion back in 2017.
However, at the same time, it’s also important to mention that restaurants have a high failure rate as almost 60% of new restaurants close within a year while up to 80% shutdown within the first five years.
While these percentages can seem intimidating but data shows that the number one reason for failure is location. Most failed restaurant owners lack the self-awareness that there’s no business opening a restaurant in that location.
Some other reasons include low startup capital, poor staffing, and inconsistent food. However, not everyone is destined to fail, despite the challenges that the restaurant industry throws up.
Restaurant Industry Offers A Unique Set of Challenges
It’s no secret that the restaurant industry is tough on business owners. From long hours to slim profit margins and relatively low chances of success, restaurants have to contend with a lot. On top of that, the COVID pandemic led to the permanent closure of over 10% of restaurants in the US.
On the brighter side, it opened up opportunities for others as we witnessed an exponential increase in online delivery, offering new beginnings for many food entrepreneurs in the new normal. This is why we stress the importance of restaurants investing in an online ordering system, whether you’re in Texas or Kansas (more on that later).
Nevertheless, experts suggest that this is the best time for entrepreneurs to turn their restaurant ideas into reality. From cheap rent to digital traffic, there are many upsides to starting your restaurant right now. If you’re reading this, you’re one of the few brave ones who are willing to accept the challenge.
Restaurant Industry is A Lucrative Sector, Despite its Challenges
Every industry has its own set of challenges, and we feel as if the restaurant industry gets some unearned infamy. There’s no shortage of examples of successful restaurants. If you do it right, there’s no reason for you to expect failure.
However, while it’s important to be optimistic, it’s also quintessential that you remain aware that a restaurant startup will require your blood, sweat, and tears. So, to help you start your restaurant, we’ve prepared a checklist to ensure you don’t miss out on anything.
1. Finalizing Your Concept
When it comes to opening your restaurant, there are several key factors. However, one of the most essential ones is to finalize the concept. You should have a solid vision for your restaurant.
Having an innovative idea will make your restaurant a more attractive destination for your potential customers. However, your restaurant concept shouldn’t be decided on a whim. Instead, proper market research should back it.
You can also consider hiring a market research firm to perform this task for you. Making informed decisions is crucial to ensuring the success of your restaurant. Market research will help you assess whether your concept is viable or not.
2. Create an Actionable Business Plan
Before selecting a location for your new restaurant, it’s important to have an actionable business plan. With a proper plan in place, you can easily go ahead with your restaurant.
For instance, your business plan can help you get investors on board, which is undoubtedly crucial for your business’s success. It can also help you budget appropriately, get a professional chef on board, create an attractive menu, and initiate the hiring process for restaurant staff.
In other words, your business plan is a crucial first step towards the realization of your dream. Your business plan will require some vital prerequisites such as business overview, SWOT analysis, industry analysis, financial analysis, operations, and marketing plan, etc.
Your business plan will also need to consider whether you’ll be a dine-in-only operation, or you’ll also offer takeaway and delivery services. In the latter case, you’ll also need to invest in the best POS and online ordering system for your restaurant.
Rest assured that with all the information present in your business plan, you can hardly go wrong.
3. Select the Location
As we discussed before, the biggest reason most restaurants fail is that they don’t pay enough attention to their location selection. It’s easy to imagine why selecting the right location is so crucial. A restaurant can have a brilliant concept, but if the location is inferior, it’ll hardly survive.
Just as market research and due diligence are important in other aspects of opening a restaurant, they’re also important in location selection. It’s important to select the location where you can easily find your target audience.
For instance, if you plan to start a full-service fine dining restaurant, you should open it in a posh locality, instead of a university town, for example. Okay, maybe not the best example, but you get the idea.
Finding the perfect location is not just about cheap rent or a crowded area. It’s about finding a place where your potential customers are accessible.
4. Sort Your Technology Needs
Restaurants these days can’t function without technology. Whether it’s online marketing or point of sale systems, restaurants need to embrace innovative technologies to thrive. Before you open your restaurant, you need to consider everything your restaurant will need, tech-wise.
For instance, you’ll need top POS systems for your restaurant and a restaurant kitchen order-taking system. You’ll also need an inventory system as well as CRM software for your new place. If all of this sounds overwhelming, you can simply invest in MenuCRM, which offers numerous benefits, all combined in one single platform.
Even if you’re not interested in online ordering, you should consider investing in it for several reasons. Firstly, the ever-changing pandemic situation means that not having an alternative stream of revenue through online orders can hurt your business significantly.
Moreover, several studies have suggested that food delivery will thrive even after COVID restrictions are over. Therefore, you should get an online ordering system for your restaurant and not deprive your business of a lucrative stream of revenue.
5. Take Care of Your Finances
Your finances are crucial to your new restaurant, and while entrepreneurs spend a lot of time and energy acquiring funds, they don’t pay nearly enough attention to running capital. The average time for new restaurants to break even is 2 years.
Therefore, you should pay attention to both startup capital and working capital when you’re starting a restaurant. Getting investors on board is imperative, and you should be prepared to go some time without a profit while keeping the operation running.
6. Create a Smart Menu
Your menu is another crucial element of your restaurant that deserves your full attention. Moreover, the goal shouldn’t be just to create a menu and use it for years. Instead, you should look to maintain a dynamic menu, especially if you plan on having regular customers.
With MenuCRM, you can easily manage and edit a dynamic menu that can handle custom pricing. For instance, whether you need to make last-minute pricing updates or offer membership-based pricing, MenuCRM makes it as easy as 1,2,3.
7. Hire Trained Staff
Having professionally trained staff is crucial to providing excellent customer service. Moreover, businesses, specifically restaurants, need to focus on offering more than just their products. Instead, the goal should be to provide a flawless and memorable experience for the visitors.
Hiring trained staff and properly briefing them on what the restaurant is trying to deliver will be crucial to maintaining the right atmosphere at your restaurant. Moreover, having good staff that adds to the friendly and inviting vibe can lead to more returning customers.
8. Get the Right Equipment
The kitchen equipment should be on the top end of your priority list, and it should cover everything you’re offering on the menu. This step should come after you’ve decided what cuisine, and more specifically, what menu you’ll be offering.
Once your menu is ready, you can make a list of all the equipment that you’ll need to run a smooth and functional kitchen. Without the right equipment, even the best chefs fail. Therefore, you need to make sure you get all the required equipment.
9. Use Online Channels for Marketing
As an entrepreneur in the digital age, you simply cannot ignore the potential of online marketing and the pull you can generate through social media. Some business owners may not pay attention to it, thinking that their business is new, but smart entrepreneurs will leverage the newness to attract crowds.
With MenuCRM, you also get SEO and Social Media features to help your customers find your restaurant online. The powerful HTML-based technology and analytics make it easy to find your audience and target them effectively.
You can also use personalized newsletters, text messages, and personalized emails with MenuCRM’s Customer-Connect features to help build a following for your restaurant.
MenuCRM offers a website platform that powers digital ordering and automation for online delivery. MenuCRM makes customer ordering smooth and simple and offers numerous other features, some of which we’ve already discussed.
Book a quick demo now to see how it can benefit your online food business. Get in touch today for more information.