It is imperative that prospective restaurant owners perform the necessary research before going into business. From identifying a prime location to establishing long-term financial objectives, a successful undertaking requires a comprehensive plan of action. Experienced entrepreneur Sam Mustafa outlines six factors to consider before opening a restaurant.
The restaurant industry is highly competitive, so it is vital that owners seek out a prime real estate. Selecting an aesthetically pleasing location is only the first step. Consider factors such as ease of accessibility, parking options, and nearby attractions, as all will play an essential role in the long-term success of your endeavor.
Many aspiring restaurateurs fail to objectively evaluate their competition and identify what sets them apart from the crowd. Your restaurant concept should reflect your target market and bring a creative edge to the industry. Ideally, your business should offer foods or experiences not available elsewhere. Take the time to analyze local trends and gather the necessary information before opening up for business.
It is essential that during the first several months of restaurant operation, owners have access to affordable and sufficient working capital. Restaurants often have an optimal cash flow due to the volume of transactions. However, if the money coming in does not cover both fixed and variable costs, restaurant owners may only have enough left to break even. When it comes to working capital, restaurateurs should hope for the best, but prepare for the worst. It is wise to have access to a rolling line of credit to cover unexpected costs. It is also vital to build relationships with vendors and suppliers, in order to negotiate more favorable terms over time.
Restaurateurs must perform several jobs and are able to thrive under significant pressure. However, even the most persistent restaurateur cannot succeed alone. The front and back-end team will ultimately determine the long-term profitability of a business.
Sam Mustafa claims that the importance of recruiting and retaining the right people cannot be overstated. It is essential for new hires to understand the restaurants vision and feel comfortable at their place of employment. If they do, there’s a better chance they’ll stick around when — not if — things get stressful and challenging.
From the outside, planning a menu looks simple; however, a restaurant’s signature must be aligned with the brand strategy, support competitive advantage, and most importantly: it must be profitable. Sam Mustafa claims that restaurateurs who fail to put in-demand items on their menu that have sufficiently high margins will squeeze themselves out of business. There must be a sufficient return on investment
Identifying the right mix of marketing channels and allocating enough money towards campaigns to give them a chance to succeed, is critical to generate brand awareness, pull in customers, and in time create an army of raving fans. Sam Mustafa states that if restaurateurs don’t know a lot about conventional and especially digital marketing, then it’s important to work with a proven consultant or agency that can build a plan and carry it out. Restaurateurs need to focus on their customers and staff, not on whether they are getting enough likes and shares on Facebook, Twitter and Instagram.
Opening a restaurant is a complex endeavor, so it is essential that one be prepared for all difficulties that may come their way.