Opening a restaurant is a notoriously risky business. Bloomberg Business reported that about 1 in 4 restaurants close in the first year of opening, and 3 of 5 close within three years. Those are daunting figures for inspiring entrepreneurs who have a foodie dream.
Instead of thinking about the chance of failure, it is important for would-be restauranteurs to learn about the common reasons for failure and to develop the right plan for success. Here are a few things you can do to help beat the odds and create the successful restaurant of your dreams:
Perform Thorough Market Research
A Jamaican restaurant might not work in your neighborhood, but French cuisine might prove to be wildly popular. Even with the right cuisine, you might find that a formal setting won’t be successful, but a casual, family setting will be. The only way to know what concept will work is to perform thorough market research.
Your research should help you identify the type of cuisine you will serve, the atmosphere, your target audience and even the menu items you should include. The more market research you can conduct, the better prepared you will be to create the right plan for success.
Pick the Right Location
Even within a certain neighborhood, different streets can mean success or failure for your restaurant. Even putting your restaurant on one side of the road or the other can determine its success or failure.
A special part of your market research should be determining the right location for your restaurant. Be thorough in your research. Once you settle on a location, it will be hard to change it. Make sure you get it right the first time. Simply having the right location can account for a large part of your success.
Write a Solid Business Plan
Every business needs a good business plan. Your business plan will lay out how much money you will spend to open your restaurant, your operating costs (including inventory and payroll), your projected sales, the time to achieve profitability, and much more.
Your business plan will help you determine if your restaurant idea has the potential for success. You will also use your business plan to show investors the viability of your restaurant to raise capital.
Start Small and Grow
You may have dreams of a chain of restaurants stretching across the country and even the world, but you have to start slow. Take entrepreneur Ricardo Vega Serrador as an example. He started with a couple of Go Mart convenience stores in Mexico, and he worked his way up to own numerous fast food franchises throughout Mexico, including Subway and Wendy’s.
Make sure your first restaurant is doing well before you think about expanding. Then put away any profits you make — minus what you need to support yourself — toward capital for starting your next restaurant. Before long, you will start growing your own foodie empire.
Put the Right Marketing Plan in Place
The right marketing plan is essential to the growth of any business. No one will know about your restaurant or chain without the right marketing. Put aside capital to invest in a professional marketing firm that will get the results you need. When you are just starting out, you can handle your own marketing, but you’ll want to turn it over to the professionals once you start to grow. The right marketing firm can get you results quickly.
Don’t let your dream of owning your own restaurant turn into another statistic. Do the right research and put together the right plan, and you’ll be celebrating restaurant success before long.