You’ve always dreamed of opening your own restaurant. You’ve toyed with the idea for long enough and now you’ve decided it’s time to take the leap. You have a concept and a name and have already drawn up a tentative menu. Things are starting to get real and you are going all out to make this lifelong dream come true.
As you get the ball rolling, you realize that opening a restaurant is hard work. It is natural to have some misgivings. The stats don’t help either – according to the National Restaurant Association, 30% of restaurants fail in their first year. Obviously you don’t want your restaurant to end up in the list of launch failures. Luckily for you, we have compiled a list of five mistakes to avoid when opening a restaurant. Pay close heed and you will be able to avert some of the major pitfalls faced by new restaurateurs.
Coffee Shop Business Plan
Use this detailed business plan to help put all your unique ideas together before you open your own coffee shop business to the world.
Mistake No. 1: Not Budgeting Properly
The primary reason why one in three restaurants go belly up within a year of opening is because they run out of money. Sustaining a restaurant requires financial viability and you need to ensure you have suitable capital to keep you operational until you begin to make profits. For this, you must create a detailed and thorough budget.
Make a list of all the costs you will incur to open a restaurant and keep it running. Add on reserves for your primary costs (rent, ingredients, overheads etc) for at least 12-16 months of business. There will always be unforeseen expenses so try to make allowance for that as well. It is much better to overestimate than underestimate.
Mistake No. 2: Not getting the requisite licenses
You simply cannot establish a legal entity without the proper licenses and permits. Completing the paperwork should be one of the preliminary tasks that you carry out – perhaps even before attempting to build or design an interior.
Keep in mind that you need to get licenses at both federal and state levels and that licensing requirements vary from state to state. Do your homework and make a complete list of everything you need, checking them off as you get each one. You could always hire a professional to work through the jargon and speed up the process.
Mistake No. 3: Not having a capable, well-trained team
The success of a restaurant is rooted in people. You need the right team to run your business and so you must be judicious in your selection of staff. Profile each job role before you interview so that you know what you are looking for and can easily spot these attributes.
Once you have formed a team, you need to ensure their buy-in. Run a proper training program. Make them aware of your concept, goals and requirements. Seek their input and keep them invested in your restaurant’s performance.
Mistake No. 4: Not creating a detailed marketing strategy
Customers are fickle and change loyalties at the pop of a slice of toast. Staying in business means ensuring that you get regular business. Don’t let your customers forget about your restaurant. Use clever and regular marketing strategies to keep your brand front of mind.
Employ as many marketing channels as possible – text messages, emails, your website and social media. The last one is of particular importance. A majority of today’s customers use social media to find a place to dine so stay active on all the social media platforms. You can also use promotions and specials to drive more footfall into your dining room.
Mistake No. 5: Not utilizing data
A good restaurateur must keep on top of things. You need to be fully aware of the goings on in your establishment. It is not enough to rely on the reports of your managers and other staff members. You need to see for yourself how your restaurant is performing.
This is why you need to use data analytics. With data analytics you will be given a comprehensive picture of the goings on at your restaurant. You can learn about all the different aspects of operations. The right data analytics tool will also provide you with forecasts and predictions to help you plan better. In this way you will be able to make sound decisions that will help you to take your restaurant from strength to strength.
Starting your own business, no matter what the industry, comes with its own set of risks. Too many restaurants fail because they make some pretty basic mistakes , with the above five being among the most common. As you plan the opening of your restaurant, you need to set yourself up for success by guarding against making these same mistakes. So take note and take action.