10 Things to Know before Launching a Restaurant Business
Restaurant businesses are the aim of lots of people because people often view restaurant businesses as easy, saying that all you need is some money, a good location and some employees to start this type of business. In reality, however, restaurant businesses are just like other regular businesses. If you want to succeed, you need to plan your management from the get-go. Otherwise, your business will be more likely to fail rather than succeed. The following are the 10 things that you need to know before opening a restaurant business. If you can handle all these 10 things, you’ll be more than likely to succeed.
- Setting Your Restaurant Concept
- Selecting Your Location
- Checking Feasibility with Business Plans
- Planning the Menu and Setting Prices
- Layout Design for Maximum Effectiveness
- Permits and Learning about Legal Matters
- Procuring Ingredients and Equipment
- Manpower Planning
- Marketing Planning
- Testing the Entire System before the Actual Launch
- Setting Your Restaurant Concept
Having a clear concept from the start for your restaurant will make it easier to plan other processes ranging from investment budget allocation, restaurant style and design, restaurant props and decorations, lights, colors, sounds, indoor atmosphere, outdoor atmosphere, chairs, tables, equipment, employee uniforms, service model, employee selection, menu design, plate decorations, menu names, and pricing.
All of these things are based on the restaurant’s concept. So, if you have a clear concept, it will be easier to establish your brand and make it more memorable, which will make your marketing more effective than ordinary restaurants.
Click to read How to Create a Restaurant Concept for Money and Success!
- Selecting Your Location
Once you have a clear restaurant concept, the next thing to consider is location. There is no set recipe on how to pick the best location. In particular, since the food delivery market is expanding, some restaurant locations don’t have to be where crowds are always walking by. Instead, they can be located in quiet places where low rent is prioritized, so the space can be used mostly for production and delivery. Nevertheless, there are some principles you can apply in selecting a location to minimize your risks and increase your chances for success.
In picking a location, you might primarily base your decision on your customers. Accordingly, there are two groups of customers, namely, primary customers and secondary customers.
Primary customers are people who live within a 5-kilometer radius of your location; or if you’re located in provincial areas, people who can travel to the restaurant within 30 minutes. This group of customers are likely to be able to frequently use your services every month and are highly likely to become your regular customers. So, you should analyze and figure out who lives within a five-kilometer radius of your location, or can travel to you in about 30 minutes. Then you should identify key locations, customer behaviors, income bases, and spending patterns to determine whether or not they are suitable to your restaurant’s model or food.
On the other hand, secondary customers are people who live outside the 5-kilometer radius or people who take hours to travel to your restaurant. These customers might have a hard time frequently using your restaurant’s services consequently, if your products or model is more suitable for secondary customers, you might struggle with problems related to service frequency.
Each type of location has different benefits and drawbacks and attracts different customer groups. Consequently, whenever you’re selecting a restaurant location, the most important thing is to study the details of each location such as rent conditions, rent fees, people traffic during different time periods, mean spending per capita on the restaurant, etc.
These are all things you need to know. How do you know? The answer is visit the location yourself and spend at least one or two days there to gather your data.
If you want to find the great money-making locations and attract the right customers, you can learn about that in How to Choose Location to Sell Well
- Checking Feasibility with Business Plans
If you want your restaurant to be successful, you need to study the feasibility of your restaurant business. You need to analyze your market feasibility, competitive feasibility, service feasibility and financial feasibility. Good plans are battles half-won. You can study additional details in a free online course here
After you’ve studied the feasibility of your business, the next thing you, the entrepreneur, have to do is take a look at your investment and figure out how much you need to sell in order to reach the break-even point and then turn a profit and win back all of your investment.
In finding the break-even point, you start by calculating the restaurant’s actual expenses or what we call a profit and loss statement (P&L) so that you can plan your sales for profit and win back your investment. You can read additional details by clicking here
However, if you don’t understand the article and would like to learn with an expert directly in order to gain a better understanding, you can also take this free online course by clicking here
Now that you know how much you need to sell each month in order to not suffer a loss, you need to project your sales, so you can distribute your targets into daily sales targets. This is because sales might vary each day, and some areas might sell well from Monday to Friday, but some other places might sell well in the weekends. As a result, you need to set different sales targets for different days.
- Planning the Menu and Setting Prices
Naturally, new restaurant owners often have lots of ideas, especially when it comes to the menu. Surely, lots of restaurant owners want their own restaurants to have all sorts of menu items in every category. Well, you can have as many ideas as you want, but you eventually have to go back to your restaurant concept and your customers to find out how consistent they are.
For example, if you’re going to run a Thai-European fusion cuisine restaurant, your menu items can’t not steer away from Thai and European foods, and this applies to your beverages and desserts, too.
Once you’re clear on the concept of your restaurant’s menu items, one easy way to get ideas for your menu is to find another restaurant with a similar concept to what you’ve come up with. Then you study it and collect data. It’ll then be the responsibility of the chef or menu designer you hire to create recipes for your restaurant, covering things like flavor, appearance and garnishing.
Otherwise, if you want to learn how to develop menu items on your own to boost your sales, you can use the BCG matrix to develop great-selling menu items, identify menu items that you should eliminate and create new menu items that are better than before by taking this free online course!
Once you’ve got your menu, the next important thing to work on is how to set prices. Whether or not you suffer a loss, make a lot of profit or make little profit will depend on this step. Many restaurants rely on setting prices by simply adding their desired profits. While this is doable, whenever they run promotions, they might suffer losses. Here is another way we recommend for price setting. It is a recipe to prevent losses from the get-go. You can, for example, specify them as a percentage of your cost:
(cost in baht x 100)
———————-
% of the desired cost
Example: Let’s say you want to sell Pad Thai with fresh shrimp at 30% cost.
And the cost per plate is 35 baht.
(35 x 100) / 30 = 116.66 baht (round remainders up)
will give you the desired sales price, and when you offer a promotion with a 10% discount, you will still make a profit.
If reading that is still not enough to give you an understanding, you can learn professional price setting techniques in this free online course
Once you’ve got your menu and the right sales prices, your restaurant should have attractive food pictures to promote your restaurant. You can take these pictures using your own mobile phone cameras. All you need to do is learn how to prepare foods for pictures, picture composition, and how to use natural lighting and the angles and distances of your mobile phone camera. Apply and learn for free by clicking here!
- Layout Design for Maximum Effectiveness
This area has caused lots of problems for new entrepreneurs. These problems can include unfinished work, bloated budgets and dysfunctionality caused by designers and constructors inexperienced in restaurant construction. Although many people overlook mistakes in this area, the area is responsible for many big problems that you have to endlessly solve.
As a result, your first rule in designing the layout of your restaurant is to only use a work team experienced in restaurant design and construction. This is because people experienced in this area will understand the work principles in restaurants. They will understand that designs are meant for creating a place to accommodate hundreds of people per day. They will know which stations to design in the kitchen as well as how to do things properly in line with the law while making things flexible for employees in each station and reducing work time in each work process to quicken food output.
For any entrepreneur who wants to learn how to design a standard kitchen on your own as well as how to manage kitchen space and choose basic kitchen equipment and know which to buy and not to buy as well as understand some precautions that restaurant entrepreneurs should know about, you can learn from one of our experts, Chef Willment Leong for free by clicking here!
In addition, you need to ensure that your space can accommodate many customers and generate a lot of sales without putting so much emphasis on attractiveness that you end up having only a few seats. You also have to arrange your tables and chairs in cases where two, four or even six customers arrive at the same time in groups. That way you will not lose out on opportunities to accommodate them.
Additionally, in order to maximize work effectiveness, employee stations have to be arranged such that they are convenient, quick to manage and take little work time. For example, if your kitchen and storefront areas are far away from each other, the station for spoons, forks, glasses, cups, plates and bowls for your tables have to be additionally provided in the storefront section of the restaurant, especially just in case for when customers ask for more of such utensils, in order to prevent employees from having to walk all the way into the kitchen to retrieve them.
- Permits and Learning about Legal Matters
Restaurants are just like other businesses, so they also require a business permit. You can begin by applying for commercial registration in compliance with the law. Registration is a way for you to report that you are operating your business properly and in a disclosed area with a set business location and name in the system of the Ministry of Commerce. There are two types of commercial registration: for ordinary persons and for juristic persons. You can read about the details and documents you need to prepare here.
In addition, if you plan to sell alcoholic beverages, you will also need to obtain a permit for selling alcohol. You can find out the documents you need for applying for a permit to sell alcohol by clicking here
Another legal area restaurant entrepreneurs need to know about is public health laws. You can read about the basic things every restaurant needs to clarify such as the sanitation of food distribution facilities and labor laws by clicking here
- Procuring Ingredients and Equipment
In this area, you should adhere to the principle of buying quality and affordable ingredients and equipment based on what you actually need to use.
What you need to consider a lot is the word “affordable”. This is because many people have been hurt by it before. Affordable might not mean quality and value, so you need to find out whether or not 100% or nearly 100% of what you buy can actually be used. For example, sometimes ingredients are cheap, but you have to cut away large portions of spoiled or rotten parts when you actually use them. You need to consider this, too.
Thus, you should adhere to the principles of quality, value and purchase convenience as much as possible, and you can find all of that at Makro, a consumer product wholesale and distribution center for customers, members and businesses nationwide. Makro offers one-stop services for restaurant businesses, and you can order products online from MakroClick and receive news information before anyone through the Makro Application now today on Android, IOS and even Makro’s LINE account.
- Manpower Planning
One big problem for new restaurant owners is not knowing how many employees they should have for each station. The basic principle in manpower allocation is to take the monthly sales projection and subtract labor costs, which range from 18-20%. What you’ll get is the figure for the monthly salaries of employees. This figure will determine how much money you’ll need to pay in hiring employees for each job position and how many employees you can actually hire.
Formula
Projected Sales – 20% = Total Monthly Employee Salaries
Example
Monthly sales at 500,000 – 20% = 100,000
After you get your salary figure, the next thing to do is to take a look at your restaurant’s layout and schematics, restaurant business hours, food menu items and restaurant format. Begin with the layout to determine how many employees you need for each section of the restaurant from the moment it’s opened until the moment it’s closed. This way, you’ll be able to hire the right number of employees for the workload.
Nevertheless, there is no fixed recipe on how many employees you actually need for each work position. So you should consider how many employees you need in order to sufficiently and appropriately service your customers according to your restaurant’s type by primarily emphasizing customer service effectiveness.
If any entrepreneur wants to learn some employee management techniques, whether about the factors involved in recruiting employees appropriately for restaurants, finding out the number of employees you need, learning about the places where you can hire employees, what employees want in addition to salaries, and how to set your employee and promotion system, you can take a free online course by clicking here
- Marketing Planning
At this point, it’s almost time for the restaurant to open. Anyone who reaches this point has to plan marketing offline and online together. One important thing many SMEs fail in is setting a marketing budget. It is absolutely necessary to set a regular marketing budget as part of the restaurant’s cost structure.
Most SME restaurants engage in marketing activities without a system, planning or budgetary allocations and thinking only about marketing to boost their sales after they decline, which is the wrong way to go about it.
Instead, we recommend that you create continuous marketing plans covering areas such as what offline media you need in front of your restaurant, budgetary percentages for marketing, monthly online marketing and communication formats, bloggers you hire for creating reviews, how to create promotions, what posts and media to create, the channels you need, and the times to do them. These are things you need to include in your daily, monthly and yearly plans so that you can allocate budgets and promotions in support of your effort.
You can learn about some basic online marketing tools with easy learning content that you can apply immediately for actual use in this free online course: Promote Restaurants Online for 10 Times Increase in Sales
- Testing the Entire System before the Actual Launch
After you’ve completed all the other steps, the one last important thing you need to consider before actually launching and servicing your customers, you need to do a pre-launch test of all your restaurant’s systems.
In running your pre-launch test, you need to do everything in the same way you would do it when your restaurant is actually launched. However, rather than having actual customers, you’ll be inviting people you know like friends and family to use your services over a given time period. The number of these invited “customers” should be about 30-50% of all your seats so that you can test your restaurant’s various systems and find out if any area still falls behind your set standard. That way, you’ll be able to make improvements or changes to ensure uninterrupted services. Click here to find out more about the things you have to check during your test
As you can see, opening a restaurant isn’t as easy as many people think it is. If your goal is to ensure that your business experiences sustainable growth, planning in all of these 10 steps and thoroughly doing your homework are the keys, in addition to all the numerous other minor details entrepreneurs need to learn and make improvements while running their businesses. In any case, however, a better start will give you a better chance of success.
