The hard truth is that most startup restaurants and bars have a 60% chance of failing the first year. Furthermore, startups rarely make it to their sixth year of business. It is a very competitive industry. Factors including business and financial planning, location, marketing, food quality, and menu are just a few things that can make or break a startup.
While it is natural to make mistakes, doing your research to avoid issues will help open your restaurant to success. There are no magic formulas; however, knowing the common mistakes and planning success around them are a good start.
Below the hot topics with startup restaurants and the most common mistakes new restaurateurs make are revealed.
Non-Existent Business Plan and Business Guidelines
One of the critical things that many startup restaurants miss is having a well-written business plan in place. Your phenomenal ideas can only become a reality if they are feasible. A business plan can help with this process and really provide an overview for others.
The plan should be your restaurant’s go-to whenever something out of the ordinary occurs. A well-written business plan should include (at minimum): an executive summary, company description, market analysis, organization and management, service or product marketing and sales, funding requests, financial projections, and appendix.
Equally important, though not required in a business plan, is a detailed manual of guidelines and further documentation. This will maintain organization and help in training your staff to understand procedures and duties.
Well written business guidelines include detailed recipes, checklists, account information, and essential tasks of each staff person. A clear vision and common goal will bring you closer to success. An added benefit to a clear vision is that it inspires teamwork and dedication in all aspects of your restaurant.
Overcoming Management Mistakes
Obviously, your priority is having a successful startup restaurant with a profit. To accomplish this, you will need to manage well and contribute to the end product. As part of your strategic efforts and operations, act like another employee and balance that with business management.
While it is necessary at first to help bus tables, cook, and manage the books, after training your staff to complete these tasks you should focus on strategic operations. This will include monitoring cash flow, analyzing sales, planning future marketing campaigns, and employee oversight.
During staff turnover you may have to help with day-to-day operations; however, it should only be to cover those staff shortage and training time. By taking control and helping when necessary, the restaurant’s working environment will be pleasant and foster future success. Once your startup restaurant is successful, maintain your active involvement to ensure your restaurant continues to run smoothly.
One aspect of being a good leader and a successful startup owner is having staff trained properly. Whatever you model and teach them as part of your restaurant’s culture will extend to your customers. Upsells are a great profit-maker, and staff are key to upsells in what they do and say.
There has always been a high turnover rate in the restaurant industry, up to 70%. This all circles back around to where your business plan and guidelines, as mentioned above, come into play. When staff know what to do and how to do it, and receive better tips, they are more likely to stick around.
Making a Profit Takes Time… and Money
A mistake sure to disappoint is assuming you will make money as soon as you open. Most restaurant owners will tell you to plan for three months without a profit. This occurs for many reasons such as the number of repeat customers, active marketing on social media, and time to build up the volume of sales.
Your staff over the first two months will spend time simply becoming familiar with the startup’s environment and culture as they work together. After the first few months, you may also need to take another look at the menu and ensure it is working well by reviewing sales and reviews. Therefore, during the first three months, one of the best decisions you’ll make is to ensure you have operating costs covered.
Along with proper funding and initial operating costs, be sure to build in marketing essentials such as flyers, posters, ads or an article in the local independent newspaper, and specials for your soft opening and grand opening events. Additional marketing that must be considered are social media (start with one and stick with it), and an app with rewards, waitlist, or ordering capabilities.
Focus on Customer’s Needs and Wants
As with any successful business, location is key! When choosing your location consider factors including parking, other area restaurants and businesses, and demographic target. If there is existing competition, try a few dishes. Take time to study the competition and visit their website, download their app, and read their customer reviews.
A location that is convenient for your targeted demographic will provide a natural stream of customers. When you open your startup be sure to watch how customers react to your menu, the atmosphere, and customer service. Take time to visit with customers when they come in the door, or simply say hello before their order arrives. Be bold and ask for feedback, welcome that feedback, and take action as needed, from customer service skills to revised menu options.
One way to help with knowing and catering to customer’s needs is to start with a soft opening, and then two weeks to a month later have a grand opening event. Your restaurant’s first open day or night is truly a learning time. In that sense, a soft opening will help staff get used to serving, cooking, and finding their work groove to make a grand opening truly successful.
It will be critical during the first week to recognize issues, assess them, and work to fix them. Major issues, whether staffing, menu, or other must be worked out before you announce your grand opening.
Above and beyond the issues to tackle above, remember that first impressions of your startup restaurant are key and essential to success. Each potential mistake that you avoid will help you achieve the goals set for your startup. Go out there, plan, develop, and focus on your customers… it will be worth the extra effort!