Did you know that 33% of restaurants don’t make it past the first year in business? Opening a restaurant takes good planning, heavy investment, and skillful management.
Being a food entrepreneur is not just about making and selling great food. It’s about creating a unique experience that customers are willing to pay for. Opening a restaurant is a variable science that requires patience and experience, just like making pâté en croûte. And, like the famously hard to master pastry, having a winning recipe is the first step to success.
First, Get Your Approach Right
A simple Google search on “How to start a restaurant” will give you many answers like “Ten Steps to Opening a Restaurant.” These lists tell you to follow a number of steps, and voilà! You’ve got a working restaurant.
Such an approach does not account for the incredible complexity of the many interconnected moving parts that must work together to create a successful restaurant. Between financing, hiring labor, creating reliable supply chains, and meeting regulations, you soon discover that nothing is so cut-and-dry as you would be led to believe.
Blue Orbit is a power team of experienced restaurant advisors with decades of high-level restaurant and hotel management experience. Every restaurateur looking to open their own business can leverage our team’s expert knowledge and experience to gain traction in the industry. We help you transform your idea into a thriving business.
We do that in multiple dynamic phases designed to bring together all the factors that define a successful restaurant.
1. Restaurant Concept Development: Bring Your Idea to Life
An idea becomes meaningful in the business world when it is translated into a working concept that you can sell to investors, employees, and customers. Restaurant concept development for us starts by running the numbers and creating a profit model.
Also called a DuPont equation, the profit model shows how much money you expect to make once you are running. The assessment of a company’s return on equity is a significant indicator for investors and landlords of a restaurant’s profitability and potential growth.
The profit model takes into account factors like what food you will be selling, your selling price, the number of employees, rent prices in your specific city, restaurant size, and utilities to generate an income-expense report.
Once we show that the restaurant model can make money, it’s onto step two. Here, a detailed business plan is created, starting with intensive market research, competition analysis, brand filter, and a definition of your brand’s operating practices. The plan serves as a roadmap from where you are to where you want to be.
Finally, with a business plan articulated and approved, it’s time to market your idea. A lot of people believe that the business plan is enough to do that, but not us. Dry figures alone don’t sell, but numbers with graphics do.
As part of your concept development stage, Blue Orbit works with you to create a Concept Book with infographics, financials, sample menus, market research, and competitive analysis. This will be your pitch to stakeholders that will help portray your concept’s energy and vibe. The reason we go to all this trouble is to ensure that you secure the funding needed or the most favorable lease terms.
2. Build and Organize
Phase two takes on a more practical approach. It is the stage that involves most of the work and requires the most experience on how to start a restaurant business.
This second phase will involve major decisions and activities that will shape your restaurant business for years to come. One of these will be defining your business culture. Culture is all about what you believe in, how you do things, and what drives you. These values will diffuse into everything else you do, including interior design and employee training.
Speaking of which, you will need to come up with a FOH (front of house) vs. BOH (back of house) ratio. Typical kitchens have about one-third of the space dedicated to operations, while the rest goes towards guest space and sitting space (this includes restrooms, vestibules, walkways, etc.). You can also opt to go for a cockpit kitchen with a ratio of one-fourth, which helps you to maximize seating space and revenue.
Menu and Cocktail Program Engineering
The building and organization stage also carries the menu engineering part of the process. Your menu structure defines what you will be selling, cost, number of staff, equipment needed, the restaurant layout, and much more. Blue Orbit can help guide you through the process to maximize profitability.
If your restaurant has a bar, you will also need to satisfy customer needs with a top cocktail menu. The cocktail menu also needs to be engineered to fit your brand, expected team execution strategy, and profit goals.
All this time, you will be nearing your launch date. Your pre-launch marketing will need to be running in top-gear to generate pre-opening buzz. In fact, this needs to happen months in advance so that you can have the kind of exposure that will (hopefully) create lines of customers on your first day. Use local media, online marketing, influencers, PR companies, and everyone else you can bring onto your team that can attract traffic from the moment your doors are open.
After all the hard work, you have to make sure that your restaurant’s launch goes off smoothly. For a smooth grand opening day rehearse and polish your checklist and routines, refine your inventory and supply logistics, and transition your accounting and back office procedures from pre- to post-opening.
By now, you should have hired the right staff and made sure that they are properly trained and ready to onboard. You will still need to perform a number of mock runs (also called pre-opening events) with family members, contractors, and close friends and have them order free meals to test out your operational routines. Have two mock runs per meal period to discover and weed out any issues that are likely to occur when you go live.
Once you’re up and running, you will still be ironing out many wrinkles from your day-to-day restaurant operations. Opening day tends to be an acid test for any new restaurant, and you will need to be ready for long hours.
In the days and weeks that follow, you will gradually pick up momentum and confidence. Coordinating the staff, managing costs, managing inventory, and exceeding customer expectations during this honeymoon period is vital to make sure you are off to the right start.
During pre-launch and launch, you will also need to continue with staff hiring and training. Management teams will also need continuous support and training so that they can continue delivering results.
Through all of this, remember to keep a close eye on your financials. Your back office protocols involving money handling, invoice discipline, profit-and-loss statements, as well as annual budgeting all need to be done diligently and communicated as needed.
The expert restaurateurs at Blue Orbit will be right there throughout these three phases, offering industry-insights and side-by-side coaching. From creating a business plan, to choosing the best location, to crafting your menu and post-launch incubation, Blue Orbit does all the heavy lifting for you to ensure that your restaurant launches from a solid foundation. You can learn more about what we do here.
Ray Camillo – Founder & CEO, Blue Orbit Restaurant Consulting