For example, are you comfortable with the unknown? Can you take risks that may or may not pay off? How comfortable are you being a self-promoter? Can you “sell” your business to strangers and your community? Are you willing to work long and/or unusual hours to keep your business afloat? Are you comfortable being the person responsible for your success or failure? Do you enjoy problem-solving and creative thinking?
You will need to do significant market research in order to learn about where the best location would be, what types of customers you might attract, and what customer needs are currently not met that you could meet. [6] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source Sources such as the National Restaurant Association and Nation’s Restaurant News can be helpful to obtain industry data.
It’s a good idea to ask about the challenges and difficulties they faced, as well as what strategies they used to overcome those challenges. Remember that small business networking is a two-way street. Make sure that you thank people who talk with you for their time, and offer to help them once your own business is up and running. This will also help generate goodwill toward your business.
For example, a restaurant that serves steaks, Chinese food, Italian pasta, and fresh seafood would probably be confusing to most customers. Businesses that specialize in a particular area are more likely to draw a following. Pick a few things for your business to do and do them impeccably. You should also think about the demographic in the area where you want to open your business. Who frequents the existing businesses in the area? Millennials, who often prefer fast/convenient food or quirky, locally sourced food? Families, who often focus on value for the money and family convenience? Professionals, who often spend on “fine dining” experiences?[8] X Research source You want to look for a balance between filling an unexploited niche while not aiming your business at customers you’re unlikely to draw. You should also decide whether you want to open a “fast food” restaurant, a midscale restaurant, or an upscale restaurant. Knowing whether your demographic is more likely to be interested in value or fine-dining “experiences” will help you determine what type of business will be most successful.
For example, if you love your grandmother’s fried chicken and soul food, centering your restaurant on that tradition will be your “concept. ” You wouldn’t also offer hamburgers or Korean food at your soul food restaurant. Consider your location as well. For example, a restaurant centered around “fresh seafood” makes sense when you live near a river or ocean, but less sense if you’re far inland from any source of fresh seafood. The cost of those ingredients will be higher, and it will be harder to find quality. Coffee “concept” shops are increasingly popular as well. Customers are interested in buying coffee that is fair-trade, organic, and other markers of quality. Decide whether you want to be more of a “boutique” coffee experience or more of a traditional “doughnuts and coffee” venture. Stick with that identity. [10] X Research source
If you choose this route, make sure you still do your research to learn why the owner wants to sell. Is the business profitable? Does it have a steady stream of customers? Does the owner just want to retire, or is the business having trouble that the owner wants out of? Another option is franchising. Opening a franchise of a successful restaurant chain can be a good way to achieve instant brand recognition and access a loyal customer base. However, you will not have as much control over your product and operations as you would if you open an independent business.
It’s a good idea to keep your ambitions small, at least at first. [12] X Research source Once you have built your reputation on your menu, you can expand. [13] X Research source You could start as small as a kiosk focused on providing one delicious dish or beverage type. Make sure you research average salaries and wages in your area as well. You will need this information when you write your business plan. Plan on not turning a profit for at least the first six months. Set aside enough money to cover your personal expenses for six months at minimum. [14] X Research source
A business plan has many elements. It’s important to have a very clear idea of your restaurant’s identity, including what food it will serve, its location, and its long- and short-term goals. Present a clear breakdown of all costs. State the amount of the lease or mortgage, how much salaries and wages will cost, how much benefits packages will cost, how much furniture and equipment will cost, how much your food products will cost, etc. Develop a clear marketing strategy. You should be absolutely clear on who your target market is and what actions your business will take to draw them. You should know who your competitors are and how you will compete with them. In this section, you should also present the average costs of the types of marketing you’ll use, as well as any licensing and permit requirements. Include your menu. Make sure that you know exactly what your restaurant will serve. Know what distributors you will purchase food from and how much items will cost. Consider these costs when pricing menu items.
You can use personal resources, such as savings accounts and credit cards, as start-up cash. You can also go in with a partner or two, particularly if your business plan is convincing. Just make sure you draw up a clear partnership agreement document. The US Small Business Administration (SBA) can connect you with lenders and other programs to support small businesses.
A small business attorney can help you figure out what the best structure will be for your needs. An attorney will also be able to guide you through the process of obtaining permits and licenses, as well as ensuring that you comply with any regulations in your area. The US Small Business Administration has District Offices throughout the country that offer free counseling and advice about how to start a small business. You can find a local office on their website. They also have over 900 “Small Business Development Centers” (SBDCs) that can help you plan and execute your business decisions. Many restaurant and coffee shop owners go with a Limited Liability Company (LLC), which protects your personal assets in case the business runs into trouble. While you can run your business as a “sole proprietorship,” this is usually not a good idea, as your personal assets are usually on the line if your business incurs liabilities. You may also want to consult with a small business accountant. The work of running your restaurant may be so much that you need to hand the bookkeeping over to someone else. [19] X Research source
Most areas will not allow you to sell food or beverages unless you have a commercial kitchen on-site. This means that home-based businesses are usually out. The SBA has a “Permit Me” tool that will help you determine what licenses and permits your state requires. [20] X Trustworthy Source U. S. Small Business Administration U. S. government agency focused on supporting small businesses Go to source
Be aware that you will generally need to submit your application to your local environmental health department at least a month in advance of opening your business. You should also be aware of any particular regulations involving the sale of alcohol. While laws vary depending on your location, the laws surrounding alcohol are generally complex, so make sure you understand them.
It is generally much cheaper to renovate an existing restaurant or coffee shop than it is to build one from scratch (or convert a non-eatery to an eatery). [22] X Research source You may want to lease rather than purchase, especially if you have never operated a small restaurant or coffee shop before. Make sure to consider things like parking facility, rent rates, and city/county ordinances when choosing your space. Check out the history of the site, too; if there have been eight failed restaurants in your space before yours, there could be something about the site that isn’t great for food service establishments. [23] X Research source
Even if not required, insurance is an excellent idea. Property insurance and general liability insurance will help protect you and your business.
Don’t let other people push you around with their own ideas. Remember that what works for one business may not work for another. Just make sure that you’re basing your decisions on research.
If you need to establish branding for your business, consider contacting a local design school or university with an advertising department. Often, students will be glad to develop excellent low-cost work for you in exchange for getting to use it in their portfolios. Leasing big-ticket items such as refrigerators and espresso machines, at least at first, can help cut down on start-up costs. This means you will be able to keep lower prices, which will mean happy customers. [26] X Research source You may also be able to find equipment offered on sites like craigslist. Just make sure that it is in good working order. [27] X Research source
Visit other restaurants or coffee shops in your area. Observe how customers interact with the space. Does it seem comfortable? Efficient? Inviting? Make sure you have flexible seating. Booths for larger groups should be placed along the walls. Remember that 40-50% of customers arrive in pairs. 30% come alone or as a party of 3. Just 20% of guests come as groups of 4 or more. Use primarily tables for two that you can push together when necessary. [29] X Research source For coffee shops, make sure that you have a comfy seating area that’s conducive to working and socializing. A mix of chairs and couches with 2-person tables will create an inviting environment in which customers will want to stay for awhile. [30] X Research source
Create a training guide so that your employees know what is expected of them. Setting clear roles and expectations will help things run smoothly. [32] X Research source For coffee shops, hire well-trained baristas. Coffee quality is the live-or-die element of coffee shops. Even if you buy the best espresso in the world, if your baristas don’t know how to prepare it, your coffee won’t draw customers. Be aware of turnover. Food service is very prone to employee turnover, where employees join and leave a company within a short amount of time. Make sure you have ways to quickly hire new people when you need to. Make sure you’re aware of and comply with your local Department of Labor regulations. [33] X Trustworthy Source US Department of Labor Federal department responsible for promoting the wellbeing of workers Go to source Even if you hire family, make sure that each person has a clear understanding of their duties. All laws and regulations apply to family-member hires, too.
Categories to think about include equipment (stoves, refrigerators), furnishings (lighting, tables, chairs), dinnerware (glasses, plates, silverware), and miscellaneous details (cocktail stirrers, toothpicks).
Start with a list provided by your local branch of the National Restaurant Association. Check out any potential supplier with your local Better Business Bureau. If a business has a history of complaints, steer clear. [35] X Trustworthy Source Better Business Bureau Nonprofit organization dedicated to promoting marketplace trustworthiness by educating consumers and reviewing businesses Go to source Comparison shop. Ask for price quotes on everything you’re likely to need and compare between suppliers. Consider your staff’s talents. It may be more cost-effective for your staff to clean its own seafood, but if you don’t have anyone who knows how to do that, it won’t actually save you any money. If your staff has skills like bread-baking, though, make use of them. Make sure the company you choose is responsive. If they can’t get something to you in time, will they let you know? Are they conscientious about delivery schedules? Do they reply to inquiries in a timely manner?
Tell people what the price will be at the restaurant and ask them how they think about it. You may need to bring your prices down, or you could be pleasantly surprised to learn you can charge more while still offering value.
Gift-certificate giveaways and “free food” promotions are very popular ways to draw attention to your business. [38] X Research source You can also donate gift certificates as prizes for local charities, nonprofit, and professional organizations. This will generate goodwill toward your business and spread the word about your business. Consider inviting your local food critic to your business. While you can’t control what they write, it’s a good way to get some press for your business. Loyalty cards work well for fast-food restaurants and coffee shops. [39] X Research source
You can even incentivize these surveys by offering a free product or meal if customers return the survey to you.
Payroll is another reliable chunk of expenses. In general, payroll should cost no more than 20-25% of revenues.
Coffee should not be more than about 40% of your weekly sales volume. Don’t go overboard with the accompaniments, though. Have a good selection, but you don’t need to have six types of quiche and twelve types of cookie. Trying to sell too much of a variety increases costs without increasing benefits.
