Restaurants are right up there as one of the most common and popular business ideas in the world. You only have to walk down a busy high street to see countless restaurants begging you to come and check them out. Many of these are big chains, while others are independent restaurants. The concept of this business makes it one that many people consider starting. After all, there is a clear path to making money. People will always need to eat, and you should generate some cash as long as your food is good.
Nevertheless, there are many crucial things to know before going down this path. Think of this post as a wake-up call. It’ll alert you to all the major concerns when starting a restaurant business. Furthermore, you’ll get a few pointers on how to make this endeavor as successful as possible. By the end, you’ll know whether this is still the right idea for you. If it isn’t, at least you figured it out now rather than a few months down the line after spending loads of money.
So, without further ado, here are the most important things to know before opening a restaurant:
#1 There’s a lot of competition in the industry
First things first, competition is rife in the restaurant industry.
It’s right up there as one of the most competitive industries in the world – which is a good and bad thing. It’s good because you know plenty of customers will be eager to try your business. It’s bad because you have to try and draw them away from other restaurants in your area.
Unfortunately, too much competition can be great for customers yet awful for business owners. You’re constantly trying to match prices and provide the most affordable eating experience in the restaurant industry. At least, that’s the hole you can get sucked into. It ends with you offering discounts to undercut your rivals, making it almost impossible to make money. You enter what is known as a destructive market.
You need to know how competitive the industry is before you start. Ensure you follow a clear game plan to stand out from the crowd. Don’t focus on delivering the best prices per se; find your USP to encourage customers to come to you over others.
#2 You’ll be up against some huge brand names
Some certain brands and chains appear everywhere. Regardless of what restaurant you open, there will be massive names to compete against. We’ve already mentioned the competition within the industry, but this is something different.
You see, when you compete with brands like McDonald’s or Olive Garden, you’re instantly up against it. They have something you don’t – and probably won’t ever – have: brand power. Consumers immediately recognize the brand and know what to expect from the restaurant. So, when it’s time to pick somewhere to eat, they’re more likely to drift toward the well-known names.
As a restaurant owner, you must figure out how to differentiate yourself from the big brands. What can you do to tempt consumers to your restaurant over a tried and trusted one? It’s a massive challenge as you’re constantly competing against the power of a multinational brand with huge pockets and unlimited marketing resources.
#3 Your location means everything
The location of your restaurant is almost its be-all and end-all.
This can sound dramatic but think about it. If you’re in a closed-off location that’s hard to get to, how do you rate your chances of success? What’s the one thing a restaurant relies on to make money? Foot traffic. When nobody can see your restaurant, or it’s hard to get to, nobody is likely to visit it.
Comparatively, look at restaurants right in the middle of busy cities. They’re in locations that see loads of foot traffic daily – particularly around lunch and dinner hours. It’s far more likely to get customers because people notice the restaurant and get drawn in.
Some people believe that the location of a restaurant should be one of the first things you think about. Realistically, it should be the first thing. Consider where you can set everything up. Find a prime location, and then start thinking about everything else. We’d even go as far as saying that you should wait until finding a place before determining what restaurant to open. Otherwise, you run the risk of spreading a specific style of restaurant in an area where there are already loads of similar restaurants.
For instance, you want to start an Italian restaurant. Cool, a trendy cuisine! You’ve got everything planned out, and you begin searching for locations. Unfortunately, you can only find one in a place with ten other Italian restaurants nearby. Does it make sense to open another Italian joint in an already saturated market? No. It would make more sense to look at this location and consider if there’s a gap in the market.
#4 Marketing is almost as important as your menu
Most restaurant owners put lots of time and effort into crafting a fantastic menu. Sadly, nobody will notice how great your food is if you don’t have a solid marketing plan.
You must develop a marketing strategy that attracts consumers. If we go back to the second point about big brands, this often sets them apart from smaller restaurant businesses. They have good marketing campaigns to ensure everyone knows their brand and why they should go there.
You need to create a marketing strategy built around your key selling points. Yes, this can take a lot of time to formulate as you’re figuring out what’s unique about your restaurant. It is worth employing a marketing agency to help with this as they can take things one step further. If you have a killer marketing campaign, it can be almost as important as your fantastic menu.
#5 Restaurant owners must embrace technology
One of the biggest reasons restaurants go under is that owners do not embrace the industry’s future. Technology is your best friend! There are countless ways to utilize it to help you get the most out of your restaurant business.
For example, all restaurants should accept Apple Pay and other mobile payments. If you click that link, you’ll find a whole article dedicated to the benefits of doing this. To cut a long story short, it helps attract more customers and provide a better dining experience thanks to a convenient payment method.
Still, your use of technology should extend far beyond this. It’s crucial to run a tight ship and get your scheduling in order as a restaurant owner. This is why restaurant scheduling best practices should be followed at all times to ensure you’re successful. You need to keep your employees in the loop with everything that’s happening and ensure they have positive experiences working for you. Otherwise, you end up in a loop where all of your waiting and backroom staff keep leaving, costing your business money. Having the right scheduling technology makes it easier to manage this.
Think of it this way; if there’s a chance to use technology in your restaurant, do it!
#6 Restaurants need multiple revenue streams
If we’re talking about reasons restaurants fail, the biggest one is that they don’t adapt quickly enough. A lot of restaurant businesses only have one revenue stream. You rely on money from customers that come in, sit down, and enjoy a meal.
That’s fine, but what happens if you struggle to get customers in? Perhaps you see less traffic in winter because of the weather? Or, what if there are external factors – like the recent pandemic – that stop people from going to restaurants? Suddenly, your one revenue stream dries up, and you fail to make money.
Instead, you need to figure out new ways of making money. As an example, offering deliveries is a fantastic idea. People can order from their homes, meaning you aren’t as reliant on foot traffic. Another idea is to open an online store selling things from your restaurant. This can include meal kits, sauces, and so on. Someone can visit your eatery, enjoy what they had, and wish to recreate it at home. Now they can! A third and final example is to set up your pop-up restaurants or food trucks in different places. It’s another way of selling your food to other people and encouraging them to give you a go. This is a genius marketing ploy as your food truck can be successful, meaning more customers are likely to visit your restaurant or order takeout.
The bottom line is that you must consider these things before opening a restaurant. Sure, things will be hard, and you’ll be fighting an uphill battle. But, if you’re aware of the struggles and what you can do to counter them, there’s a higher chance of running a successful business.
Also read:
How Restaurants Can Benefit From Accepting Apple Pay
Make It a Slice Above the Rest: 500 Pizza Taglines to Get Customers Attention
How To Open A Cafe With A Low Budget
750 Catchy Restaurant Names and Taglines to Get Your Restaurant Noticed
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