Running a restaurant is certainly rewarding, but it’s no easy task. Like any start-up venture, restaurant ownership takes a lot of hard work, unwavering dedication and a willingness to overcome the obstacles you’re sure to come up against along the way. Provide good food, an enjoyable atmosphere and a high level of customer service. Treat your customers like they’re your business partners, knowing that a happy customer will tell people about your restaurant and a dis-satisfied customer will too.
Steps involved in starting a Restaurant
• Making a Business Plan
Planning is the first and foremost step in every business. If you are seeking funding from a venture capitalist, you will certainly need a comprehensive business plan that is well thought out and contains sound business reasoning. It also helps you to evaluate a new product line, promotion, or expansion. A comprehensive, accurate business plan is the most critical component of opening a new restaurant. In fact, the success or failure of your restaurant can hinge on the strength of your business plan, so make sure to do it right.
• Determine the type of restaurant.
What type of food would you serve? Indian, Chinese, Japanese, etc.? Restaurants are also classified according to the type of service. There are sit-down restaurants where the waiter gets and serves orders. In most fast food types, the customers order at the counter and get the food themselves. Restaurants are also divided according to the price of food so there are fine dining places that are extremely expensive, and there are affordable ones like cafeterias.
• Choose the right Name for the Restaurant
Restaurant names may reflect a theme (Italian, Asian-fusion, Southern barbeque), a location, or simply be a play on words. The important thing to consider is the impression it will leave on customers. Select a name that will be easy to customers to remember and spell. Nothing is more frustrating than not being able to find a restaurant online or in the Yellow Pages because you aren’t spelling it correctly.
• Plan your menu
Collect the menus of other restaurants similar to your concept and use the ideas that would work best for you. Compute the costs and the pricing of the items to project your potential profits per item. Remember to incorporate all your overhead expenses like labor, time, rentals and taxes. Update your menu periodically and remove items that aren’t selling.
• Buying Equipments
Buying the kitchen equipment and fitting out your restaurant will probably be your biggest expense when starting up a restaurant. Having the right type and capacity of equipment enables you to serve your customers promptly, which is one of the keys to customer satisfaction. Having the proper equipment also helps maintain the quality and consistency of the food.
• Plan your location
Consider market size, adequate parking space, easy access and visibility. Having an excellent market size means having a large number of potential customers. Location is vital to the success of any restaurant. There are several factors to consider when searching for the ideal restaurant location, including the population base, local employment figures and accessibility. Once you find that perfect location, you will need to make sure you negotiate the best lease possible for your restaurant. Location can make or break a restaurant.Do not rush this decision.
New restaurants need advertising to get customers in the door. Before you begin placing newspaper ads and building a fan page on Facebook, decide who your target audience is. Are you hoping to lure in families, business people, and the after-hours crowd? Once you’ve decided who you want to attract, decide how much money you have to spend on your initial advertising campaign.
• Register your business
A business license is required by all restaurants. It essentially grants you the permission to open your doors for business. Generally, business licenses are issued by the city or local municipality.
When starting a restaurant, insurance is the one of the easiest things to forget. Here is a quick review of the essential and optional insurance that you will need to consider. Public liability insurance, Buildings Insurance, Employers’ liability Insurance, Contents cover and Business interruption.
• Have modern control systems
Invest in a POS (point of sale) system and develop control procedures with the help of an accountant to both minimize internal theft and to manage your operations better. The POS will also be useful in tracking the movement of items and monitoring the productivity of your employees.
One of the focal points of any retail business is the cash register. The ability to process transactions and tender cash are essential to the efficient operation of business. A POS system is a computer software and hardware networked together to track sales and inventory as they occur. POS systems will solve a multitude of problems in your business.
Since implementation of a POS system requires a large investment in time and money, the selection of software and hardware requires careful research into the features available and associated costs. For the new business, a POS system is a smart investment. The savings in labor hours and increase in efficiency makes balancing staffing easier, and the POS system automates many time-intensive tasks. Most POS software helps you stay aware of how your business is performing.
Many owners and managers find that the reports generated from the POS system invaluable in the day-to-day and long term management of the business. From revenue and profit reports, ordering reports and product sales reports, the POS system offers a perspective of the total business that is difficult to grasp in other ways.
Apart from the POS billing, any business has to maintain book of accounts which needs to be audited every year. For this purpose, there will be accounting software used by any business. Purchase of goods or raw materials is one more activity that is happening in the store. This also has to be maintained in order to make payments, reordering etc. Similarly Salary payment and other purchases also have to be accounted. This is where accounting software comes in handy. Before purchasing the accounting software make sure it is integrated with your POS software as well.
Customer Relationship Management(CRM)
CRM software is designed to help businesses meet the overall goals of customer relationship management (See CRM definition). Today’s CRM software is highly scalable and customizable, allowing businesses to gain actionable customer insights with a back-end analytical engine, view business opportunities with predictive analytics, streamline operations and personalize customer service based on the customer’s known history and prior interactions with your business.
CRM software is commonly used to manage a business-customer relationship; however CRM software systems are also used in the same way to manage business contacts, clients, contract wins and sales leads.
Customer relationship management software is offered in a number of installations including on-premises (where the software resides inside the corporate firewall and is managed by IT operations), or as web-based (“cloud” applications) where the software is hosted by a CRM provider and accessed by the client business online via the provider’s secure services.
In the software market there are so many companies offering accounting, billing and CRM separately. When all the above mentioned software are purchased separately without integration between the software then the idea of analysing and planning strategy is lost. It’s because when these functions are done separately using different software it becomes a lot difficult to get the kind of reports you want on time. This will actually hinder your business progress. So it is very vital in choosing the right kind of software to manage your entire business. A Cloud ERP solution can integrate all your business functions under one roof and helps you to stay focussed on scaling up your business. There are so many ERP solutions available in the market. Reach Accountant’s ERP is one such solution which is affordable, reliable and user friendly which is tailor made for Restaurants. Probably you can try it when you are looking for an ERP solution for your business.
• Common mistake people make when they first go into the restaurant business and how can they avoid that
Not going in with enough money. When you get into the restaurant business you have to first set up a realistic budget and plan for six months of operating expenses in advance. Never go into a project that’s so big that you won’t be able to recover if it doesn’t work out. Have insurance because the reality of running a restaurant is that you never know what can happen.
Hire experienced employees which may help us fulfill your customer’s needs. Never stop promoting your restaurant. Keep on introducing new menu items so that customers will not get tired of your offerings. While there is intense competition in the restaurant business, but still there is huge opportunity for entrepreneurs determined to succeed. All the very best for your new Venture.