Starting a restaurant business is something a lot of entrepreneurs and food lovers dream of. There’s no better time like the present as the foodservice industry is forecast to reach $898 billion in sales in 2022, so if you want to make money while doing something you love, this is a good career choice.
However, a great love for food isn’t enough if you want to start your own restaurant. It’s still a business like any other, and to start a business and make it profitable, there are a few things you need to do. Here is a complete guide on how to start a restaurant business.
Start with a business plan
The first step you need to take when starting any business is to write out a good business plan. No matter if you’re a business veteran or a new entrepreneur, this is a step you shouldn’t skip.
Your restaurant business plan will present the building blocks of your business and describe every aspect. A good plan will allow you to outline all of the fine details and summarize your business so you know which steps you need to take and make it easier for you to draw in investors.
A restaurant business plan has 8 main components:
- An executive summary of all the other sections of the plan.
- The company overview and description of what your business does.
- The concept of your restaurant and the menu.
- The management and ownership structure.
- Employee and staffing requirements and needs.
- A plan of your marketing efforts and competitor analysis.
- Your advertising and marketing strategies.
- Financial projection and summary of how you plan to obtain funding.
Business plans are usually very straightforward and don’t require too much creativity, but can still be hard to draw up. So, you should learn about business plan design. Knowing what information to include and how you need to include it is very important.
Marketing is essential
The restaurant industry is extremely competitive, and so is restaurant marketing. It requires a lot of well-thought-out campaigns and strategies and since most promotions are now done online, your best choice would be to look into digital marketing
There are multiple restaurant marketing strategies you can try out, but starting online is always a good choice. For example, you should always start with your website. You can do a lot with a well-built website if you understand the importance of SEO in taking your startup to the next level.
But this is just the tip of the iceberg and there are many more restaurant marketing tactics you should consider, such as Facebook, Instagram, and Twitter, for example. Other tactics include creating a Google My Business profile for your restaurant, sending out newsletters, and starting an email marketing campaign.
Finally, you shouldn’t forget about the power of Google Ads. A lot of people search for restaurants online and if a Google Ads pops up, it might intrigue them to visit yours. Google estimates that for every $1 spent on Google Ads, businesses receive $8 in profit, so this can be a great way to draw in business.
Find the perfect location
Before you settle on the location for your new restaurant, here are a few factors you need to take into consideration:
- The accessibility and visibility. It’s important to find a location that is easily accessible by car and on foot and has a lot of available parking spots. The visibility also needs to be great, meaning it should be easy to find and that even people who are just passing by can easily spot it.
- The competition in the area. The location needs to have a couple of restaurants similar to yours so you know the local demographic will be interested in your business. But there shouldn’t be too many of them so you can have a fighting chance for success.
- Labor costs. Your location will be important when it comes to how much you want to pay for labor. If you open a restaurant in an area with a high cost of living, you will also have to pay higher wages.
Calculate all of the costs
You can’t expect to have a profitable business unless you know what kind of costs to expect and carefully plan around those costs.
Most people who want to open a restaurant think about the food costs before anything else. Of course, this is one of the most important expenses you will have and ideally, you should spend approximately 30–40% of your menu price on your food.
However, you should also think about your overhead costs. This is the money you will have to spend on expenses that don’t have anything to do with food or labor.
Overhead costs include things such as your rent, the kitchen equipment, the interior decoration and furniture such as chairs and tables, and your restaurant license. Your overhead costs will be much bigger in the beginning when you’re still setting up your restaurant.
Starting any type of business takes work and dedication, and opening a restaurant is no different. But with a good business plan, solid marketing strategies, the perfect location for your restaurant, and being aware of your costs, you will see it’s not as difficult as it may seem. All that’s left is coming up with the perfect recipes.