10 Ways to Survive Opening a New Restaurant

Opening up your own restaurant can be both an exciting and challenging venture for any first-time restaurateur.

According to an Ipsos survey, just over a third of Canadians have dreamed of opening up a restaurant or bar at some point in their life. With such a booming industry, it’s no wonder why. The Canadian restaurant industry brings in $85 billion in sales every year, contributing to 4% of the country’s GDP.

But the industry isn’t without its own challenges and it certainly isn’t one to go easy on the naïve. A popular study conducted by Ohio State University found that 60% of new restaurants fail within the first year.

So how do you avoid failure or avoid becoming one of that 60%?

Here are 10 ways to help ensure your success and survival when opening the restaurant you’ve been dreaming of.

1. Strong Business Plan

Though it may seem that way, it won’t be enough to think customers will flock to your new restaurant because you have the best food, service, and atmosphere in town. When you open a restaurant, you’re also starting a new business, so having a clear business plan that maps out what you need to do, how long it’s going to take, how much it’s all going to cost, and where you ultimately want to end up is key. Both banks and investors will want to see one, but it will also help you establish realistic goals and steps that chart your course, while giving you something to follow and look back on.

Having a detailed and accurate monthly revenue and expense budget written into your business plan will also go a long way in the planning stages. Taking into account both fixed and variable costs like rent/mortgage payments, hydro, gas, food, equipment, and wages is extremely important especially in the beginning when your cashflow is much slower.

2. Excellent Location

The right location will have an enormous effect on how well your restaurant does. Noticing a lack of good restaurants in an area and thinking that yours could fit right in and dominate the business is hazardous and not the way to go about choosing a location. You need to consider why there aren’t any or why there are so few restaurants, which requires thorough research.

When determining a great location, it’s important to look at a variety of factors including visibility, accessibility, and traffic. The more people who will see and pass by your restaurant the better, so finding a spot on a major street rather than a side street would be a major benefit.

Will you have a parking lot or are there places nearby where your customers can park? Making sure your restaurant is easy for guests to access is another important consideration. Some restaurant goers only drive or aren’t able to walk long distances so public transportation is out of the question. Others can’t or don’t drive, so finding a location on a bus route or near the subway would make it possible for many more people to visit.

In addition, consider the type of restaurant you’re planning on opening and whether it suits the area. For example, an expensive fine dining restaurant near a big university or college may not get as much traffic as you would expect. Despite being located in an extremely populated area, the majority of residents are probably students living on tight budgets.

3. Sufficient Funding & Extra Capital

Having enough funding to get your business off the ground is essential to its success. Underestimating costs and overspending are common mistakes that could have drastic effects on your bottom line, which is why it’s so important to create and stick to a budget and not get carried away.

New restaurateurs should prepare to have at least 12-14 months of reserve cash or extra capital in order to cover any unexpected expenses. Finding new ways to minimize your initial up-front costs will also go a long way in getting you through those first months after you open. For example, leasing rather than purchasing restaurant and food equipment outright will drastically reduce these initial costs, leaving you with a larger safety net for emergencies.

4. Equipment Costs Covered Before Opening

The equipment you need to completely outfit your commercial kitchen requires a significant amount of capital. Whether you’ve decided to purchase or finance your equipment, it’s a good idea to acquire everything for your kitchen before you open your doors. Not having all the equipment you need when your restaurant opens could limit the foods you make and the service you’re able to provide, leaving your customers with a poor first impression.

It seems obvious, but it’s also very important to make sure you have all your finances in order, equipment paid off or a signed lease agreement, prior to opening your restaurant. Not paying your vendors in full could mean an unpleasant visit from them in the near future, reclaiming and removing unpaid equipment from your possession.

5. Simple & Tested Menu

The food you serve in your restaurant will be what brings in new and returning customers, so creating a great menu should be a priority for your business.

It’s important that the menu be simple both for the customer and your staff. Menus that offer too many items can overwhelm customers and significantly lengthen the ordering process. Offering too many different dishes also requires you to have those ingredients on hand, which leads to more food waste at the end of the day.

Your food also needs to taste good and the menu must be tested regularly to ensure that all your items are selling. Asking for feedback or handing out surveys will help you determine which dishes are a hit with your customers and which ones should be removed.

6. Excellent Customer Service

Just like a great menu, amazing customer service and a fantastic customer experience will bring back repeat customers and generate positive buzz about your restaurant. Hire staff that you know will be efficient and able to create an atmosphere that’s enjoyable for your customers. It’s important to set a precedent early, on what you expect from your team in terms of customer service, while investing in proper training and support to ensure it remains a top priority for everyone.

With it being so easy to post a review or rating online for every new and potential customer to see, one bad customer experience could have damaging effects on your restaurant’s image.

7. System of Operations in Place

Before your restaurant opens, you’ll want to establish clear systems on how it’s going to run. For your employees, this will include creating job descriptions and training outlines for every position you’re hiring for. This will ensure that everyone knows exactly what they’re responsible for, so that there are no areas of the business left uncovered or forgotten about.

You’ll also want to establish guidelines for your menu. How will your menu items will be prepared and served? What type or grade of ingredients must be used? What will the portion size be in order to ensure top quality and consistency?

8. Distinct Restaurant Concept & Culture

All successful restaurants start out with a clear concept or idea of who they are. Determining yours will be one of the first things you decide, before even drafting a business plan. You need to decide what type of restaurant you’re going to run. Will it be a café, breakfast/brunch spot, quick and casual eatery, or fine dining venue? Afterwards, you can decide on things like the kind of food you’ll serve or how you’ll decorate your front-of-house.

By not having a clear niche, you run the risk of being too broad or having a scattered menu with no cohesion, which will ultimately confuse your guests and staff. With a distinct restaurant culture and mission, your staff will be able to better portray it to your guests and customers.

9. Coordinated Staff Appearance

Your front-of-house staff are the face of your restaurant and often the only people your customers directly interact with. For this reason, it’s important that they represent your brand. A coordinated uniform, apron, or dress code, helps complement your restaurant’s design and aesthetic, making everything more fluid and attractive to your customers.

Clean and coordinated staff outfits also make it much easier for customers to identify who works there and whom they can easily approach to have any questions or concerns quickly addressed.

10. Clean & Polished Restaurant Appearance

Dirty floors, windows, and washrooms will always leave a bad impression on your guests and could even prevent them from visiting your restaurant in the first place. A clean and polished restaurant, whether in the dining room, washroom, or on the patio, will instill confidence in your customers regarding the cleanliness of your kitchen and quality of your food. No one wants to eat somewhere where they’re going to worry about cross-contamination or getting food poisoning from a filthy kitchen.

Talk to one of Nella’s experienced professionals today about opening your own restaurant. We can help at every stage of planning, design, and financing to get you on the path to success.
416-740-2424
help@nellaonline.com

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