We briefly touched on the 13 steps or ingredients and the categories they are divided into on our previous blog. Brush up on it:
We will dive into the first category:
Prep: Set up your Mise en Place
This is the preliminary market research stage you need to do before getting too committed to a particular restaurant concept. Learn to find the right location and conduct a feasibility study.
- Choose a Concept
Your restaurant concept needs to include the theme, food, service style, décor, ambiance, name, logo, atmosphere, menu, prices, and restaurant type. Choosing your concept is one of the most important decisions you’ll make when opening your restaurant.
Having a basic concept in mind from the start will help you answer crucial questions about cost, space, equipment, and staffing. It will also help you choose your location, conduct a market feasibility study, and create a business plan (more on that in a bit). Ultimately, properly executing your concept will help satisfy and retain customers who are more likely to spread the word.
Selecting your restaurant type, is not your concept, but one core element of it. It’s an ideal place to start when choosing a concept because it lets you view it from a broad lens before diving into the details like your menu and prices.
Common Restaurant Types:
- Fast food without table service
- Takeout and food delivery
- Food trucks
- Table service
Choosing the Right Restaurant Type:
Tip 1: Consider the cuisine. Certain types of cuisine suit certain types of restaurants. For example, French-style cuisine is often the domain of upscale restaurants offering full-table service, Chinese food is often found in the takeout food market.
Tip 2: Determine staff pool availability. Are there enough job seekers in your city to staff your operation all year round?
Tip 3: Understand your target market’s habits. A more dispersed market makes delivery service less practical while a concentrated market is great for delivery.
Tip 4: Meet your city’s zoning requirements. Establish if you have enough space to accommodate your restaurant type.
- Research the Market
With a basic concept down, it’s time to research your market, potential customers, and competition.
Understanding Your Market:
- Research the demographics of your market area. Review factors such as age, education level, household size, income, rental prices, and population trends. Get this information from informal research, formal surveys, statistical research, and online. If your budget allows it, you can also pay someone to collect this data.
- Analyze your market’s lifestyle characteristics. Using restaurant market research methods, you may discover that many of your potential customers are vegan. It follows then, that your menu should incorporate vegan based dishes.
- Study the spending patterns of different groups. Again there are studies online that will provide this information. A survey by LendEDU, for example, discovered that Millennials prioritize restaurant food over retirement savings.
Research your Competition:
You should also research direct and indirect competition. Your direct competition shares your restaurant’s concept and indirect competition is all the others. For example, if you’re an upscale restaurant offering top-notch service and a fantastic ambiance, your direct competition is other similar fine dining restaurants and your indirect competition—cafés and diners.
Researching the competition will help you better understand what your competition does well (maybe their service is stellar) and what you can do better—perhaps you can create a better ambiance or serve better food. It may even give you a deeper understanding of your market—the dishes regular’s like and what kind of music appeals to them.
The easiest way to conduct your research is to select a few direct and indirect competitors and visit their establishments. Then, study their menu, listen to the type of music they play and even assess the decor. You can also speak to their customers and ask them what they like about your competition’s restaurant.
- Find the Right Location
It’s now time to choose a location—something crucial to your restaurant’s success. Ideally, you’ll want a site that has:
- A high concentration of potential customers
- Nearby pedestrian traffic
- A central location
- Neighboring businesses to attract potential customers
- Support from your local municipality in the form of utilities
- Nearby parking so your location is accessible
- High visibility to ensure foot traffic and free advertising
- Restaurant zoning permissions and approvals
But, remember this: Your location is only as good as your concept. If you choose the wrong location for your site or execute it poorly, you risk closing your doors.
The bottom line: Take the time to find a suitable location but don’t ignore the needs of your concept.
- Conduct a Feasibility
A feasibility study helps to determine the likelihood of your restaurant succeeding by analyzing relevant factors like concept appeal, revenue and cost projections, and financial goals.
Below are the core sections to cover. As you work through these sections, you may notice they look similar to the elements included in a business plan. However, a feasibility study is not a business plan. Instead, it surfaces the probability of achieving the ideas detailed later on in your plan.
Let’s dive in.
Section 1: Executive Summary
This section summarizes your market research findings and helps answer one crucial question: “Is my idea worth pursuing?” It will detail important financials like revenue projections and explain your USP (unique selling proposition). This section is usually only a few paragraphs at the top, but is written after the main feasibility study.
Section 2: Market Overview and Analysis
In this section, include relevant market research findings such as the saturation of the market, demographics, and competition in your area.
Section 3: Business Explanation
Detail your concept, highlight your competitive advantage, and explain how you’ll fulfill your market’s needs.
Section 4: Financial Projections
This is arguably the most important section as it helps establish if your restaurant will be profitable. The main areas to include are your break-even point, capital requirements, expenses, and income.
Section 5: Conclusion
Sum up the findings and conclude whether it’s worth starting the restaurant or not.
If you concluded that starting a restaurant is feasible, we’ll discuss the next steps on our upcoming blog…stay tuned!