Tips for Opening Your Own Restaurant

Do you love to cook? Do you love to entertain? Have you ever been told that you should open up your own restaurant? If so then you are among a majority of people who are under the innocent impression that the restaurant business would make a fun and exciting career change. STOP RIGHT HERE!

A word of caution: Do your homework! In the United States 5 out of 6 restaurants fail within the first five years. Most don’t make it past year two. The reason for such a high failure rate, you may wonder? Most people who open a restaurant have no idea how much money (profit) they need to make in order to pay the bills and keep the doors open. I have seen more people than I care to count open a restaurant thinking they will make a quick buck only to close it six months later, dismayed because not only did they not make any money, they lost money.

Opening a restaurant, like any business venture, is an investment. Some investments become huge successes while others flop. You must approach your restaurant idea with this same business-like attitude. Most successful, independently owned restaurants can make a nice profit, but it probably won’t make you rich, at least not in the first few years, if at all.

If your desire to open a restaurant stems from your love of food and a need to share it with the general public, you may want to stick with hosting small parties at your house. However, if you are ready to be your own boss and are willing to invest a lot of time and hard work, not to mention money, to make your dream a reality then you may be ready to open your own restaurant.

The first thing you must do is study your potential competition. Even if you do not like a certain restaurant, such as a chain establishment, many other people do like it and you need to figure out why they eat there. Is it because of the low prices, the good service, the great atmosphere? Try to study each of your competitors; not just their menu, but what the dining experience is like for their customers. How are you going to lure customers away from your competition’s establishment to come and eat at your brand new restaurant? What will you offer that is unique to the area? How are you going to build a loyal customer base? You will need to answer all these questions, plus many more when you write up your business plan (more on that in a bit).

The next major step is choosing a location. I am partial to old buildings for restaurants. The older, the better. Both of my restaurants are in historic buildings; One is an old shoe factory that has been renovated and the other is an elaborate hotel that was built by one of Maine’s many paper mill barons in 1906. There is an inherent charm that these old buildings possess which is hard to duplicate in new structures. Many chain restaurants have gone out of their way to make their interiors look like a flea market, with fake antiques and “old” tin signs adorning every available surface. I still believe, as do my customers, that certain ambiances are next to impossible to create in a new building.

Despite the obvious charms of an old building, there are many drawbacks you should be aware of. Bringing a building that is even 20 years old, up to current health and safety codes could prove to be very costly. Handicap access is a must in all parts of the restaurant, so if you want an upstairs banquet room, you need to make sure there is a handicap entrance. Bathrooms need to have so many stalls per seats in a restaurant. When we opened our second place, we were delayed a week because another toilet had to be installed in the men’s room. (Like there is ever a line to the men’s room anyway!) If you have not read up on your states health & licensing codes, I recommend you do so, before you start applying for loans. The week we were delayed in opening cost us several thousand dollars in lost business.

Another important issue to think about is the actual location. Perhaps there is a spot in your town that has one failed restaurant after another close down every six months or so. It is a common mistake to think “Well, my restaurant would be a success there! Those other people just didn’t know how to run their business.” Stop right there! If more than three places have come and gone, don’t bother with the spot. It’s cursed. For whatever reason, the general public associates that particular location with bad food andor service. It doesn’t matter if you have the best food at the best prices with the best looking staff around, it WON”T WORK! It’s cursed. Let is go and find a new spot to daydream about.

The last thing I want you to think about when choosing a location for your restaurant is well…Location. You want to locate your restaurant in a busy and accessible location. A big consideration is parking. Are there enough parking spaces within walking distance of your restaurant? I wanted to open a place in this wonderful downtown building in a town about forty minutes from my home. After asking around about the spot in question, and about where people eat in that town, it soon became clear that parking was a major issue in the downtown. If people have to go out of their way to get to your restaurant, then they probably won’t eat there often.

Just as in real estate, location is everything. Be careful not to jump at the first available spot that strikes your fancy. Like everything else in this business, the more time you spend planning before you open, the better chance you have of succeeding.

Finally, before you open your own restaurant, you need to think about choosing a menu. Menu concepts are vital to any restaurant. If you don’t have a great menu, then what is the point? The menu you choose will reflect the type of restaurant you are trying to create. Keep in mind a few tips.

1. Don’t make your menu too large.
I have seen many places that start out with menu’s the size of small novels. We did this with our first one. It was confusing, and hard for servers to remember, and it caused alot of extra food be on hand that we could not sell.

2.Cross-train your menu
Just like your staff (see “That’s not my job!” post below) you menu indgredients should fill at least two dishes, if not more. For example, you have a wonderful smoked seafood appetizer platter. That smoked seafood is a small fortune to purchase. You do not want it lingering in your walkin. You can run it as a special, but that only works if your staff remembers to use it. I suggest adding another dish that calls for smoked seafood, perhaps a smoked seafood Alfredo, and a smoked seafood frittata.

3. Limit the menu, and go crazy with the specials.
If you have a pared down menu, then you can add variety and mix things up with your nightly specials. Your regular patrons will appreciate the change on any given night. This is what we have done, and it works very well. If there is a particular vegetable or fruit in season, then we can incorporate it into our specials. For instance, when strawberries are in season, we run strawberry chicken marsala. I would never put this on my regular menu because finding affordable, good quality strawberries in Maine outside of the summer months is nearly impossible.

Unless you are independently wealthy, you will have to take a loan out to start your venture. It can range anywhere between fifty-thousand dollars to one hundred thousand dollars, or more. In order to get a business loan, you will have to prepare a very detailed business plan. There are many local organizations, such as the Small Business Association (SBA) that can help you put your plan together. Essentially a business plan will explain to the bank how you intend to make a profit. You will need to estimate how much you’ll need to make on a daily/monthly/yearly basis in order to stay open.

If the prospect of writing a business plan, putting a second (sometimes third) mortgage on your house, paying for your own health insurance (oh the horror!), filing out endless paperwork for loans, and not sleeping for the next, ohhh, year or so, don’t scare you, then I would say you are ready to be a restaurateur. (Quick, there is still time to change your mind!)