Looking at Opening a Restaurant? Are you an aspiring restaurant operator, looking at opening a restaurant but unsure where to start? Well, we get it. Opening a restaurant or any type of hospitality venue for that matter might seem tricky. On one hand, it can be financially rewarding. On the other hand, opening and managing one can be really overwhelming, especially if you've never done it before . But if you’re really serious about opening a restaurant, then go for it. With the right attitude and planning, you can turn this dream into reality. We've put together a checklist below on the basics of opening a restaurant, so you can get a better understanding of what's required before starting.
Buying A Restaurant Checklist
Buying a restaurant can be a complicated and time-intensive process. Follow our restaurant buying checklist to get an understanding of the process ahead:
1. Complete Market Research
Completing market research is critical for any new business venture but is especially important for local businesses like restaurants. Having the geographic information of the location you are prospecting will give you insights into where potential customers are during different part of the day, their purchasing habits and income levels. Find a reputable market research company who specialised in geographic data to help you acquire these insights.
Something that can be done by anybody is checking demand for certain types of cuisines in a given areas. A fantastic and free tool is Google Keyword Planner, which will allow to check the monthly demand for the cuisine offered. Open an account and check how many people each month are searching for "indian restaurants near me" or "indian restaurants in melbourne", or whatever keywords relate to your food and location.
Check things like tripadvisor, Google reviews and Zomato to build up a picture of the local market. If every restaurant in the area offering the same food types has 5 star reviews, it might be a tall order to break into the market.
Finally, walk around the area and ask people what food they enjoy, who are the good restaurants, who are the bad ones and what they would like to see added to their area. Nobody knows an area better than a local who has lived there for years and knows the local establishments.
2. Find Restaurants For Sale
There are a plethora of platforms which list restaurants for sale including Gumtree, Seek Business, and other business purchasing platforms. A quick Google search for "restaurants for sale" will bring up more than enough options for consideration.
3. Evaluate The Restaurant's Financials
Once you have identified a restaurant to buy, it's time to assess the commercial viability of the restaurant. Look at the profitability, revenue, cash flow and fixed costs to get a good understanding of the health of the business. Take into account the cost of renovations, new equipment and extra staff required when you take over the business.
4. Secure Credit and Funding
Establishing your existing credit rating is the first step in securing credit for your investments. A credit score is measured from 300 (the worst) to 850 (the best). You can check your credit rating online for free through a number of services, some of which can be found by clicking here.
Your credit rating will be a significant factor in how much banks are willing to lend you and what rate. Once you your rating you can begin negotiating with the bank for a suitable business loan.
5. Contract Negotiation
Now that the restaurant has been identified, proven to be viable and the funding secure, its time to lawyer up! Hire an experienced contract lawyer to help you navigate the contractual negotiations, which for a layman is near impossible to do with confidence. It is absolutely critical that you have a full understanding of what each party is agreeing to and what it means for your future restaurant.
6. Restaurant Due Diligence Checklist
A due diligence checklist will help mitigate anything slipping through the cracks which could compromise the success of the restaurant. Ensure that you have asked the existing owner for the following:
- Detailed Financials including tax returns.
- All insurance, policy, licenses and trademark documentation
- Detailed employee information relating to salary packages and schedules
- Detailed Inventory or current stock
7. Transition Strategy
A good transition strategy will deliver a smooth transition for you, your staff and your new customers. There are two main areas to focus on:
Make list of all required renovations, changes in decor, equipments upgrades and new equipment required. In addition, if you the menu is changing create an obsessively detailed plan about which suppliers you will use, the costs, timings and the price at which the dish will sell at.
A marketing strategy should also be developed to get the word out there. Restaurants are a local business so any form effective local marketing will be a step in the right direction. If you need help, reach out to a marketing firm.
A restaurant is only as good as the staff who cook, clean and service the patrons. It is of the utmost importance that the existing staff buy into you as a person as well as your visions. Honesty is the best policy, so be clear about the timings, what you expect from them and what they can expect from you. Ensure you keep your word and the transition you should be somewhat seamless.
Don't forget, existing staff will know the restaurant and the customers much better than you do, so they will be your greatest ally.
Invest in restaurant technology
From the front desk, to the kitchen, the role of technology in the hospitality sector is unmatched. Because of this, innovators are constantly developing new solutions. Solutions that change how restaurants operate for the better, of course. Because of them, operations are more efficient and more lucrative.
Take a point of sale system (POS), for instance. Investing in this delivers a ton of gains. The long list includes tracking your sales patterns, inventory, and others. Simply put, a good point of sale system opens up a different world of information. To add, it can help increase efficiency, improve dining experience, and cut costs.
Formulate your menu
The menu is another crucial aspect of a hospitality business. Your cuisine plays a key role in determining the crowd that you want to tap and the equipment that you need to purchase. Also, by formulating your menu, you can carefully set up your pricing strategy.
Pick a theme
When opening a restaurant, thinking up and creating a theme is really important. A theme is essential in targeting the demographic that you want to serve. So hire professionals and explain the interiors that you want to achieve, then choose a colour scheme. For a cozy dining experience, use dark colours since this makes spaces appear smaller, check out Matilda by Scott Pickett for a little bit of inspiration. For a quick service character, use bold colours that are complemented by bright lights. Our customers at Royal Stacks and their new Food Truck Concept has a great bright and bold theme - check it out. Don’t forget your staffs uniform; they should also reiterate the theme of your restaurant.
Make a financial plan
When opening a restaurant, financial planning is arguably the most important facet. This is because it can make or break a business. In the process, decide if you are going to build, purchase, or rent an establishment. Don’t decide on a whim and carefully weigh the pros and cons. Furthermore, set aside about six months of payroll. This is the part that many business owners neglect. And by doing so, their endeavour falls flat.
Find a reputable supplier
Bear in mind that there’s more to owning and managing a restaurant than making meals. This is because you also need to find the right suppliers. Remember, without the right ingredients as well as equipment, you’re going to have a hard time expanding.
Hire the right people
Employees are critical to the overall success of a restaurant or café. Therefore, it is best to consider the necessary roles before hiring. This has become a lot easier because nowadays ad placement can be done via the Internet. But make sure to hire the right ones since constant rehires can be time consuming and expensive.
These are some of the variables that you need to focus on if you want your hospitality business to go places. If you properly address them, you can cut costs, deliver top-of-the-line dining experience, and so on. Who knows? In time, your restaurant may become a success story that many inspire others.