The 2021 Restaurant Start-Up Cost Guide & Checklist is Here! Download Today
by David Klemt
This guide gives anyone starting a restaurant, bar, brewpub or other F&B venue the best chance for success in 2021.
Hospitality has endured a nearly endless thrashing for almost an entire year. The calendar has ticked over to 2021 but still, the pummeling doesn’t have an end date.
However, the industry has endured and continues to do so. We don’t know when Covid-19 will cease presenting a threat but we know this: there’s no end to the fight in those in the hospitality community.
Veteran and neophyte owners and operators are still going to open new venues in 2021, pandemic be damned. That fact means it’s more crucial than ever before that owners are positioned for success.
The KRG Hospitality 2021 Restaurant Start-Up Cost Guide & Checklist aims to structure the process of opening a restaurant or bar to maximize an owner’s opportunity. The guide contains 2021 start-up costs, renovation costs, scaled costs, an in-depth milestone checklist, and more that will help readers understand the process and keep them on track to go from concept to opening doors as smoothly as possible.
Click here to download the guide and start down the path of restaurant or bar success today.
Those seeking new restaurant opportunities in 2021 should give serious consideration to Absurd! Kitchen Co., KRG Hospitality’s unique turnkey QSR.
Development of the concept was motivated by the realization that operators need to continue to pivot to survive the pandemic and thrive in a post-pandemic world.
“At KRG Hospitality, we immediately pivoted in March 2020 into ‘rescue mode,’ understanding the immediate needs of so many independent operators,” says Doug Radkey, president of KRG Hospitality.
Moving forward into 2021, guests will be more concerned health, safety and their comfort than ever before. Absurd! was developed as a response to heightened guest expectations and to create a path forward for operators in the post-Covid-19 era. Not only is the concept forward-looking, it’s designed for turnkey operation.
Restaurant guests were growing accustomed to the convenience of frictionless ordering, pick-up and delivery. Lock downs, restrictions, and health and safety concerns have pushed delivery and pickup closer to the forefront of guest expectation. Absurd! leverages the latest in technology and utilizes a subscription element to reward loyalty while offering a convenient and safe QSR experience.
In the new era of restaurant operation we can expect guests to be less tolerant of waiting in lines. Multiple publications have published articles hypothesizing that the Covid-19 pandemic we lead to the end of waiting. Considering the importance of social distancing and how commonplace curbside pickup has become, it’s understandable that many guests have developed a preference for speedy, safe service.
Equally understandable is a guest wishing to keep interactions with other people to a minimum. The ability to peruse a menu via QR code or pay their bill using their own device has offered a level of comfort to guests during the pandemic. It’s logical to believe these guest habits are here to stay.
At Absurd! locations there are no traditional lines. By design, there’s no contact between guests and staff. Guests interact with a location via designated pick-up or drive-through areas. In the pick-up area, guests access food-safe storage units through their mobile devices to grab their orders. The drive-throughs only serve delivery drivers or those who have placed pre-orders. Convenient, safe, time-saving restaurant features for a post-pandemic world.
Absurd! cuisine is inspired by Southern flavors and dishes such as loaded chicken strips, fried waffle sticks, breakfast bowls, and sandwiches. There are options for the full range of dietary needs and preferences, such as dairy-free, gluten-free and vegan meat alternatives. Along with a competitive, high-quality menu, KRG Hospitality has developed a retail offerings that include branded dry spices and meal kits, leveraging another trend that has seen significant growth during the pandemic. The concept’s packaging is sustainable, and adding a food truck can expand an Absurd! operation’s reach.
“Approximately 85 percent of the food menu will be prepared on-site, including the seasoning mix and ‘dredge’ for the fried chicken, which is intended to also be gluten-free and dairy-free,” says Radkey. “The brand is able to accomplish this by maintaining a small but robust and strategic menu mix over the breakfast, lunch, and dinner day-parts. Other food items such as the chile cornbread, breakfast biscuits, and sandwich buns will be sourced through regional partnerships.”
While developing Absurd!, KRG has created a loyalty program to go along with it that’s relevant to today’s guest preferences and consumer habits. Loyalty programs have made the news lately, with attention being paid to how they’ve been changing for the past couple of years. Tech has emerged as a driver for such programs, combining guest data and personalized digital interactions to increase loyalty. However, creativity is a crucial element as well. Recognizing the value of a unique but easily understood loyalty program that offers an attractive value proposition, KRG’s approach for Absurd! is a beverage-based subscription service.
“With a low monthly cost of approximately $8.99 USD per month, the Absurd! beverage subscription program, which is optional, gives the brand an easy way to attract customers and convince them to change their traditional F&B ordering habits while building a strong base of loyalty (and data),” says Radkey. “Consumers today are accustomed to low-cost monthly subscriptions. Therefore, we think it is time for restaurants to tap into that opportunity. The ‘unlimited drinks’ within this program include coffee, iced tea, lemonade, and an assortment of flavored soda waters.”
Absurd! Kitchen Co. isn’t unique for the sake of being different. First and foremost, the concept was designed for experienced and new operators alike so they can thrive in the new era of hospitality. The dedication of KRG Hospitality to helping operators flourish with concepts that are scalable, sustainable, profitable, memorable and consistent is ingrained in Absurd’s DNA.
The concept is a recession- and pandemic-proof QSR that doesn’t rely heavy upon day-to-day involvement by the owners, making it ideal for operators of any level, from the neophyte to the experienced hospitality group.
Originally Posted on Typsy – By Doug Radkey 10/02/2018
The development of a restaurant can be extremely daunting with its many moving parts and it’s easy to miss crucial start-up strategies within the mix of it all.
One you don’t want to overlook is your intended media launch strategy. Today, the word ‘media’ means so much more than your local newspaper outlet.
The worst thing you can do is start your marketing and promotional campaigns one week before opening or simply expect a Field of Dreams “if you build it, they will come” type of scenario to work.
Hint: it doesn’t!
A successful restaurant launch includes building plenty of buzz for the three-four months leading up to the opening. It also means developing what we call a communications strategy to deal with the variety of media outlets both before and after opening.
A strong communications strategy will prepare you for the most effective social, digital, and community-related marketing tools in relation with targeted media partnerships which will then target your specified audience across a multitude of touch-points.
Aside from the established chain restaurants, many aspiring and independent restaurateurs do not have the budget for their own in-house marketing team (or outsourcing an award-winning agency). And that’s okay. In order to be fully present within your community both before and after opening, restaurateurs just need to ensure they have the necessary marketing plans in place.
This means projecting the right voice to attract the right audience. This also means determining the tone of your content, the nature of your interaction, and the overall approach to your brands messaging.
It also means knowing how to handle any third party media attention before and after opening.
To develop an effective communications strategy – you want to focus on three key areas: your social media, your public relations, and your direct-to-consumer channels. Let’s have a look at each.
Within both your marketing and communications plan, you firstwant to develop a social media strategy. There is no getting around this today. Use plenty of simple, cost-effective strategies in the weeks prior to opening to create the buzz you want (and need). These methods will also maximize exposure (to both the public and other media outlets) in addition to early revenue opportunities during what’s known as your ‘honeymoon period’ – the first three months of operating.
This includes developing and/or executing on:
Social media channels, like Facebook, Instagram and Twitter, that your target audience actually uses each and every day
The development of strategic monthly content calendars for each social channel
The creation of social media contests and sales-driven promotions
Social media paid-advertising campaigns to further build your targeted community
Digital marketing partnerships where you can leverage both social media and email marketing
Food and beverage photography and videography strategies to enhance your visuals
It’s not easy building an online community from scratch. Your social media presence must have a strategy behind it – not a ‘spray and pray’ method of posting a food photo and hoping your target market will engage with it. It is imperative that you’re consistent, unique, and strategic. You also want to build digital partnerships that will help you successfully piggy-back on another’s already built social media community.
Leading up to the opening and for the first one-to-two months after – you want to build strong relations with your local media partners. Pairing this with a strong social media strategy is crucial in developing the awareness you need to get a head start in generating revenue.
You want to consider the following methods:
The development of your key brand messages to create consistency and reduce confusion
The creation, management, and distribution of press materials including a press kit, fact sheets, press releases, and owner/chef biographies
The development of a targeted media list – online, print, and broadcast. Know beforehand who you want and don’t want to associate throughout your local media. Don’t waste time meeting with media outlets that don’t have the same target audience as you do
Partnering with key influencers (bloggers) and tastemakers (farmers, breweries, wineries, and other key suppliers to your restaurant)
The identification and training of your start-up brand ambassadors; this includes ownership, management, and other priority personnel
At a minimum, you want to send out press releases and contact your local restaurant bloggers, podcasters, food critics, and social media influencers. Engage with your local industry dignitaries on social media and then inform them of your newly developed restaurant. Create an invite only event either before or during your soft opening to maximize on their value and to amplify your story.
To tie all of your social media and public relations together to create a winning communications strategy, you want to include a variety of direct-to-consumer campaigns throughout the first 30-90 days of opening.
You want to ensure your target market is seeing your brand across a variety of channels. Pending your choice of concept – you want to entice them to visit your venue approximately three times before the end of your honeymoon period.
You can achieve this by creating the emotion that your target audience is going to miss out on the hottest new restaurant in town (FOMO – Fear Of Missing Out). You can do this by creating the following:
A variety of menu tasting and beverage pairing events
Direct mail marketing campaigns to targeted hyper-local neighborhoods
Community marketing outreach and partnership opportunities (events, donations, and sponsorships)
Site sampling and street activations by personally taking food samples and marketing material to local businesses (using your developed brand ambassador strategy)
In-house return visit campaigns that measure the return-frequency of customers
How will you reach the maximum number of targeted customers with the least amount of spending to maximize your return-on-investment? How will you plan to be memorable and stand out from the competition as time goes on? Start early and be creative, imaginative, and bold in all of your efforts while being prepared to handle social media, public relations, and direct-to-consumer strategies.
The Ultimate Opening Day Checklist for Restaurants
Originally Posted on Typsy – By Doug Radkey 08/06/2018
Before opening your doors to the public, there is an enormous and often overwhelming list of both tasks and strategic milestones to first complete.
This list traditionally starts 3-6 months (sometimes even more) prior to opening day.
In this industry, there is never a ‘one-size fits all’ approach, but there are some general guidelines to follow, that any seasoned restaurateur will likely agree with, no matter if it’s a 3 month or 6 month project.
Your opening day checklist shouldn’t just be a piece of paper either, it is ideal to hold weekly meetings throughout the start-up phase and consider using an online project management dashboard to promote effective communication within your entire start-up team.
Let’s have a look at a generic restaurant opening-day checklist with the appropriate time-frames that should be shared with all members of your opening day team.
Design and Build
Even prior to signing your lease, you should have a grasp of who your design and construction or renovation team will be. Don’t waste your time afterwards sourcing and negotiating – the clock is now ticking.
For many independent operators, this is often 120-180 days away from your projected opening day. This is also where having your feasibility study, concept development plan, and business plan will help speed up the process, positioning you to make strategic – business driven decisions.
During this period you should expect the following:
Completed schematic designs (engineer and architect related drawings)
Submission of drawings to local municipality for approvals
The hiring of your project/construction manager or foreman
Receive quotes for exhaust hood systems and any other customized concept specifics that may need additional lead time outside of 2.5-3 months.
The project manager should then put in place what is known as a ‘gantt chart’ indicating construction or renovation milestones. From there, the construction of your restaurant dictates the remainder of the schedule for concept and operational specifics. You should work backwards from that projected completion date, often 90 days, and by ideally adding 2-3 weeks for potential delays.
3 – 4 Months Out:
Apply for liquor license – if required
Finalize graphic designs and other branding initiatives
Secure both web and social domains
Order bar and kitchen equipment – order earlier for customized equipment
Order furniture for restaurant (tables, chairs, umbrellas etc.)
Order any additional millwork related pieces for your concept – earlier for customized ones
Develop vision, mission, value, and culture statements for your concept
Develop staff positions, specified roles, job descriptions, and wage structures
Prepare your operational strategies (marketing plans, training programs, onboard packages, staff policies, operational templates/checklists etc.)
Decide and finalize choice of operational vendors; cleaners, pest control, grease trap cleaners, exhaust hood cleaners, security, telecommunications etc.
60 Days Out:
Install exterior signage and execute first portion of marketing plan including social media launch
Create start-up menu and prepare your food and beverage supply chain management
Setup payroll structure with bookkeeper and all staff paperwork filing processes
Interview and onboard any key management (chef and/or general manager)
Decide and order small-wares for both the kitchen and bar area
Decide and order staff uniforms with any logo artwork or embroidery
Decide and order point-of-sale systems in addition to any sound, video, and digital menu boards
Cost out menu and prepare both menu covers, design, and engineering strategies
Review current construction status and milestones – adjust remainder of schedule as needed
Install (and test) all kitchen & bar equipment and organize all ordered small-wares
Interview and onboard remainder of your team leading up to 30 days to opening
30 Days Out:
Install point-of-sale system and merchant services for both testing and training
Finalize recipe booklet & menu cards with photos for both kitchen and bar area
Setup line and employee stations; walk-through menu, steps required, and adjust
Begin 1-2 weeks of training for all new hires focusing on operations, equipment, and service sequence
Order and organize all food and beverage for training, soft openings, and opening day
Execute 30 day marketing and media launch strategies to begin second phase of building buzz
Create staff schedules for the next two weeks of soft openings plus first week of opening
Construction should be nearing completion minus final touch-ups and inspections
Setup a preventative maintenance program for all equipment and create emergency contact list
14 Days Out:
Host a photo/video shoot for food, beverage, and interior for marketing purposes.
Host first week of soft openings – using a strategic list of invite only guests
Make tweaks to operations and service sequence by observing timing, traffic flow, and guest emotions
7 Days Out:
Execute final portion of start-up marketing, media, and promotions plan.
Host second (and often final) week of soft openings – using a strategic list of invite only guests
Finalize tweaks to operations and service sequence by observing timing, traffic flow, and guest emotions
D-day has arrived. Are you ready? By now all the previous groundwork you’ve done should mean that you’re prepared to open your doors to the public. Just a few more things before you celebrate:
Ensure venue, both interior and exterior, is impeccably clean with no signs of construction
By completing both training and a two week soft opening – your team should be confident and well prepared for the first round of guests
Be calm, you got this!
As you can see, there is so much that goes into an opening and one should not attempt to go about it alone. Starting a restaurant, whether ‘from scratch’ or by over-taking an already built establishment (and re-branding), is incredibly challenging.
But by being prepared with the appropriate plans and checklists, you’ll be opening your restaurant with success!
There is truly a science to the design and layout of a winning bar. Outside of implementing a timeless interior, a bar needs to consider many factors including but not limited to; efficiency, hyper-local competition, and overall guest experiences – within its design elements.
Completing a bars ‘concept plan’ should be one of the first steps any aspiring bar owner should take. A concept plan will outline vision, value, mission, and culture statements plus its initial architectural, entertainment, and menu development characteristics (wishlist).
Once you’ve defined your concept, you can begin adding more heart and soul to the design and overall guest experience strategies; the back-bone to a memorable bar. Every component of the bars interior design, entertainment plan, and menu development process should enhance the guests’ overall senses (also known as emotions).
Here are items you can work on for your vision, prior to delivering a presentation to any designer, consultant, and/or architect.
Energizing the Space
Consider ways to not only maximize the space, but energize the space. What experiences can you deliver? Use this time to consider adding space for sound engineering, live music and/or DJ’s, interactive games, mix of televisions, and the right mix of socializing and networking opportunities.
In today’s market-space, it is imperative that all newly designed bars (and restaurants) take into account social media, guest photos, and guest videos. Keeping the energized space in mind, how can you add space with the right lighting for taking group photos (with your branding in the background) in addition to taking videos and photos of cocktails and/or food.
The next focus needs to be on bar efficiency. Consider the size of establishment, guest capacity, and your point-of-sale requirements. Then add multiple bartender stations while choosing the correct equipment, bottle display, overhead glass racks (less breakage), and under-bar space plus the number of speed rails, ice stations, garnish stations, cutting boards, and sinks within a one pivot movement for each bartender. This will then determine the size of ‘bar’ required, which will assist in developing your budget (and beverage menu).
A winning bar will also have a memorable food program. Offering premium food and focused, high-quality beer, wine, & spirits is a recipe for maximum revenue potential in today’s market space. Ensure there is space for grills, flat-tops, deep fryers, burners, and a convection oven (or combi-oven) plus space for prep areas, freezers, and refrigeration to provide a quick (and profitable) food program.
Seating and Lighting
This will entirely depend on the chosen concept. Your choice of lighting and seating will determine length of stay, the amount of money a guest will spend, and how they will interact with guests in their party plus other guests at your bar. Every seat and light fixture must have a purpose. This is just as important as laying out the actual back-bar itself and should be discussed with designers, architects, and consultants.
Consistency through all design elements (interior, exterior, menus, website, social media, and other marketing collateral) is the final consideration piece. Look for ways to incorporate subtle additions of logo colors and branding throughout the venue. Where ever the guests will take the most pictures and videos, make sure there is a way that people will know they’re at your bar!
There are numerous other variables and details required, but starting with this will make you look like a pro when you meet with a designer by having a concept plan completed and a true vision of how you want your bar to be laid out. A professional designer should be able to then take your vision, tweak it to professional standards, and implement it into drawings that will ensure it meets local codes and your overall budget!
Originally Posted on Typsy – By Doug Radkey 07/13/2018
Sometimes, in order to reach our dreams, we need a little help. Starting (or growing) a scalable and sustainable restaurant or hospitality business is not cheap. Many aspiring restaurateurs need a business partner or investment group to help reach their financial targets.
Here’s what we know: The average start-up restaurant, (in US dollars) can range from $295,000 to $660,000+ depending on a variety of factors, including of course the size of establishment, whether it’s a ‘from-scratch’ project, and the choice of overall concept.
No matter how you look at it, that’s a lot of money.
So how can you get financial help? You can’t just walk up to someone and ask for $100,000 for example. You need to get out in both the financial and hospitality community and network to build up both solid and referable business relationships. You then need to prepare yourself and your concept for investors.
But how do you do that successfully for your hospitality business? Here’s how:
Let’s hope you’ve completed a feasibility study, concept development plan, and business plan (hint: if you haven’t – get started, you won’t get far without these plans). Once those plans are finalized and tweaked, you want to begin preparing yourself for investors by ‘working backwards’ from your completed business plan.
Investors receive numerous proposals per month or year. They may not have the time to read through all of your plans, initially. You want to narrow it down to 10-12 impactful slides followed by 1-2 pages of your ‘executive summary’, and then a 60 second elevator-type pitch.
When crafting a proposal to investors, the return on their investment will always be their first and most critical concern, so keep that in mind.
Perfect Your Pitch Decks
Combining your three plans (feasibility + concept + business), what are the most important and impactful pieces of information that an investor would look for?
This is a great opportunity, within 10-12 slides, to include:
Your overall market size
Gaps in the market
Key performance indicators
Other financial highlights
Refine Your Executive Summary
Now, take your pitch decks and narrow that key information down to 1-2 pages of the most important and impactful information. If you can’t capture their interest in your executive summary, you need to keep re-drafting it until it screams ‘WOW’.
Often times, this is the first document they will want to read, before getting into pitch decks or even your business plan.
Know Your Elevator Pitch
Sixty seconds. How can you grab the attention of an investor in one minute or less? Show your passion through the pitch while answering the three most critical questions the investor will want to hear, even before they ask you.
This is where you want to hit them with:
How they will make their money back
What problem or market gap you are filling
What your overall business concept is
Investors want to know where their money is going, how it is going to be used, and how they’re going to get it back. Being strategic also means to expect the unexpected, and be prepared for it. You also want to identify your strengths, opportunities, and challenges.
If you’ve completed your plans correctly, you should know your numbers. Be prepared to answer key financial questions (for example KPI’s) – which should all be backed up with both facts and strategic (SMART) objectives.
Show them your benchmarks for:
Revenue per customer throughout different times of the day
Detailed labor reports, inc. revenue per labor hour
Detailed food and beverage costs
Marketing and advertising budgets
Revenue per square foot
Revenue per available seat
Know Your Limits
Don’t be surprised that investors will have an interest in your business, (after all it is their money and reputation that’s on the line) so be prepared to answer some challenging questions:
Are you willing to negotiate any control of the restaurant to investors?
When will the restaurant begin to turn a profit? What are the monthly cash-flow projections?
What are the projected profits of the restaurant over the next 1-3 years; and is it realistic?
What is your role in the project and who will be surrounding you for support?
What are the chances the restaurant concept will fail? What is the exit strategy
Before you pitch your heart out, have a long, hard, think about these and know where you stand. It’s better that you know your boundaries rather than step into a deal that you’re not happy with.
Leave an Impression
Lastly, be confident and memorable – show your passion, your level of experience, as well as your true understanding of your business concept. Utilize additional resources such as photos, drawings, videos, market research, testimonials, and even food or beverage samples to help enhance your presentation.
If you’re turned away by an investor (or bank), don’t let it get you down. Learn from the experience, make any adjustments from their feedback, and try again.
Asking for money isn’t easy – but being prepared, strategic, and memorable – will help you get closer to winning that next investor pitch.
Originally Posted on Typsy by Doug Radkey – 04/24/2018
Opening a second restaurant location is not as easy as many people may think. Just because “you’ve been there – done that” once doesn’t mean it’s going to be any easier the second time around. In fact, many restaurateurs find it more difficult than the first one.
A common first challenge is that many restaurants, even the most successful restaurants, are simply not ready or properly positioned for this type of expansion. There are numerous circumstances that need to be executed on first, many of which are often overlooked.
To take a restaurant from one location to two or three takes a variety of planning methods, in-depth market research, and the proper execution of a variety of systems. Sound familiar?
Let’s have a look at the indicators so you can ready yourself for growth and expansion!
1. You’re Mentally & Physically Prepared
By now you should know if you have the willingness to sacrifice in addition to the required systemized thinking, social skills, creativity, stress management, and passion to lead a restaurant to success. But that’s just one restaurant, now you’re considering multiplying all of that by two (or more).
Are you ready?
We know restaurant owners more often than not, wear too many hats, leading to upwards of 60 to 80+ hours of work per week. You have to truly ask yourself if you’re in the right mindset and have structured your personal life to endure this type of growth. This is where surrounding yourself with the right professionals (supporting cast) and/or considering a business partnership might be ideal for some – to reduce both risk and potential burnout with the opening of a second unit.
2. Your Previous Restaurant Isn’t Dependent on You
How critical is your presence to the operations and day-to-day success of the restaurant? If it is highly dependent on you; what would happen if your time was shared at a secondary location? What often happens is an independent owner will spend more time at the new location, leaving the first location vulnerable.
That’s why it’s important to take the time to consider the right management team for multiple locations to ensure there is no collapse of the first location and a strong start for the second location.
This includes additional chefs, managers, and supervisors in addition to start-up specialists like consultants, designers, engineers, and architects that will save you time, money, and energy during this growth stage.
3. You Have Strong Systems and Processes in Place
Arguably one of the most important aspects in terms of growth is ensuring that each restaurant (current and the potential new one) has consistent systems in place. Duplication of the same winning formula is the key to early success.
Developing daily routines, service sequences, training programs, communication methods, hiring practices, and customer experience strategies to name a few – is absolutely critical.
It takes effort, honesty, training, reviews, and accountability by the entire team to ensure these basic systems work and are implemented on a daily basis. If you feel there is a gap in any of these systems, it needs to be addressed immediately before any second location is considered.
4. You’re Financially Ready
Is the current restaurant highly profitable and maintaining the most important key performance indicators? Could there be any further financial improvement at the current location? Could it help financially carry the second location if needed for a period of time? If so – for how long and by how much?
Again, just because one restaurant is profitable, doesn’t mean the second unit will have immediate profitability. It takes a deep dive into the books to make a verifiable business decision to expand. Work with trusted and experienced accountants to fully understand the financial health of the current location and the viability of a second.
5. Your Restaurant is a Good Market Fit
Conducting a feasibility study for the second location is just as important as completing one for the first location.
Consider these factors: Where are you planning on developing this second location? How close will it be to the first location? Is the market large and strong enough to support a second location of the same brand? What has made the first location so successful? Will you need to scale or adjust the concept?
There are numerous market related questions that need to be addressed.
Outside of the company structure, choice of concept, financial viability, and overall market – growing restaurants need to consider supplier consistency and overall marketing plans for numerous outlets.
There are many positives to growing into multiple locations, but it should only be done when the time is truly right and when it is done for the right reasons. It’s important to not forget the fundamentals of restaurant operations; where consistency, the quality of food and beverage, customer service, and overall guest experience is paramount at each location.
Lowering Your Risk Before Opening a New Restaurant
Originally Posted on Typsy by Doug Radkey – 01/16/2018
Early recognition of risk is crucial for the success of any business, and arguably more so for restaurants. To ensure proper positioning and ongoing success, it’s vital for a restaurateur to understand the variety of operational, financial, legal, systematic, and people-related risks to not only opening a restaurant, but operating one too.
Identifying risks from the very early stages will position a restaurant to be disciplined and prepared for when things may ‘go wrong’ down the road. Identifying risks will also help streamline a restaurants’ processes while improving communication and implementing a variety of systematic control methods, something every restaurant needs for long-term success.
The opposite of risk, is opportunity, and that’s why focusing on with these seven tips will help you avoid pitfalls before opening your restaurant.
1. Assess Yourself First
First and foremost, the hospitality industry is not for everyone. It’s not what it’s made out to be on television and across some social media feeds. This industry is cut-throat; plain and simple. Take the time to look in the mirror and ask yourself about the required character traits.
You then want to ask yourself, and also write down detailed responses to:
Why you want to open a restaurant or bar
Why you think many restaurants fail within 18 months
What the difference is between success and survival
Explaining expectations of profit versus the lifestyle you want to live
Explaining how important growth is to you, both personally and in business.
Do you feel you have what it takes? This industry requires sacrifice, systemized thinking, social skills, creativity, stress management, and a lot of passion. The first opportunity in risk management – starts with you.
2. Plan Thoroughly
One word that cannot be stressed enough during the start-up phase is of course, planning. Sometimes, however, even with a high level of planning in place, things can unfortunately go sideways — and they can happen fast.
This is where having a strategic combination of feasibility studies, concept development plans, and business plans will be beneficial and provide you with an opportunity to set the tone early, for the upcoming project.
These plans will analyze and reduce the risk for many potential, common, and ‘unforeseen’ events during both start-up and operational stages.
3. Form a Strategic Team
You’re determined, positive, confident, adaptable, and crave learning experiences. Being an a restaurateur combines an enormous amount of passion and vision for creating food, drink, and experiences – and a drive to be undeterred by a high level of unprecedented risks.
But you shouldn’t go about it alone. Work with a team of supporters; including mentors, consultants, accountants, lawyers, designers, engineers, and chef/bar focused experts.
They will help minimize start-up and operational risks by creating efficient systems that will undoubtedly streamline your restaurant and both its start-up and ongoing processes. You will also be given the opportunity to learn a lot from these professionals in their respective fields which will assist you both short-term and long-term.
4. Do a Financial Check-Up
One of the many headaches aspiring restaurateurs face is the simple fact of running out of money before the restaurant even opens – a common, but detrimental risk.
A thorough set of plans reviewed by consultants, accountants, and designers – will prepare a restaurant for potentially hidden costs by measuring realistic financial scenarios. Ideally, there should be at least three months worth of operating capital set aside for opening day.
Aspiring restaurateurs should also analyze the potential for leasing equipment and other assets while comparing interest rates and exit strategies for each potential financial program they may apply to.
Restaurant owners should also ensure they have a credit check report and a statement of personal net worth, and to clear any outstanding debt with past creditors prior to starting a restaurant. Most importantly, set aside savings (ideally 6-12 months worth) for yourself and your family in case the restaurant is off to a slower start than originally predicted.
5. Complete All Business Paperwork
Make sure you receive the full list of permits that your local municipality requires for starting a restaurant or bar. Visit your city clerk office to receive the entire list, in writing, plus their associated fees and timeline for approval. Overlooking one or more of the required permits or licenses can result in a delayed opening and course, further additional costs.
These may include business registration forms, business licensing, building permits, zoning adjustments, occupancy certificates, ventilation, electrical and plumbing permits, outdoor signage permits, health and safety inspection certificates, liquor licenses, and others. Each municipality, province/state, and federal government will be different, so ensure you receive the correct information for your specific location.
A restaurant also needs to measure a variety of liability factors. Disaster can strike at any moment, therefore an aspiring restaurateur should ‘hire’ an insurance broker, to source the best general liability insurance, property insurance, off-premise insurance, liquor liability insurance, and workers compensation insurance to reduce risk, costs, and any personal liability.
6. Assess Your Restaurant’s Location
Choosing a location is an exciting component of starting a restaurant, but it comes with its own variety of risks. New restaurateurs often find out after a lease is signed that their property may not be fully compatible for a restaurant and will need further upgrades to meet standards for energy and ventilation, plus any revised building and/or health codes (to name a few).
This is where working with a commercial realtor, property inspector, engineer, and commercial lawyer will reduce any potential shortcomings while looking for specific leasehold concessions and exit clauses that will reduce your own risk, down the road, if the restaurant is unsuccessful.
7. Prepare Your Restaurant’s Operational Setup
When it comes to restaurants, bars, and cafes etc; the producers, manufacturers, delivery drivers, owners, managers, and servers ultimately share the responsibility to create a safe and enjoyable dining experience.
Transparency, traceability, and accountability in terms of food and beverage, must be a top concern when deciding on vendors to ensure all product entering your restaurant are not only safe for your customers, but for your community.
Knowing and understanding your concept will also assist in kitchen, bar, and storage requirements – reducing the risk for spoilage, theft, and accidents.
There is so much that goes into operational setup, but focusing on the above plus proper HR programs, staff training programs, allergen disclosures, secured networks, and overall venue related security, will create a safer environment for both your employees and customers; reducing a long list of risks and potential lawsuits.
Life happens, things go wrong, but being prepared is what will make you stand out from the others. It takes planning, effort, and an experienced support team to overcome the impact of an unfortunate event when opening your restaurant.
Originally Posted on Typsy by Doug Radkey – 11/01/2017
If you’ve worked as a leader in the restaurant industry, then you know what it’s like. You know that leaders have to be willing to make sacrifices and acquire the systemized thinking, social skills, creativity, stress management, and passion that it takes to be successful.
Becoming a restaurateur combines an enormous amount of passion and vision. You have to create food, drink, and overall experiences with a drive that is undeterred by the high number of unprecedented risks. You must be determined, positive, confident, adaptable, and crave learning experiences.
And even if you do have all of those qualities, it can often be too much for one person to endure. This is when considering a partnership might be ideal for some.
It’s not uncommon for restaurants to be started or initially operated by a partnership, and you will be hard pressed to find a well-known restaurant brand that didn’t start as a partnership before becoming a larger corporation.
However, partnerships aren’t easy. They come with their own set of challenges, both at the start-up phase and during the operational stage.
There must be a common vision, mission, and commitment, and a high level of communication, creativity, and expertise between partners. Effective partners will also play off each other’s strengths and weaknesses to succeed in this cutthroat industry.
Here are a few elements to consider when determining if a restaurant partnership is right for you. This is what you should be looking for in a business partner today.
1. Have a Three-Step Plan
Before engaging in serious partnership discussions or agreements, it is crucial to complete a feasibility study, concept development plan, and business plan. Is the idea of a partnership even feasible? Can your restaurant concept withstand not only the market, but also two or more owners? Is there enough of a profit margin for all partners to live a healthy lifestyle? What are the short and long-term goals?
Many questions need to be answered before you make any decisions, and these plans will lay the foundation needed to move forward.
2. Conduct a SWOT Analysis
There should be a competitive SWOT analysis within the business plan, but it is also ideal to complete a thorough SWOT analysis (strengths, weaknesses, opportunities and threats) on both a personal and partnership level.
What strengths and weaknesses do you each possess, what opportunities exist if you decide to partner, and what threats will present themselves if you formulate a partnership?
For full effectiveness, have all potential partner(s) complete the same and analyze all of the responses.
3. Create Statements
To ensure potential partners are on the same page, it is imperative that you all have a similar vision, mission, value, and culture statements. Complete an exercise, similar to the SWOT analysis, in which each individual writes a statement addressing those four categories. These answers should then be compared against one another.
A partnership will inevitably run into hard challenges if visions and goals are not equally aligned. If you cannot cohesively agree on these statements at this stage, don’t move on to the next step.
4. Review the Laws
It’s absolutely critical to review your national and local business laws, regulations, taxes, and how they may relate to structured partnerships, liability, and asset management. Many countries, states, provinces and local municipalities have different information on their registered requirements.
Study this information and review it with both an accountant and a lawyer, so you can determine which partnership structure is best for your unique situation.
5. Draft an Agreement
Restaurants, bars, and other hospitality related businesses are really no different to traditional businesses. There needs to be a comprehensive and clear partnership agreement in place, even if it is a friend or family member as the potential partner.
The agreement must clearly state the financial structure of the partnership (investment, return and profit share) in addition to property management involvement, labor involvement, and overall activeness within the business.
Will both partners be active in the day-to-day operations, or will one act as a ‘silent partner’? Often, one partner looks after the back-of-house while another looks after the front-of-house, or is one partner just there to assist in finances while the other operates the business? Every minor detail must be documented, reviewed by a lawyer, and signed for liability and accountability purposes.
At the end of the day, successful partnerships rely on setting realistic (S.M.A.R.T) goals, open communication, frequent meetings, defined roles, and sound business structure. Only partner with other individuals who are willing to be open, honest, and respectful, and share the same values that you do.
You will need a balance of planning, trust and talent to be compatible. There will undoubtedly be stressful situations throughout the start-up phase, operational phase, and overall partnership that will reveal who you have really partnered with.
By executing these steps, you should be able to limit any surprises. The same goes for partnerships as it does for business in general; if you fail to plan, then you plan to fail.
Originally Posted on FoodableTV by Doug Radkey – 10/19/2017
There are so many critical elements that go into the design of a restaurant, so much so that it can easily become overwhelming. It’s a moment during the start-up or renovation period, where specifics that play a large impact on customer experience, can simply be overlooked. One of the key elements that are often overlooked — is the importance of restaurant lighting.
To create positive emotions and to deliver on your promise for memorable customer experiences, a concept must think through its initial design while utilizing processes, maximizing communication, and creating surprises through a multitude of ‘touch points.’ Arguably one of the most important touch points in the overall design — is again that of restaurant lighting.
Lighting within a restaurant (or bar), affects many elements within both operations and guest experience, including food and drink presentation, atmosphere, and length of stay. Lights come in many creative materials, shapes, sizes, and brightness; therefore the largest challenge is finding the right balance for each location and concept.
When planning a restaurant space, one has to consider the ‘job’ of each light source. Is it meant to highlight wall features, to enhance a back-bar, to highlight walkways, washrooms, and exits, or is it to create the right mood over a table? Or perhaps it is for security, liability, and theft prevention?
When considering the job of each light source, it’s imperative to remember to keep customers and operations top of mind first and not the architecture itself.
Here are other ways that restaurant lighting can have a large impact on revenue, profit, and customer satisfaction by again, considering the ‘job’ of each source.
Sense of Security
Ensure that the restaurant and bar space is well lit (this is both inside and outside the venue). Strategic placement and brightness of lights will undoubtedly reduce theft opportunities, reduce damage to property, reduce injury and liability, and keep both employees and customers safe (especially at night).
Different lighting sources within a venue can assist in creating multiple spaces. Similar to guest positioning, lights can assist in highlighting the multiple “levels of comfort” that guests will connect with and want to be seated near, allowing the restaurant to maximize each individual seating area, effectively managing customer satisfaction and revenue opportunities.
Lighting has another effect on Restaurant Revenue Management, as well. If a restaurant wants customers in and out quickly (QSR model), they should consider brighter lights paired with fast paced music, as it often makes guests feel hurried. A balance between warm and bright lights is ideal for casual restaurants where dimmed (softer) lights is therefore more ideal for restaurants that are looking for longer guest duration.
Kitchen & Bar Performance
Don’t forget about a restaurants team and the productive areas within the restaurant space. Ensure the correct light placement and correct choice of bulbs is decided upon for inside the kitchen and bar production area. Consider where food and beverage preparation and final presentation will be completed for a final quality check before being delivered to the guest.
Food & Beverage Presentation
Increase restaurant and bar profits with the correct back-lighting, up-lighting, and track lighting along liquor, beer, and wine displays. Take it up a notch and differentiate positioning of premium product with a different set of lights. Furthermore, food and drink can look unappealing if placed under the wrong lighting element— therefore bars and full service restaurants should use dimmers to control brightness (softness of light) and to ensure there are no shadows along the plate or glass while at a table.
When deciding on lights, consider the upfront cost and the ongoing energy cost and look for long-term operational savings, adding profits to a restaurants bottom line. Restaurants use a lot of lights so dimmers (or control systems) for example, are great for a variety of concepts to reduce costs and create more efficient layouts.
A restaurant cannot forget about its exterior lighting. Outside of the obvious security reasons, a well designed exterior with strategic lighting can in fact, invite people inside versus them choosing a neighboring restaurant. Lighting along entranceways, signage, landscape, and the up-lighting of architectural highlights, is most ideal. Lastly, outdoor lighting for a restaurants patio needs to be creatively decided upon and equally not overlooked to create not only the right outdoor atmosphere, but curb appeal, as well.
Poor restaurant lighting can lead to a cold and clinical feeling or a dark and unsafe feeling among guests. Lighting can also have a psychological effect on guests, as their minds may play tricks on them when it comes to flavors and scents for both food and drink.