Thinking about your first brick and mortar business?

Opening a restaurant is a dream for many people involved in hospitality for various reasons:

An opportunity to entertain clients and friends, which can be seen as a status symbol.
Moving from a pop up or food truck to a permanent venue.
Search for a return on investment.

But in all cases, the road can be tricky and full of high and lows. Getting our experts from Insight Hospitality on your side is a good way to ensure steady progress and delivery on your vision.

What are the motivations?

One should be realistic with the aims of entering into a restaurant business. If you are looking at a quick return on investment, this might not be for you as the industry is historically delivers lower return than many other sectors of the economy. Also, the rate of failure is still very high and success in this industry is only the result of great products, great service, a price point, and a lot of resilience.

Only motivated operators, who are not scared of the unsocial hours, will be rewarded with lots of satisfactions and decent money. Passion is the key word to success, and it is best if you can test yours with pop up and markets before committing massive energy and funds into a permanent residence for your concept.

What is your concept, brand and offering?

The offering, style of service, values must be clearly defined at start. Only clear concepts, strong values, guidelines, will allow you to get moving and reach the finish line with all the chances to succeed. Our team of experts will guide you through the steps of creating your concept.

A great concept is always one where products, atmosphere, prices and service are all aligned. It is a testament when the staff can explain to you in few words what the concept of the restaurant is.

Also, are you aiming at a one off or a collection of venues? This will have an impact on what investment is required, the latter requiring more research into branding and concept development.

Get a business plan.

To win a war, you need a clear strategy… Spend the time to analyse the market, get a realistic approach to the level of sales with different variation and an achievable costs structure; this will give you a clear insight on the potential success. Try to define your break point and assert if this is achievable within a period that only you can define.

If the numbers do not add up, there will be no miracles and the business will fail. It might be that you didn’t get the right offer in the right place. So keep on looking and do not fear of missing out (FOMO for our crypto friends…).

Insight can help you in your search for the right location for your concept and we have the expertise to model the perfect business plan bespoke for your needs.

Get the funding and more…

You have to look at various aspect of funding your business

Equity or capital. This money is blocked and give access to a share of the business to your co-investors. You could call on venture capitalist, crown funding, friends and family. There are several tax reliefs in place to counter act the risks associated with these types of investments. But one thing for sure, you will still have to invest some of your money and a lot of your blood, sweat and tears.
Debt financing. A lot of investment could be financed by loans or debt financing. But keep in mind that there will be a cost in form of interest to be paid.
Cash flow, establish the exact timing of the income and payments that your business will face. All restaurants have some sort of seasonality, and the activity is far away from linear. Plan your dips and ensure you have enough resource to go through. This is unfortunately the most common mistake leading to failure.
Have some reserve. Just like anything in life, things will not always go according to plan. So built a treasure chest that hopefully will be never required but that will relief you of the stress associated with dealing with cash flow issues.

Get the right people in the right place.

Hospitality is a time-consuming business and will rely a lot on relation with people (guests, staff, suppliers). Therefore, it is vital that you create a trusted team around you. Get a business partner could be a good way to split the workload. Focus on creating an enjoyable atmosphere where anyone will be able to thrive and stay with you along the journey.

Finally, get some specialists to support your journey and launch. Social media has taken an important role in the success of any restaurant and our customers eats with their phone first. Except if you have a strong knowledge of social media, invest in some support.

Location, location, location!

Not every location is a good location. Consider the demographic your concept is aiming for. Do you need a large foot fall or a more premium neighbourhood? Is your venue a pure destination? Can you operate from a basement, or does it require a large street frontage?

It is well worth engaging a specialist agent who will have direct access to institutional and traditional landlords. He will negotiate the best deal and guide you through several options. But just remember to spend some time on the ground and look at foot fall, demographic of resident, other businesses around. This gives you insight into the various services potentials.

Place the management tools to have data and KPI.

No business is manageable without the right information and control. The most important ones in our industry are:

EPOS, giving you information on what you sell and when you sell. There is many on the market from light cloud-based system to more integrated systems.
Cost control for food and beverage; these systems will allow you to cost your menu but more importantly, will give you data on real costs and discrepancies.
Rota planning and labour costing; labour cost is your biggest cost and needs close monitoring as it can eat your profit in no time. These systems will also feed your payroll in order to get accurate payment of your work force.
Reservation platform: depending on your concept, you will rely on guests being able to book online. Integration with your website and third-party platforms like Open Table are essential to generate the traffic.

There is a lot of software out there and all offering different level of information at different price point. Insight will be able to guide you though and recommend the best solutions for your business.

Be ready for a ride and keep focus on the goals.

Restaurant business is certainly not for the faint hearted. You will be tested on many occasions on building delays, level of revenue, staffing sickness, customers complaints to name few.

In order to navigate though and keep you on tracks, you will have to keep the focus on your concept, goals, the DNA, the reason why you are doing this. Invest in great support for the first few months of development and operations.

Also, keep a balance with your private life and avoid the burn out effect that too many of us have experienced.

Insight Hospitality is here to assist you along this journey. Please contact us for a free chat.

September 2022

www.insighthospitality.net