5 Things You Should Know as a New Restaurant Entrepreneur!

Restaurants are the most appealing businesses to jump into as an entrepreneur. Imagine that your day to day work and source of income is a combination of food, people and culinary arts. It is like a dream career to every foodie.

Do you know how popular restaurant businesses are?

These numbers do not reflect in any way the success rates for restaurants. According to a cited study conducted by Ohio State University on failed restaurants, 60% do not make it to their 1st anniversary and 80% go under in 5 years.

Here are my top 5 tips to give you a head start:

Passion for food and cooking will always be the key to keep you motivated and drive you forward. However, it won’t be enough to create a sustainable and successful business. Most of the time, new restaurant owners realize this at a late stage where they find themselves with lots of challenges but few solutions in mind.

Team up with someone who has a great restaurant experience, and make sure you are involved in every step of the way to learn and improve your knowledge. Being on the floor, with your team and customers will be the most insightful thing to do. You will find most of the answers you are searching for, and you will improve morale for your team and create an engaging environment for your customers.

A very common pitfall that you can see a lot especially in the Middle East, is investors deciding to open restaurants because they have seen a nice, successful concept somewhere in the world. They tend to copy and expect to get the same results. You can always take some good ideas from competitors and adapt it to fit your story.

Copying the whole concept will mostly lead to disasters. You have to do market studies for the segment you are trying to serve, competitor studies, find the perfect location for your concept and audience and make great food that is relevant and coherent with the brand you are building. Most importantly, make sure to build everything around a very clear story for your restaurant and menu that will deliver your customers an engaging experience and a memorable story to tell.

If you are a fan of reality TV shows like “Hungry Investors“ or “The Profit” you probably know that lots of restaurants operate without knowing their food cost per item, total cost of sales, labor cost and other numbers that are critical to run and improve any business.

You have to build your new restaurant, menu and business model accurately. Measure, calculate and understand all numbers related to your operations. These costs are critical to build your pricing strategy, business model and business plan accordingly. You should be able to know how much revenue you need to achieve to be profitable and how your costs and margins are distributed before welcoming the first guest.

One of many restaurant misconceptions that are widely common is that restaurant owners think of a new restaurant as a onetime investment that will pump back profits effortlessly, and make them rich. They invest lots of money and time in design, branding and menu creation. Once the restaurant is open they lay back and celebrate the accomplishment.

The real work starts when you get close to the opening date with recruiting the right candidates, and continues after the opening with continuous trainings, improving customer experience, capturing customer feedback and recommendations and building standards to run the restaurant efficiently. Building a successful restaurant is a long journey that is driven mostly by operations’ consistency in delivering great food and service, and attention to details in execution every step of the way to create sustainability that will help the business grow and succeed beyond the first couple of years.

Today, successful restaurants are creating a thorough customer experience strategy that defines their brand. In addition to having an effective online presence and instagramable food, owners need to make sure their brand has a coherent story, attracts a very specific customer segment, engages with these customers, listens, cares and speaks their language. Restaurant experience moved way beyond the physical restaurant and is defined today by any interaction and touch point between a customer and brand regardless of the physical place.

I have been in the restaurant industry for more than 15 years. And Yes, I assure you that not only has it been an attractive business to be in but extremely enjoyable and satisfactory as well.

As long as you take it seriously from a business perspective and put your heart and mind into it, there is nothing more exciting than opening a restaurant that serves memorable experiences, draws hundreds of smiles and delivers happiness to people days in and days out.

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