Starting a restaurant isn’t a cakewalk. A lot of planning needs to be involved if you want to start that dream restaurant of yours and have an overflowing cash register in it. The restaurant industry in the USA is a highly competitive one, and you must take care if you want to have a successful restaurant startup.
However even before you starting implementing your ideas, it is necessary for you to know about the most common restaurant startup mistakes the aspiring restaurateurs make that might lead your dream of carving a space in the volatile restaurant industry to doom.
Common Restaurant Startup Mistakes That You Must Not Make
It is always better if you are already aware of the various mistakes that aspiring restaurateurs generally commit so that you can avoid making the same blunders and many do. Hence, below we have listed the top 8 restaurant startup mistakes that can trap your restaurant and resist its blossoming growth.
1. Not Having a Stellar Business Plan
When you are planning your restaurant startup, having a stellar business plan in place is fundamentally essential. One can have elaborate ideas, but you need to check if your plans are feasible. Here comes the need of a business plan. A business plan, in general, is an outline of a sketch of your business and how you are planning to carry on with the operations of your restaurant. This plan should be a go-to guide, whenever you find a sticky situation in your restaurant business.
2. Not Giving Much Importance to Location
The location must never be compromised with. No matter what the reason is, high rentals, high competition, whatever it is, nothing should compel you to choose a location that is secondary in your list.
Before finalizing any location must know your targeted clientele is and where you would find them. For example, if you are opening a food truck in a high-end residential are, then that might be your worst decision. On the contrary, you should try and analyze where would you get your targeted audience for your food truck; you would get them at college or university area, shopping streets, which will ensure high footfall to your food truck.
You may now think whether it is a viable option for you to open in a university area where there will be multiple other food trucks, and hence the competition will automatically be high. Our recommendation to you will be, select a high footfall area, regardless of the high competition. If you are good at what you do, customers will visit you in spite of the high competition.
Now, the challenge here would be finding the right location within your budget. Prime locations with high footfall tend to have a high rental cost. In case you are operating on a tight budget and cannot spend much on the real estate, then try out these tips that would help you overcome a poor restaurant location. Confused about how to buy a restaurant location keeping the budget in mind? Check NRA’s report on the same that will help you to finalize on a stellar restaurant location for you.
3. Not Having a Clear Concept
Having a stellar and defined concept is one of the fundamental prerequisites to running a successful restaurant startup. You need to have a predefined vision of how you want your restaurant to look like. From the space layout to the type of furniture, to the facade and the decor, you need to decide everything beforehand. Many a time it is seen, that the things you have pictured can’t be fulfilled due to space configurations or other unexpected reasons. Hence, we recommend you to sit with hired professionals, be it interior designers, architects, engineer, and general contractor. Share your ideas with them and get feedback on any foreseen problems. Work together to create alternatives plans for your concept. This may be better than the original plan that you had envisioned.
4. No Proper Financial Planning
Underestimating the amount of money you would require to start a restaurant is one of the biggest mistakes that you can do. You must always come on the field with a bank balance which is good enough for you to implement all your ideas. Construction delays or changes demanded by building inspectors are the most common problem that a restaurateur faces. To cover such unplanned and unexpected challenges, a certain amount of money should be set aside for working capital which should cover up to one year of electricity, rent, employee salaries and purchasing the raw materials. Besides, contingency money should also be set aside for any other unexpected problems that may arise. We advise you to keep at least aside 10%-15% of the total investment for such expenses.
5. The Belief That the Restaurant Will Start Earning Profit Right Away
Most of the first time restaurateurs have these strong false beliefs that the restaurant will start generating profit from Day 1 and end up exhausting all their investments in the opening of the restaurant and keep no budget aside that will come handy once the restaurant is in operation. This is by far the biggest blunder that a restaurateur can commit and has the potential to bankrupt the restaurant startup. Hence, it is imperative for all the aspiring restaurateurs to understand the importance to keep a standing capital. It is virtually impossible for any restaurant to start acquiring profits from the very first day. Hence, a standing capital will come handy to carry on with the fixed expenses, such as, rent, buying of raw materials, paying electricity and staff salaries and other miscellaneous and sudden expenditures.
6. Not Having a Proper Restaurant Training Plan
You must always remember that you are what your restaurant staff is. Since it is your restaurant staff who are in on the floor and are in direct contact with your customers, it becomes all the more important for them to be trained enough that will help them to upsell whenever necessary and to exhibit the culture and the aura of the restaurant in the most explicit way possible.
The restaurant industry in the USA is notorious for high employee attrition rate. It is estimated that the labor turnover rate in the US is almost 70%. As per a recent study from Cornell’s School of Hotel Administration, the cost of losing and replacing one hourly employee can be as high as $5,864. Considering that the turnover rate is 70%, one can only imagine how much restaurants lose out their money. Hence, it makes all the more important for restaurants in the USA to have a proper plan on training and a handy manual which must include all the details of all their tasks which will be a one-point solution in all sticky situations.
7. Not Planning for the D Day
The first impression counts; hence it is essential that you spend a considerable amount of time in sketching the perfect grand opening for your restaurant. This is your first chance to make a splash in the community and under no circumstances should that be ignored. Start with a soft opening, where you must introduce your restaurant to your family, friends, investors, employees, and vendors who will give you true feedback on which you can work on before you open your restaurant to the rest of the world. Then start preparing on a grand day, leave no stone unturned. Invite media personnel, bloggers, social media influencers and all those who can spread the news of your arrival even further. On the day offer exceptional offers and discounts, host events, being in celebrities and singers and DJ. Organise an event that will compel people to visit your restaurant on the day. Also, make sure that you offer free loyalty programs or vouchers with 10-20% off on the next visit, that will play a pivotal role in bringing the customers back.
8. Restaurant Owners Failing to Take the Ownership
A good owner is one who can manage the business well. He should act like they are one of the employees. However, it’s essential to be able to handle the business by maintaining an active role in analyzing the reports on a regular basis, monitoring cash flow and making strategic decisions that will affect the business in the long run. Depending entirely on the restaurant manager can be one of the biggest restaurant startup mistakes that you can make. Even if you do trust your staff, you still need to stay actively involved in the operations to ensure that the business runs smoothly.
If you have high hopes to start that dream restaurant of yours, then it is highly recommended that you keep in mind the mistakes as mentioned above that many aspiring restaurateurs are found to commit to save yourself and your restaurant venture form a potential failure. Memorize these tips and see how avoiding them will help you achieve breakeven rather quick and will bolster your overall sales in the US market while keeping your cash register overflowing.