Buzz
The culinary realm has always been a lucrative field that many aspire to venture into for profit. Observing bustling eateries, one might easily assume that running a restaurant is a guaranteed success.
However, it stands as one of the most challenging and competitive entrepreneurial pursuits. It demands dedication, meticulous attention to detail, and utmost adaptability.
If you're contemplating wealth through this industry, meticulous preparation is key. Don't overlook addressing these 10 questions beforehand:
Considering delving into the food industry? Then, ensure to eloquently address these 9 key questions before embarking on your restaurant venture!
1. How to raise capital and from which sources?
“How much capital is needed to open a restaurant?”
- This is a frequently asked yet challenging question to answer outright. The required capital depends on factors such as scale, location, business model, and the culinary offerings of the restaurant.
It would be ideal and fortunate if you had abundant resources, meeting all the scale requirements for the restaurant you wish to open. However, not many are as lucky as you. The majority of aspiring restaurant entrepreneurs often encounter their first hurdle in terms of capital.
Most will resort to borrowing funds for business, but the chances of securing loans are very low. Most large and small banks are not interested in investing hundreds, even billions of dong in someone about to become a restaurant owner.
Do you have any other funding sources?
Therefore, to obtain initial funds from banks or investors, the experience when starting a restaurant is that you need a clear, convincing, and coherent business plan. Identify core customers, how to attract them, how to collect payments from them, and how you will spend to overcome the initial difficulties as well as reserve for future development stages.
2. Where is the target market? Who are the target customers?
Today, cultural environmental changes have elevated customer dining demands towards higher expectations, thus culinary standards must also rise to an artistic level.
As society and technology advance, cultural environments evolve, leading to changing dining demands from customers. They demand higher, stricter standards. Therefore, culinary arts must also elevate to meet these demands.
Current customers come from various social strata with differing cultural backgrounds. However, no restaurant can attract everyone, so target only 5 or 10% of the market and serve them well; that's already a success.
Analyze your target customers, segment the market by age, income, preferences, or specialty restaurants (nutrition-focused, vegetarian restaurants...) and choose a suitable business approach.
3. Where to locate the restaurant?
The cost of renting a location is a significant initial investment and also incurs considerable monthly expenses thereafter. Depending on the capital you allocate for opening a restaurant and the type of restaurant you intend to operate, you should seek a suitable location. The most important factor is that the location must align with the restaurant's concept.
If the address is too difficult to find or requires customers to expend too much time and effort to reach your restaurant, then all the perfection in your food or service becomes meaningless.
Pay attention to the population size, population density around the location, and especially their standard of living or spending power. Are they among the target customers of the restaurant?
4. How long should the lease contract for opening a restaurant be?
Start with a lease contract of 1 year or maximum of 2 years.
According to the experiences of many restaurant owners, the business cycle of a restaurant is typically around 2 years. This means that if you survive the first 2 years, chances are you will continue to thrive and expand. Conversely, if you fail, it usually happens within the first 2 years.
Therefore, when starting a restaurant business, a short-term lease of 1-2 years is reasonable. Consider the possibility of restaurant business failure and the inability to continue paying rent.
Moreover, a 1 to 2-year timeframe ensures more flexibility in case you no longer want to rent that location due to it not yielding high revenue.
Of course, with a short-term lease contract of 1-2 years, you may have to accept the possibility of the landlord not renewing the lease or raising the rent after the contract expires.
5. What should the restaurant be named?
The most basic principle is that the restaurant's name should be easy to read, easy to remember, and reflect the location, theme, and history of the restaurant.
Furthermore, in the era of Industry 4.0, add a simple, concise, easy-to-write factor that won't have font errors when searched online.
6. How should the restaurant space and interior be designed?
A standard restaurant space cannot overlook three main factors: Style – Coziness – Convenience. Typically, the dining area occupies 40-60% of the restaurant's space, 30% is allocated for the kitchen, and the remaining portion is for storage and office space.
Statistics show that 40-50% of customers come in pairs, 30% dine alone or in groups of three, and 20% come in groups of four or more. Use these figures to arrange the space and furniture accordingly. To cater to the flexibility of different customer groups, it's best to use furniture for two and four people and use movable types to assemble larger table sets to serve larger groups of guests.
7. How should the menu design and food pricing be done?
A menu listing food and drinks is definitely a must-have when you open a restaurant. However, the advised experience is to design a menu that is truly simple and concise, avoiding being overly lengthy to confuse customers. Arrange the items by category to make it easy for customers to choose.
The general pricing formula for restaurant menus is that the total price of a dish should not exceed 30% of the cost of the ingredients you spent to create that dish (including the cost of materials, labor, electricity, water, gas, and any additional ingredients that make up the dish).
8. Should you hire a manager or self-manage?
Do you prefer to directly oversee everything at the restaurant? Or do you just want to stand back and manage everything remotely? Determining this preference will help you decide whether you need to hire a restaurant manager or not.
9. Buy franchise rights or create your own brand?
Answering this question still relates to your personal goals and ambitions. Do you want to create your own restaurant brand identity?
Conversely, if you simply want to run a restaurant and make a profit, then buying franchise rights is a quick, safe solution. Because most franchise brands have already proven to be successful. However, consider the costs, regulations, and risks you may encounter when buying franchise rights.
10. How to find customers?
List a few channels you will choose to promote and attract customers. Regardless of the marketing strategy you apply, don't forget word-of-mouth marketing. Research shows this is the most effective advertising method for the food business industry.
The best way to optimize advertising is to identify your unique selling points compared to competitors right from the start. Then, establish a clear and continuous message and consistently convey that message to your target customers.
Once you have a certain position in the market, you can adjust the message and advertising strategy at each stage to ensure the restaurant always maintains freshness and attracts new customers.
In conclusion, to successfully run a large-scale restaurant or a small eatery, you need a lot of lessons and experiences that a few pages cannot fully cover. It requires perseverance, resilience, and especially market acumen.
Above are just the 10 most basic things that any 'new recruit' wanting to start a restaurant business should know clearly. Hope this information is helpful to you.
Wishing you business success,
Best regards,
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Reference: Entrepreneurshipyouth
