You
woke up this morning with a brilliant idea for a new restaurant?
Good morning and welcome to the world of reality.
Good morning and welcome to the world of reality.
Every
new idea begins here, with a dream we are confident is the next goldmine.
In order
to start making your dream a reality you'll need to go through 2 main stages
before you run to brokers and search for a location.
Create
a solid and sharp concept:
- Define your idea
in one short sentence: what exactly is it going to be. A deli, a coffee
shop, a fast food restaurant…
- Look up to see
if this idea is not working already, or if it has not been tried in the
past and failed.
- Check the customers
habits. Not every idea is correct anywhere.
Selling hot soups in a very hot weather country is probably something with a good chance to fail. - Check the
frequency of consumption. If your product is been seldom bought, you'll
need to add some other products for a daily consumption.
- Define the
target market: who are your customers
- Check your
competition. Some other restaurants might have your product in their menu.
- Decide the level
you want to reach in terms of customers, prices, design. Harmony is the
word you are looking for. Customers tend to look at the whole picture
including ambience, furniture, service etc…
- Make a small research
among friends and family to hear other opinions. You will be surprised how
much you can learn from it.
- Prepare a
structure of your desired menu. After all, these are your sales tomorrow.
Write
down all your conclusions. If you are still as optimistic as in the morning, go
on to the next stage.
Prepare
a business plan
My first
recommendation is to prepare a business plan with an experienced person. Accountant
will make sure nothing is being left out.
If you need to ask the bank for a loan, they will first want to see a business plan, so here are some of the points you'll need to work out:
If you need to ask the bank for a loan, they will first want to see a business plan, so here are some of the points you'll need to work out:
- Capital budget –
is the investment in your new business. This will include renovation,
kitchen equipment, décor, furniture, p.o.s systems, and many more.
- Sales – work out
average sales per guest, # of guests per shift and per day. Calculate weekly
/ monthly sales.
- Labor calculation
– define the jobs needed, hourly salary per job, # of workers per job, #
of hours per shift.
- Calculate your
food cost – break down every dish to its components and weight. Find out
cost of goods and have an accurate food cost. Reasonable food cost is hard
to determine since there are many factors influencing this issue. If you
achieve 26%-32% food cost you are on the safe side.
- Insert ALL
expenses – rent, taxes, food cost, labor cost, energy, paper goods,
cleaning materials, insurance, professional expenses and every other
expense you should have including the monthly ROI.
If you
managed to get all the numbers together you should receive a clear picture of
your business. Don't forget some businesses build up slowly and do not break
even in their first months. You might need to finance your business in the
early stages until it will build a solid reputation and customers.
If by the end of this
stage you are still smiling and optimistic, who knows, maybe you are on the
right track.
