So you have found yourself asking how to open a new restaurant? Opening a new bar, café or restaurant can be a very exciting time. But to reach the point where the doors are actually open and you have customers, requires a lot of hard work and can take from a few months to much more than a year. The time to setup will depend upon what type of premises you want to open, its location and size.
The first question you need to answer is actually a choice between two questions. Too often people decide on the type of establishment and its location, before identifying if your two preferences fit together. Firstly, you need to identify whether you have a particular location where you want to set up, or a particular type of establishment you want to run. Only then you can move onto the next step. But at every stage you need to be aware that you may be biased towards options which are not the best business decisions.
Do you really? Warning! Setting up in the wrong location can cripple your new business before you even start. If you have your heart set on a particular area, you need to be flexible and careful with the choice of concept. You also need to be aware that your fantastic location might be a dud regardless of concept. Setting up in an area which has had a number of failed establishments may mean you will suffer by association with their bad service or poor food. Check who was in the premises before you, for how long, and who was there before them. If there was never someone there before, you also need to ask “Why?”, to be sure you’re not missing something. In many cases, the answer to the best location for you is simple; where are your competitors? If they have already done the research on location you don’t have to repeat it, and you can benefit from their marketing by being close by.
Why is a particular location your preference? Make sure you visit a variety of potential premises before committing to lease one. Learn as much as possible about the local competition. You will want visibility unless your brand is a quaint hidden restaurant, and in that case you need to allow for a significant marketing effort to gain momentum.
Is there a lot of foot traffic in the immediate area? What time is this foot traffic at? Even a very busy pedestrian street does not guarantee success, you have to ask where the pedestrians are coming from and going to.
If there is little foot traffic, is there parking to allow people to travel to your location? Parking nearby is critical in all but the busiest dense urban areas. Is there public transport close by; unless this is a subway in a busy city, public transport is a bonus and is unlikely to sustain your business.
If you have some particular premises in mind already, is it big enough to create the turnover you need. Is there enough space for sufficient cover’s and seating? Is the layout suitable for your type of establishment? Is the premises fitted out, or are you going to have to budget for a complete kitchen fitout? Before signing a lease don’t forget to ask if the premises is zoned appropriately for your type of business. Avoid a lease longer than 1 or 2 years until your bar, cafe or restaurant has proven successful, unless you have a get-out clause. You will also want to ask about the local council or government rates, as these can be a significant expense. Being aware beforehand of all the costs associated with your premises can make or break you in your first year. Check what zoning is in the local area to make sure that a drug rehab clinic, or a meat processing facility doesn’t open up next door! Make sure the premises is also up to code in all respects such as fire alarms, bathrooms, accessibility etc.
There are many different concepts for food and drink service premises, and many variations on these concepts. But its not just about the food or drink, you need an identity and brand which people can associate with your premises.
Often, the type of food or drink you want to serve will guide your choice of theme and brand. If you have your heart set on a particular concept, you will need to be very diligent in investigating a wide variety of locations to find one which suits your concept. You will need to be flexible regarding where you set up, and choose a suitable location for your concept.
Do you want to open a fast food restaurant, a bar and bistro, a fine dining restaurant, serve Italian cuisine, own a jazz bar, operate a franchise café or open a quaint cottage café? Perhaps you want to open a mobile fast food restaurant from a truck. How much is your concept going to cost? Is the fit-out, including potential custom cooking apparatus like wood fired ovens, within your budget? By all means dream big with your concept, but it’s safer to start small and grow your business.
What type of management and service will your premises need? A fine dining restaurant will often require a higher staff overhead and management standard than a more casual diner. On the opposite side of that coin, more qualified and experience staff can often run a premises will less oversight, giving you as the owner more freedom.
The type of décor has to fit the concept for your restaurant. While a fine dining establishment will allow for linen on the tabletops, a quick service restaurant or bar needs clear tables perhaps with just a menu. Music can make sure that guests don’t hear noise from the kitchen and give them a feeling of privacy when talking; but the playlist and volume are key. Your favourite heavy metal band may not be the best choice for your particular premises.
Of course all concepts should have great service and great food and/or drink.
You will need to understand your customers. Where are they located? Whether there are enough of them in your potential area. How and when they are likely to visit your premises. Perhaps the foot traffic in a particular area only suits fast food or takeaway coffee. With a lot of daytime foot traffic, you might look at a café or restaurant to facilitate the daytime crowd. With evening and night time traffic, you might want to consider opening a fine dining restaurant or bar, perhaps a gastro pub. Ask the local council what the total population numbers are in an area to check that there are physically enough customers. Check what the demographics are regarding income, age, behaviour, habits and so on, to ensure they suit your concept, menu options and pricing model.
Before moving too far down the path of establishing your restaurant or defining your concept you need to create a draft menu. The menu will often drive a lot of your decisions surrounding theme, décor, brand and style.
The menu and the style of your establishment must fit together; there is no point opening a gastro pub which looks like a fast food diner or vice versa (Perhaps that’s a fantastic novel idea…if you try it please let us know how you get on!). To create your menu you need to know your target audience, but you also need to have continuity in the types of dishes across your menu. There is a saying “A friend to all is a friend to none”…do not try to cater for everyone with your menu. Create a menu you’re passionate about and provide the dishes to a high standard with great service. Prices on the menu should be very clear. In some countries, it is also compulsory to display allergen info on your menu. An important aspect of menus to be aware of moving forwards, is that removing a popular item with less margin in favour of a higher margin dish, such as replacing a steak fillet with sirloin, may lose you more money from losses on supplementary products sold alongside the main dish, or from lost repeat visits by customers who preferred a particular dish.
Fitting out your new premises with digital menus at little or no cost, provides data analytics to drive answers to these critical decisions, helps give you the flexibility to change your menu regularly, meet your regulatory requirements such as for allergen display or calorie display, and get the intimate customer feedback you need when testing, changing and optimizing to increase your margins.
You also need to know what type of food people in the local area prefer. Does your menu provide something they will actually pay for? Do your menu and location match, and does your concept and theme match the menu. Again, look at competition in the local area; if there are a lot of pizza restaurants, do the people in the surrounding area have a preference for that food type.
We asked our team what they considered big menu blunders:
Food and drink goes through fads and trends like many other things in life. You should examine what the trends are at the moment and where they are going. During the boom years the gastro pub and craft beer started taking off. A café culture started to develop which didn’t exist before. Identify what the trends are and if your concept fits into the upward trends. “A rising sea lifts all boats”, when the sea is rising you want the advantage of being a boat, not a house on the shoreline. That’s obviously a metaphor, although there are some nice restaurants on boats and barges around Europe!
The type of premises you’re opening will often determine the type of technology you need to operate. Traditional Electronic Point of Sale (EPOS) systems can be expensive, but often provide extensive accounts and stock management software to supplement the basic functionality. However you may pay more for these additionality functionalities, or alternatively source them from a different supplier than your EPOS provider. You can expect to initially pay anywhere upwards from a few thousand euros for a recognised traditional EPOS system, and you can potentially get the entire system from a single provider such as through your bank and their recognised partner, or you can get different elements of the system from different providers. There are often leasing options to lower the initial capital burden.
The traditional payments industry is very fragmented and there is no easy way around it. You just have to research the different payment options available from different providers. We’ll cover costs of common systems in a later blog. Don’t forget to consider factors such as the time it takes for transactions to work their way through the relevant payment gateway, to actually hit your bank account. This can often be a few days.
You may also need to pay a few hundred euros separately for a credit card reader, and monthly license fees for your software and access to a banks payment gateway. You will also have to pay a transaction fee on every transaction. These fees often involve a fixed price up to a certain transaction value, and a percentage thereafter. In some cases they can have different pricing for different types of cards such as AMEX simply because the card issuer further back in the food chain may have higher rates which your supplier can’t control.
Newer Mobile Point of Sale systems (MPOS) can cost you a lot less up front to purchase the card reader, in exchange for a slightly higher fixed percentage per transaction. For new premises, the simplicity of having a fixed percentage charge per transaction, low up front costs and no license fees often make this an attractive option. You also need to consider if your payment system facilitates new payment methods such as Android or Apple Pay. Beyond this you should appreciate that even Android and Apple pay are being overtaken by newer payment app’s already before they have even become established, and you may wish to have one of these to complement your traditional EPOS functionality.
Or if this is giving you a headache, you can operate like over 30% of businesses who still use a traditional cash register and a credit card reader with no EPOS system!
Regardless of which payment system or combination of systems you choose, you want to maximise your revenue and minimise your costs. The only way to overcome the limitations of the traditional systems and increase your revenue is with a tabletop menu system which never makes errors, which provides critical data for your premises, and which will flawlessly recommend additional products and offers to consumers every single time. Promo Pads tabletop menu system complements your other hardware, increases your sales, provides critical data, and the basic introductory version is provided for free!
So now that we have the fundamentals covered, you have to remember to make it all fit together. Having consistency across your location, concept, theme, branding, menu style, service style, pricing and expectations, leads to a relaxed comfortable atmosphere which people will want to visit and revisit.
Remember: Location, Location, Location!
You might also like: How to market your restaurant, bar or café: 10 marketing tools and services everyone in the food/drink industry should be using