Starting any new business is tricky, especially in the ever-expanding food service and hospitality industry. It's certainly not all about choosing a good restaurant name, although having a catchy brand certainly helps. Here's seven common restaurant opening misconceptions debunked!
1. It Takes Two Years to Turn a Profit
It's vital to do your market research, so providing your research is good and your restaurant is clearly focused with a great concept, it's entirely possible to turn a profit on your first day in business. There's all sorts of ways help achieve this, including leasing catering equipment which also helps reduce the tax burden on your business without the initial outlay.
2. Timing is Everything
Whilst considering timing when opening a new business is important, it's certainly not the "be all and end all" that it's said to be. Some of the largest companies in the world were started when the timing couldn't be worse. Take Microsoft - founded in April 1975 and re-incorporated 1981 - just as the American recession of the 1980s started. Timing is rarely "right", however, if your restaurant concept is well thought out and you've done your research, there's no time like the present.
3. You have to work 24/7
Any new business is hard work and you get out of it what you put in. However, whilst it's vital to keep an eye on your cash flow and day-to-day operations, you also need to be aware of personal burn-out, which can lead to ill health and could even affect your business. If you hire the right staff and delegate tasks, you can take a step back, take a deep breath and focus on priorities. Owning a restaurant is hard work, but it's supposed to be enjoyable too - although don't take this too far!
Tip: If you really have to work extra long hours, at least use anti-fatigue mats to reduce the strain on your feet.
Tip: If you really have to work extra long hours, at least use anti-fatigue mats to reduce the strain on your feet.
4. You'll be Rich and Famous
If you're dreaming of riches, just remember that there's more ways to lose money than make money in catering. Not everyone realises some of the many costs involved, such as.. (deep breath)
Rent/lease, business rates, service charges, waste disposal and management, menus, pest control, insurance, recruitment, training, signage, marketing, compliance, lighting, health and safety, EPoS, staff uniform, cleaning equipment, cooking machines, ingredients.... the list goes on and on.
Careful control of costs, margins and waste may lead to a healthy profit, however "riches" take an awful lot of something we all need more of. Time.
In terms of fame, there's about 75,000 chefs employed in Australia. Of those, around 50 are well-known enough to be on Wikipedia - that's 0.06% of chefs considered "famous". It's not impossible, but being a famous chef is pretty improbable.
Tip: Build your reputation with your food and service.
Rent/lease, business rates, service charges, waste disposal and management, menus, pest control, insurance, recruitment, training, signage, marketing, compliance, lighting, health and safety, EPoS, staff uniform, cleaning equipment, cooking machines, ingredients.... the list goes on and on.
Careful control of costs, margins and waste may lead to a healthy profit, however "riches" take an awful lot of something we all need more of. Time.
In terms of fame, there's about 75,000 chefs employed in Australia. Of those, around 50 are well-known enough to be on Wikipedia - that's 0.06% of chefs considered "famous". It's not impossible, but being a famous chef is pretty improbable.
Tip: Build your reputation with your food and service.
5. Attract Customers with Great Deals
When opening a restaurant, it's considered a terrible idea to offer BOGOF (buy one, get one free) or other similar offers. Offering heavy discounts on opening can set a dangerous precedent where you don't attract your target market and customers could expect the pricing to be similar if they visit again. In addition, discounting doesn't help to build long-term success and hurts your bottom line. Intelligent marketing, especially using social media, is much more likely to provide results.
Tip: Instead of devaluing the food, perhaps offer a free glass of wine or a tasty amuse-bouche to really show off your menu.
Tip: Instead of devaluing the food, perhaps offer a free glass of wine or a tasty amuse-bouche to really show off your menu.
6. Locate Your Restaurant Where There's No Competition
Today, people don't go to restaurants just to eat. It's not just food on plates. A restaurant is an experience and an opportunity for the customer to indulge their senses. As such, having to travel a long way or struggling to find a restaurant can seriously reduce the sense of occasion. Whilst being the only destination to eat in an area sounds like it could be a very profitable enterprise, locating your restaurant within a lively food district can be a big benefit with increased footfall and better visibility for your business.
Tip: An area might have a lot of restaurants, but offering a unique concept can make yours the go-to destination for your target market.
Tip: An area might have a lot of restaurants, but offering a unique concept can make yours the go-to destination for your target market.
7. Target Everybody
If you target everybody, you end up targeting nobody. Make sure to come up with a great concept and know your customer.
What do you think? Do you know any other myths that are just plain wrong? Feel free to leave a comment!
Enjoyed reading this blog? Check out these other blogs...
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