Many nascent entrepreneurs find themselves gravitating towards the service industry. The ubiquity of bars, restaurants and clubs combined with the glitzy image of successful celebrity chefs and restaurateurs from Ken Hom to Gordon Ramsey adds an unrealistic showbiz veneer to what is, in reality a punishing and capricious business landscape. While it’s absolutely true that fame and fortune can be found in the catering industry, it’s far from the harsh reality that most in the business experience every day.
If you combine culinary ability with a savvy business mind, the restaurant business can be very lucrative. After all, people aren’t going to stop needing to be fed any time soon. But don’t be bewitched by fantasies of high profits, wealth and status. In order to make a success of your restaurant you’ll need to go into the business with your eyes wide open.
Before you start scouring mama’s recipe books and scouting for the right premises, you’ll need to ask yourself these serious questions…
Do I have enough startup capital?
Securing startup capital is vital for any business, but the importance is multiplied exponentially for restaurants. Cooking equipment, refurbishment and marketing are extensive costs that need to be born before you serve a single dish and while many businesses are able to hit the ground running from day one, restaurants rather have the deck stacked against them. The wait for a liquor license and the inevitable build up to a regular and loyal customer base can lead to heavy losses in those crucial opening months. While working capital loans for small business can help you to keep stock coming in, ensure your staff get paid and keep your marketing campaign robust, you should go in with enough capital to keep the place afloat for 3-6 months.
What’s my USP?
The restaurant business is a crowded marketplace, so it’s important to know how you’ll distance yourself from your competitors. Responding to local demand that is currently under supplied is usually a safe bet. A lack of vegetarian or vegan alternatives in the area can help give your business a leg up as can a compelling theme. Gimmicks, however, should be avoided. While cereal cafes and cat cafes may grab headlines, the truth is that the public have a very limited appetite for novelty. Retaining repeat customers can be tricky when your restaurant’s concept is all flash and no substance.
What will my menu look like?
Your menu will determine not only the type of clientele you attract but a lot of your day-to-day operations. A common mistake made by restaurants is over-diversification in their menu which inevitably leads to a decline in quality. Keep your menu small and don’t be afraid to focus on your specialism. It’s better to do a handful of things really well than to be a Jack of all trades.
Am I willing to sacrifice my social life?
The sad truth is that restaurateurs are among the least socially active of all entrepreneurs. The restaurant business has ended marriages, estranged children and caused decades-long friendships to deteriorate. If you’re looking for work-life balance, you won’t find it here.
If you’re able to answer these questions positively and comprehensively then congratulations, you have the makings of a restaurant tycoon. Good luck!