Restaurant Business Startup
Starting a restaurant can be tricky. There are so many decisions to be made. Make decisions about the size and scale of your business based on your resources, as well as your dreams. Thrift during startup is the key to making it through the first year.
The best thing to do is sit down with a pen and paper and start making lists. Figure out exactly what you need to get started in your business. The decisions you make in planning will determine whether your business will endure through the first year. The first year is the most difficult time in the life of any restaurant.
Financing and Budget
Taking out a huge loan is the most common mistake of all restaurant startups. If possible avoid borrowing money at all. Use savings and don’t quit your day job. Make sure you have income from another source to defray the cost of the restaurant. It could take many months for the restaurant to show a profit. If you must borrow, take a very minimal amount and do not spend all that you borrow. Save back for emergencies. Excessive loan payments frequently lead to bankruptcy in the first year.
Shopping for a Building
Deciding on size is one of the most difficult calls in selecting a location. If a restaurant starts too large it seems empty. People often avoid restaurants that seem strangely empty. If it is too small it will never turn enough revenue for really big profits, even if it stays full.
One good idea, if you can afford it, is to take a place that is slightly too large, and wall off sections of your restaurant into smaller areas, then simply close off the spare rooms until they are needed. However, unless the rent or sale price is really low despite the large size, you may do well to start smaller. Try to find a location which will fit the needs of a growing restaurant for years to come, without excessive cost.
Avoid vanity purchases. Buy used and discount kitchen equipment and furnishings whenever possible. Don’t buy things you do not absolutely need. Be creative with décor, and choose a theme based on what you can find or make cheaply. The most common mistake of new restaurant owners is to purchase the most expensive kitchen equipment, and décor they can possibly buy. Instead spend more time bargain shopping.
Getting the right insurance for restaurants
Take time when sourcing insurance for restaurants, as it is one of the most important purchases you will make. Be sure you get enough of the recommended types of coverage. Consult an insurance agent who specialises in restaurant insurance policies. They will be able to help you find just the right coverage tailored to your needs.
• Public liability insurance for restaurants: This is the single most important coverage a restaurant owner can buy. Public liability insurance covers any accidents that occur on the property that might result in injury. It also covers food poison, or pathogens that could be transferred through food. In the event that your restaurant is sued for personal injury public liability insurance will pay legal costs and compensation to injured parties.
• Employer’s liability insurance; UK law requires that all restaurants carry a minimum of 5 million pounds of employer’s liability insurance, to protect employees. This pays employee medical bills if they become injured on the job.
• Building cover: Fire, flood and accident insurance for the building is necessary unless you are renting or leasing the property. Protect your investment from loss or damage.
• Contents insurance for restaurants; Insurance on a restaurant will generally cover the equipment, furnishings and décor in the event of fire or flood. Even if you rent you will need this type of insurance.
• Stock: This type of insurance covers your merchandise in the event of fire, flood, theft, destruction or loss.
• Loss of money: If you lose money through theft or robbery, this type of insurance will reimburse your restaurant.
Advertising is very important, but equally important is the timing of advertising and the economy of advertising. There are four major types of advertising; on site, printed flyer, media and internet. Start with on site advertising. Use tasteful signs and neatly post a copy of your menu where it may be viewed from outside the restaurant. Remember to post specials there too. For the first two weeks on site signs should be enough advertising.
Make sure the restaurant staff are ready before inviting anything more than a few walk-in customers, and personal friends. Many restaurants open with a huge grand opening and a lot of media advertising. Unfortunately they often destroy their business because their staff is unprepared for the crowd. Making a bad first impression on a huge crowd can utterly wreck your business. Take it slow and build gradually.
Flyers are a very inexpensive and effective way to promote a restaurant. Print fliers with a copy of the lunch menu and a coupon. Have some friends or employees hand out the coupon flyers in nearby areas and have friends distribute them among their acquaintances. Start a website for your restaurant. Be sure to include a copy of the menu and keep it updated with changes. Use the flyers to gradually increase business. Generally 10 flyers will get at least one customer, so if you pass out one hundred flyers look for at least an extra 10 – 20 filled tables over the next three days.
When you are ready for a grand opening party, usually months after your first day open, advertise in the local news paper, send out tons of flyers, and spread the word with a bill board. Even try TV advertising if you can afford it. By now the staff is ready to handle the crowds. It’s even possible you won’t need a huge promotional push for your grand opening. Allowing your clientele to build gradually has great advantages as well.
Restaurant startups are nothing to rush into with a hand full of borrowed money. Use your resources wisely, and prepare for each step with careful budgeting. Avoid wasting supplies and resources. Remember to plan for necessary expenses such as restaurant insurance, utilities and rent. Using common sense and thrift now will insure success in years to come.
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