Food service is a gargantuan industry that is constantly growing. People live fast-paced lives and do not always have time to cook dinner, leading to a steady stream of customers looking to have their food cooked for them. While many people dream of starting a successful chain of restaurants, they have to face the harsh reality that many restaurants fail in their first year. That does not mean that your eatery will; you just have to follow the proper steps in starting your business. Once that first restaurant is successful, you will be able to duplicate the process to expand into a chain.
Things You Will Need
Food preparation and serving equipment
Apply to work in a existing restaurant. There are two reasons for this. First, it is unlikely you will be able to succeed as a restaurateur having never worked in one. Second, it will give you first-hand knowledge of the day-to-day operations of a restaurant.
Target a market. There is no one restaurant that caters to everyone, and many fail right off the bat because they try to despite the overwhelming odds. The type of market you choose will also determine the type of restaurant you will be. For example, Generation Y--those born in the early 1980s--live fast-paced lives and like their food equally fast. Almost thirty-five percent of their total restaurant visits are to fast-food and pizza places. Baby Boomers on the other hand--those born between 1946 and 1964--are more apt to eat at upscale restaurants with their families. Don’t expect to fill your tables with affluent business types if you’re running a fast food joint.
Choose a food concept. Determine if you want to open a Wendy's-style burger joint or TGI Friday's-inspired family restaurant. Establish if you want to specialize in a particular type of food (i.e., Italian, Mexican, seafood, subs). Since you plan on becoming a chain, make your service, food, ambiance (or all three) unique so that it stands out and becomes easily recognizable.
Write a business plan. Lay out everything on paper before you begin any other step of the process. The business plan should include your concept and market, your menu and how it will be priced and a detailed financial breakdown. You need to know how much startup capital you will need and what sources you will tap to obtain it. Outline your long-term financial projections and your strategy for hiring, training and retaining employees. It is also not a bad idea to formulate an exit strategy should things not go according to plan.
Fund your business. The amount will vary greatly depending on the type of restaurant you are opening. A small sandwich shop will cost significantly less than an upscale eatery. Depending on the type of chain you are starting, costs can run from $30,000 to more than $1.5 million. There are several different ways to get funding. You can (and will need to) use your own resources, such as savings accounts or equity in your home. You can obtain loans from family and friends or you can get a loan from a bank that provides loans for startups.
Buy or lease a location. If you are considering a retail location (near shops and other businesses), you need to take several factors into account. Examine the influx of consumers to the area. The more people, the better chance your chain has of succeeding and expanding. Make sure there are not restrictive ordinances in place. For example, a noise ordinance will almost certainly spell trouble for a pub. Make sure the rent and terms of the lease are in line with your financial projections.
Design the layout. Since you are opening this restaurant to make a chain, be sure that it is unique and memorable. You will need a dining area and a production area. The dining area is the most important part of the restaurant. This is where the customers will sit and it will be the only place they see, so what they take away from the dining area will be their impression of the restaurant. Make sure there is ample seating without crowding the patrons. If you can only fit 100 people comfortably, do not try to cram in 125. The production area should be highly functional and provide smooth transition from cook to server to customer. Include enough space for storage, receiving and dishwashing.
Create your menu. Do not try to overload it with items for the sake of variety. A restaurant that makes 10 exceptional dishes will always do better than one that offers 50 mediocre ones. You need to be more concerned with the quality of your food to build your reputation so you can expand to more restaurants.
Hire employees. Before you do, you need to design their pay scale, while being very aware of regulations. You will need, depending on your type of operation, managers (crucial for you to expand as you can not be in multiple restaurants at once), cooks, kitchen and cleaning staff, servers, hosts and bartenders. Make sure that any ads you place carry detailed job descriptions. Don’t just hire people for the sake of filling your staff. Hire the best people possible, ideally those interested in a career in the restaurant business. Check with your accountant or through the IRS as to employee responsibilities in reporting tips.
Market your restaurant. Place ads in the paper and, if you have the means, film television commercials. Once people start coming in, go out of your way to make sure they not only have an outstanding meal, but have an excellent overall experience. Word-of-mouth will do more for your restaurant than advertising is capable of.
Revise your business plan to include another restaurant and repeat the process. Once your income reaches the level of your projections, you will be able to duplicate the steps you initially took to open your first restaurant. If you reach an equal level of success, you will be able to build upon each new restaurant and you will end up starting your own restaurant chain.