What You Need to Know to Open Your Own EateryJune 21, 2021
If you’re a foodie hoping to break into the restaurant industry, you should first do some research. This is because restaurants and food service ventures are some of the most popular entrepreneurial projects in the US. This can be seen in a recent report by the National Restaurant Association, which found that restaurant workers make up 10% of the United States workforce.
What’s more, starting a restaurant business means joining a highly competitive industry, as 60% of new food businesses go under within the first year. Luckily, there are ways to stand out. Here’s a primer to help you sidestep the common mistakes that most new restaurant owners make.
Know How to Secure Financing
Opening a restaurant requires a lot of working capital, which is why doing your research is so important. Your research will give you a rough estimate of how much you’ll need, consequently allowing you to make a financial plan. If you need extra funding, there are several business loans available to new restaurateurs.
Some of these business loans include restaurant equipment loans, term loans, lines of credit, cash advances for merchants, and small business association loans. Credit unions and commercial banks are some of the most receptive lenders to new restaurant businesses, so start here when looking to raise capital.
Most new restaurants need about a year or more to break even, so before this point, your restaurant will have more money going out by way of expenses than income. A working capital loan can help you cover these expenses and other operating costs. To avoid facing financial ruin, have about 12 months of operating costs in your budget to tide you over as you wait to break even.
If you’re looking to partner with a software development company to develop niche software solutions such as a mobile app, for instance, some technology loans are available to new restaurant businesses. Your bank or vendor can also help you with equipment financing, which can be one of the most expensive costs.
How to Equip Your Kitchen
At the heart of every successful restaurant is the quality of its preferred restaurant equipment. As a restaurant owner, you want your restaurant to stand out, and one way to do this is by using the best kitchen equipment available. Commercial kitchen equipment is expensive, but there are ways to work around this cost bottleneck. For starters, consider leasing before committing to an equipment purchase.
Restaurant equipment leasing is a type of restaurant equipment financing that allows the business owner to rent commercial kitchen equipment instead of buying it. Restaurant owners can lease expensive kitchen equipment, such as refrigerators, ovens, stoves, and other appliances, that are needed to run their business. With this type of financing, you can get every type of equipment you need and make monthly payments at a rate you can afford.
Equipment leasing makes sense for new restaurants because commercial kitchen equipment gets a lot more wear and tear than the appliances in your home kitchen do. When you add the cost of equipment repairs, you’ll find that it’s sometimes more practical to lease restaurant equipment rather than buying it. What’s more, leasing can also help you save on some of your start-up costs because this equipment comes with better warranties than new equipment.
Sometimes you may be lucky enough to lease a piece of equipment, like a coffeemaker, at no cost. This unique arrangement happens when you’re already buying the manufacturer’s product, like their dishwashing fluid. In a case like this, “free leasing” means that you won’t have to pay a monthly lease fee.
How to Find the Right Software
As mentioned earlier, the restaurant industry is extremely competitive, so you’ll need to be more innovative with your systems. Technology is a great tool for streamlining restaurant operations and it can also elevate your customer’s dining experience. As a new business, consider outsourcing software development services to a software developer with years of experience with developing restaurant software systems.
One of the first software solutions you should consider incorporating into your business is a cloud-based point-of-sale, POS, system. A POS system allows you to form a seamless link between your chef, accountant, kitchen staff, service staff, and patrons. These days, custom POS software has an easy-to-use interface, such that new or non-tech-savvy staff can easily use them. They also make order taking more seamless, allowing your staff to take more orders, and for you to make more profits in the end.
Other custom software solutions like contactless payment options and online ordering systems allow you to make your patrons feel comfortable. This is because they create a hassle-free payment and ordering experience for your staff and customers. With an integrated restaurant online ordering system, customers can easily make online food orders for delivery.
A custom software development company can also help you come up with a restaurant payroll solution. A management solution like this can help you improve internal HR tasks by creating a hub that helps you manage your taxes, payroll, timesheets, and tips. This tool can also help you follow state and federal restaurant labor laws.
Who to Hire
Next, consider what essential staff you need to hire. To do this, consider your needs. Based on the size of your kitchen, for instance, how many cooks will you need? Do you have any managerial skills, or will you need to bring on a manager as well? How many service staff do you think you’ll need? Also, consider what uniform you want your staff to have. If you’ll have both male and female service staff, research trends in business clothes for women and men to avoid dressing them in frumpy or uncomfortable uniforms.
When it comes to opening a restaurant, your location is crucial. You need a location that has a lot of foot traffic, and one that is easily accessible. Towns that have a huge tourist population or local attractions make for great restaurant locations. Tunica, for instance, would make for a great restaurant location, considering its Gateway to the Blues Museum, MMA boxing events, and rich nightlife.
Combining a great location, the right equipment, and an air-tight financial plan are among the most important steps in opening a restaurant.