A Building Guide for a Successful New Restaurant

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A Building Guide for a Successful New Restaurant

We at SCORE are dedicated to helping you get started and become successful business owners. As we continue with the “So You Want to Start a New Restaurant” series, we deal with construction. Construction is always a challenge — not matter what you’re building!

Building Your New Restaurant

Construction

Building your new restaurantIf you are going to build or remodel a restaurant, your general contractor will need a set of scaled construction documents, often called “working drawings” for submittal to your local building and health department.

Typical drawings

Here is a list of typical drawings you’ll need for your contractor:

  • Cover Sheet with site and project information
  • Demolition Plan, if applicable
  • Store Front Elevations, if applicable
  • Partition/Construction Plan
  • Floor Plan with FF&E (Furniture, fixtures and equipment)
  • Environmental Plans for Health Department
  • Finish Plans and Schedules
  • Kitchen Equipment Elevations
  • Wall Elevations
  • Exhaust and Make-up Air Plan
  • Refrigeration and Curb Plans
  • Plumbing and Electrical Rough in Plans
  • Detail Drawings for custom cabinetry and fixtures
  • Furniture and Equipment Specifications
  • Reflected Ceiling Plan
  • Electrical and Telephone plans
  • Mechanical Plan/ HVAC Plan
  • Door, Window and Ceiling Details
  • Other

Building Codes

All your plans, drawings and specifications must be in compliance with the building and health codes that are applicable to your location and be approved by the following regulatory agencies.

  • County Health Department
  • Department of Building and Safety
  • Fire Marshall

Most restaurants must comply with the “Americans with Disabilities Act” (Mossier)

Construction Costs

  • Build out cost for a new restaurant +/- $80-150 per sq.ft
  • Furniture, Fixtures, Equipment +/- $20-30 per sq.ft. , consider used.
  • New, hot location rents = $28-38 per sq.ft.
  • Tenant Improvement allowance (TI) allowance (negotiable) up to of 20% rent.
  • Build Cost should not exceed 25% projected sales
  • Caveat gray vs. vanilla shell (gray totally unfinished) as well as allowance issues.
  • Caveat concept impulse (requires high traffic) vs. destination.
  • To project income calculate number of seats ( 2800 sq. ft. -> 100 seats incl. kitchen – total build out costs & fixtures = +/-_ 450k or $160/ft. furniture & equipment = 20-22% of total)
  • Remember parking safety and accessibility.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

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8 Aug

Menus to Pricing: What a Restaurant needs to be Successful

As we continue our series that started with “So You Want to Open a Restaurant?” — here we get into the nitty-gritty of the restaurant business.

Restaurant Processes and Checklists

Develop detailed process flows and checklists that document the steps of how you do business. This is the first step in building a restaurant capable of producing consistent products efficiently with the financial results expected. These processes and checklists should be designed to use as a guide in deciding what the restaurant should be doing in the following key operational areas:

  • Manager’s opening
  • Manager’s shift change
  • Manager’s closing
  • Customer Service
  • Purchasing
  • Receiving
  • Storage
  • Preparations
  • Cleaning
  • Training

Preparing Menus and Setting the Right Price

Menus to Pricing: What a restaurant needs to be successfulPlan your menu carefully.

Know what items your customers prefer and how they like them prepared. Provide variety while maintaining stable cost averages.

Menu prices are a combination of food costs and what is needed to meet expenses and realize a profit. Generally, the price of an item is approximately more then three times the food costs, depending on restaurant type, operating expenses and competitors’ prices.

To establish pricing:

  • Estimate your sales—counter-balance higher cost items tagged with lower mark-up, with higher mark-ups on lower cost items;
  • Maintain a desired overall food cost percentage including waste and shrinkage, usually 30% or less of gross sales to obtain a normal margin of profit;
  • Balance items ranging in popularity—monitor high demand items which can determine your success.

Cost Control

In the restaurant business, you must have procedures for controlling inventory and costs. Ask people in the industry for information about procedures for:

  • Purchasing and Inventory Control. Develop centralized control over all buying and physical inventory that is easily defined and integral to the profit and expense control process. Know exactly what minimum inventory exists and needs to be maintained. This capability can be obtained with QuickBooks and other equivalent software programs – but it must be kept current to be effective.
  • Most of the time, purchasing is done over the telephone, by fax, or online. Often no contract is signed between the purchaser and the supplier; therefore, it is essential that you choose your supplier carefully.
    Develop specifications on food brand names, size, quantity, grade/weight, delivery time/place, emergency deliveries, availability and policies for substitutes or damaged goods. Entertain bids from multiple sources and get the best product for the lowest price. Use a Purchasing and Receiving Form.
  • Receiving. Check all deliveries against the Purchasing and Receiving Form, focusing on three things: quantity, price and quality (i.e., temperature: frozen goods must be frozen); packaging should be intact. Make sure specifications are met. Careful recording will show short shipments, price variations and weight differences.
  • Budgeting and Projecting. Establish a cash budget and maintain cash flow projections on a continual basis.
  • Calculating Monthly Food Costs. Determine the actual cost of food consumed and the actual cost of food sold. This is a combination of opening inventories, purchases, adjustments and closing inventories. This ratio should remain relatively constant.
  • Calculating Beverage Costs. Record all bottle deliveries and purchases.
  • Preparing Food. Make sure staff understand portion sizes (photograph entrees or give written instructions) and set up a recipe reference file to list dishes, portions and supplies needed.
  • Ensure refrigerated and frozen products are quickly placed in a cold storage – storage temperature for dry goods (between 10-21 C) and frozen goods (-18 C or less).  Rotate your stock to ensure that oldest items are used first before the new stock.

Check our upcoming classes as we hold Quickbooks classes often

 Thinking of starting a business? How about running the idea by someone who’s been there and done that? A SCORE mentor can help you for free! There are over 70 mentors in the Greater Phoenix Valley. Schedule your free session now!

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

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Restaurant Management Success Tips 1 Aug

9 Restaurant Management Success Tips

Poor management and lack of expertise account for more than half of new restaurant failures!

Here are some operational tips that are essential to your restaurant’s success.

  1. Office Procedures. A simple, user-friendly manual based on Federal and State laws should define the management policy on sexual harassment and discrimination, dealing with customers or suppliers, employee performance reviews, terminations, and standards for operation of the business in a “real world” environment. Research on applicable Federal and State requirements are a must. Also included should be procedures or process flows on key work activities (budgeting, invoicing, accounts payable, credit and collection, purchasing and maintenance, etc.), employee benefits, training, disciplinary actions, records retention, and training. This manual should be developed early on, given to each employee and a signed receipt kept in company files.
  2. Profitability Through Financial Controls. Develop a progressing 12-month flexible budget defining estimated revenue streams and expenses.  As applicable, include a revenue projection based on prior year’s performance.   This exercise will provide a formula for projecting profit and loss based on expected revenue for the year and identifies trends and areas for management concern and corrective action.
  3. Restaurant Management Success TipsDevelop a Cash Flow Analysis. Show the break even point at which all costs and expenses have been absorbed and the business starts making money. This analysis will help you decide if projected yearly revenue and expenses will meet expectations and identify cost categories where improvements are necessary should a profit shortfall occur. Develop credit lines or other sources of capital to be available during potential negative cash flow periods.
  4. Develop Standard Budget Categories. Track sales and expenses, daily/weekly and quarterly/annual management variance reports. Review order slips versus register tapes to determine accuracy of reporting receipts and make recommendations for improvements. This will provide a level of management visibility and profit accountability in order to predetermine whether profit objectives are being met and form the basis for future reporting. Your accountant can help you here.
  5. Cash Flow Accountability. Implement cash controls that catch discrepancies in what is collected each night and what is deposited. All cash funds collected must go into the bank as soon as possible.  If there is a difference it must be identified and resolved by the manager on duty before they go home. The designated financial employee must then track down and resolve any difference in what is reported to be taken in for the week and what was deposited. Continually review daily and weekly register tapes by time and sales to determine an optimum operating schedule. Review cost of sales figures from prior years, if available.
  6. Training of Key Personnel and Management on a Flexible Operating Budget. The current operating budget will have the necessary operational relationships defined in order to calculate possible excursions in revenue or expenses and allow for timely management adjustments to meet year-end profit targets.
  7. Prepare Procedures and Flow Charts. These will become a reference source for all restaurant personnel on implementing and maintaining the financial and management control process. These procedures and charts are designed to be dynamic in nature and be changed or improved to fit the restaurants changing work environment.
  8. Functional Organizational Chart. Unlike a typical block organizational chart, this is a chart to graphically portray the added flow of responsibilities top to bottom throughout the entire business structure. This should be the foundation for complete understanding on work responsibilities and relationships between the owner and the restaurant team — and used in the development of job descriptions, management team development and controls.
  9. Financial and Management Reporting System. Design a financial and management reporting format that includes the required managerial controls. An efficient automated system that is designed specifically for the restaurant industry is required for updating and maintaining the financial data mandatory for professional and timely profit and expense control and reporting. An accountant with experience in restaurant financial controls could recommend a system suitable to fit the size of your business with the necessary accountability.

This is part of a series for new restaurant startups by Roger Robinson, Phd.

If you’re thinking of start a restaurant or any type of business, get FREE Business Mentoring at a convenient location in the Phoenix Valley.

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

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The Challenges in Opening Your Own Restaurant

Obstacles in Opening Your Own Restaurant

The Challenges of Opening Your Own RestaurantThe single biggest problem in the first year is a lower sales volume than expected, due either to fewer customers or customers spending less money than estimated. Do not overlook seasonality. In the Phoenix area in the summer breaking even is a challenge.

Owners seem to have the idea that they can just open the doors for a grand opening and customers will come flocking in. Increased marketing in the restaurant’s immediate vicinity often cures weak initial sales – but be cautious about offering coupon specials as they are costly and often have a low rate of generating repeat business. Also, talk to other restaurant owners outside your competitive area for lessons they learned in developing their businesses.

Funding Your Business

Money needed to start depends on the type of business, the facility, how much equipment you need, whether you buy or lease new or used, your inventory, marketing, and necessary operating capital. Banks seldom loan more hen 50% of required funds. Depending on how much money you have to

invest in your food-service business and the particular type of business you choose, you can spend over one million on a facility.

  • Your own resources. Inventory of your assets. You may have more assets than you realize, including savings accounts, retirement accounts, equity in real estate, recreation equipment, vehicles, collections and other investments. You may opt to sell assets for cash or use them as collateral for a loan.
  • Family and friends. Friends and relatives who believe in you and want to help you succeed. Be cautious with these arrangements; no matter how close you are with the person, present yourself professionally, put everything in writing, and be sure the individuals you approach can afford to take the risk.
  • You may choose someone who has financial resources and wants to work side by side with you in the business. Or you may find someone who has money to invest but no interest in doing the actual work. Be sure to create a written partnership agreement that clearly defines your respective responsibilities and obligations. And choose your partners carefully–especially when it comes to family members.
  • Government programs. Make your first stop the SBA, but be sure to investigate various other programs. SBA programs generally work through banks and require a complete business plan. The business section of your local library is a good place to begin your research.

Regulatory Requirements

Food operations are strictly regulated and subject to inspection. Fail to meet regulations, and you could be subject to fines or be shut down by authorities. And if the violations involve tainted food, you could be responsible for your patrons’ illnesses and even death. Issues such as sanitation and fire safety are critical. Provide a safe environment in which your employees can work and your guests can dine, follow the laws of your state on sales of alcohol and tobacco products, and handle tax issues accurately, including sales, beverage, payroll and more.

Most regulatory agencies will work with new operators to let them know what they must do to meet the necessary legal requirements. Investigate the governmental regulatory requirements, city, county and state, starting with the Arizona Environmental Services Department as well as county health departments. Prepare for an excess of paperwork, including complex codes with regulations covering everything from kitchen exhaust systems to sinks, storage devices and all interior finishes.

Qualified Labor – one of your biggest challenges.

The Challenges of Opening Your Own RestaurantFinding qualified workers and rising labor costs are two key concerns for food-service business owners. The supply of workers age16-24, the primary pool for restaurant employees, has been declining. Develop a comprehensive HR program and a personnel manual. The job description needs to clearly outline the job’s duties and responsibilities. It should also list any special skills or other required credentials, such as a valid driver’s license and clean driving record for someone who is going to make deliveries for you.

Next, establish a pay scale. Research the pay rates in your area. Establish a minimum and maximum rate for each position. You’ll pay more even at the start for better qualified and more experienced workers. Of course, the pay scale is affected by whether or not the position is one that is regularly tipped.

  • Hire right. Every prospective employee should fill out an application even if they submit a resume. A resume is not a signed, sworn statement acknowledging that you can fire the person if he or she lies about his or her background; the application, which includes a truth affidavit, is. Thoroughly screen applicants. Do background checks. If you can’t do this yourself, contract with a HR consultant to do it for you on an as-needed basis.
  • Detailed Job Descriptions. Don’t make your employees guess about their responsibilities. Be sure they understand what you expect of them. Interview key personnel to determine their perception of their roles and responsibilities. A written description for the owner and all personnel providing position title, qualifications required, basic functions, reporting relationships, authority, responsibilities, and measurements of performance can then be used for training and compensation purposes.
  • Formal Personnel Evaluations. A process that will communicate performance results to company employees on an ongoing basis – and is a fair – is an objective way to provide recommendations for improvement in behavior and performance. After documentation, establish a baseline for developing practical recommendations for improvement. Again, have the employee sign the evaluation form after discussions and a copy kept in company files.
  • Motivational and Compensation Process. Incorporate a profit-motivated employee incentive plan with a bonus weighted according to the employee’s contribution towards achieving both the company profit and individual growth goals as specified in the job descriptions. A new owner should consider profit sharing to provide incentives, reduce turnover, promote teamwork, and improve overall employee operational efficiency.
  • Understand wage-and-hour and child labor laws. Check with your own state’s Department of Labor to be sure you comply with regulations on issues such as minimum wage (which can vary depending on the age of the workers and whether they’re eligible for tips), and when teenagers can work and what tasks they’re allowed to do.
  • Report tips properly. The IRS is very specific about how tips are to be reported; for details, check with your accountant or contact the IRS (or see your local telephone directory for the number).
  • Provide initial and ongoing training. Even experienced workers need to know how things are done in your restaurant. Well-trained employees are happier, more confident and more effective. Plus, ongoing training builds loyalty and reduces turnover. The NRA can help you develop appropriate employee training programs.

When your restaurant is still new, some employees’ duties may cross over from one category to another. For example, your manager may double as the host, and servers may also bus tables. Be sure to hire people who are willing to be flexible in their duties. Your payroll costs, including all taxes and benefits, your own salary and that of your managers, should be about 25 to 30 percent of your total gross sales.

  • Your most important employee. Your best candidate will have already managed a restaurant or restaurants in your area and will be familiar with local buying sources, suppliers and methods. You’ll also want leadership skills and the ability to supervise personnel while reflecting the style and character of your restaurant.

Quality of manager are paid well. Depending on your location, expect to pay a seasoned manager $30,000 to $40,000 a year, plus a percentage of sales. An entry-level manager will earn $22,000 to$26,000 but won’t have the skills of a more experienced candidate. If you can’t offer a high salary, work out a profit-sharing arrangement-it’s an excellent way to hire good people and motivate them to build a successful restaurant. Hire your manager at least a month before you open so he or she can help you set up your restaurant.

  • Chefs and cooks. When you start out, you’ll probably need three cooks–two full time and one part time. Restaurant workers typically work shifts from 10 a.m. to 4 p.m. or 4 p.m. to closing. But one lead cook may need to arrive early in the morning to begin preparing soups, bread and other items to be served that day. One full-time cook should work days, and the other evenings. The part-time cook will help during peak hours, such as weekend rushes, and can work as a line cook during slower periods, doing simple preparation.
  • Salaries for chefs and cooks vary according to their experience and your menu. Chefs command salaries significantly higher than cooks, averaging $600 to $700 a week. You may also find chefs who are willing to work under profit-sharing plans. If you have a fairly complex menu that requires a cook with lots of experience, you may have to pay anywhere from $400 to $500 a week. Pay part-time cooks on an hourly basis.
  • Your servers will have the most interaction with customers, so they need to make a favorable impression and work well under pressure, meeting the demands of customers at several tables while maintaining a pleasant demeanor. There are two times of day for wait staff: very slow and very busy. Schedule your employees accordingly. The lunch rush, for example, starts around 11:30 a.m. and continues until 1:30 or 2 p.m. Restaurants are often slow again until the dinner crowd arrives around 5:30 to 6 p.m.

Servers who earn a good portion of their income from tips are usually paid minimum wage or just slightly more. When your restaurant is new, you may hire only experienced servers so you don’t have to provide extensive training. As you become established, however, you should develop training systems to help both new, inexperienced employees and veteran servers understand your philosophy and the image you want to project.

This is part of a series on Starting Your Own Restaurant

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

 

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Restaurant Layout and Design: Planning for Success

Restaurant layout and design for successLayout and design are major factors in your restaurant’s success. Typically allow 40 to 60% of space to the dining area, approximately 30% to the kitchen and prep area, and the remainder to storage and office space.

Make sure the kitchen allows efficient, effective food preparation and interaction between staff, safety in movement, dry and cold storage, dish washing, an area for staff’s personal items, convenient delivery zone, ease of cleaning and maintenance and proper ventilation.

Aim for a practical, useful layout, while setting the mood.

Make sure you have:

  • Seating/waiting areas, serving room, cashier area, rest rooms, bar (optional);
  • One or more areas from which you can view the entire restaurant;
  • Lighting, signs and obstacle-free traffic flow;
  • A variety of seating arrangements: 50% of customers come in pairs; 30% come alone or in groups of three; and 20% in groups of four or more; To accommodate the different groups, use
  • Tables for two that can be pushed together in areas where there is ample floor space. This gives you flexibility. Place booths for four to six people along the walls.
  • Adequate floor space – the suggested square footage requirements per chair are: 10-20 sq. ft in traditional restaurants, 10-12 in cafeterias, 7-17 in coffee shops;

Production Area

restaurant kitchen must have adequet production spaceOften inefficient–the result is a poorly organized kitchen and less than top-notch service. Keep menu production in mind as you determine space for receiving, storage, food preparation, cooking, baking, dish washing, production aisles, trash storage, employee facilities and a small office. Arrange your food production area so that everything is just a few steps away from the cook. Allow for two or more cooks to be able to work side by side during your busiest hours

  • Plan your menu early as the kitchen layout and equipment purchases depend on it. See if you can purchase used equipment or lease new to reduce initial costs.       Taste-test all the recipes repeatedly until the kitchen can achieve consistency. A good way to check the food and service is to have a private opening for family and friends.
  • Form a limited liability company or private corporation and be sure to define all key personnel responsibilities – in detail.
  • Allocate the available space considering furniture and equipment to be included. Consider efficient flow and applicable regulatory requirements.       Be specific for dining, kitchen, dish washing, prep, storage, bathrooms, administrative work areas and entrances/exits.
  • Plan the layout for the dining area in detail. Remember to balance the desire for the maximum number of seats with customer comfort, and avoid seating in high traffic lanes or stuffed into corners. Avoid locating tables in the middle of the room like little islands and consider instead having low divider walls and hanging plants to break up the space.
  • Don’t forget the graphics – from exterior signage to the look of the menus, graphic design plays an important part in the overall image to be portrayed.
  • Pay attention to the lighting design. Focus dramatic light onto the tables to highlight the food, and compliment it with glowing background light to make the interior and customers look good.
  • Decide whether to offer a full service bar as this will dramatically influence initial investment requirements. Periodically Arizona releases a limited number licenses such as Series 6, 7 and 9 liquor licenses – Series 6 is needed to operate a bar, Series 7 is needed to serve beer and wine, and Series 9 is needed to sell liquor at retail. Until recently, the only way to obtain a bar or liquor license had been to buy it from another business with prices reaching $90,000 for an existing Series 6 and up to $240,000 for a Series 9. This state intends to issue a total of 126 new licenses this year at the going market rate.
  • Define your insurance needs. Restaurants are sources of potential accidents from fires to floods to food poisoning, and hundreds of other catastrophes. The NRA is an outstanding resource for guidance on related insurance coverage requirements.
  • Select and train your staff early. Look for enthusiasm, good grooming and experience. Allow them enough time to become familiar with your concept as well as for cross training. Remember that the person greeting customers is as important as the person running the kitchen – and great service and great food is a winning combination for success.
  • Set up a restaurant oriented bookkeeping and accounting system – more on this later on. Be sure to establish control over the meal checks as there are dozens of scams that dishonest servers and cashiers, especially bartenders, can use.       In particular understand and document the entire process thoroughly, and watch the petty cash, cash drawer flow and check cashing processes. Get expert advice on how to prevent abuses.
  • Designate several trusted employees to supervise storage areas. Stress that they must check in all deliveries and audit the food inventory carefully – document these responsibilities into their job descriptions.
  • Read books and attend SCORE training seminars on managing a business. Take a class at a local university on restaurant management.
  • Finally, decide on the restaurant’s overall look. Beware of trendy, contrived designs that are short lived. Attempt to provide a warm, friendly atmosphere tailored to the customer base you are trying to attract.

Dining Area

Plan your restaurant's decor & seatingDining room design will depend on your concept. This is where you’ll make the bulk of your money, so don’t cut corners. Visit restaurants in your area and analyze the décor. Watch the diners; do they react positively to the décor? Note what works well and what doesn’t.

Calculating Seating Capacity

Note relation of costs to gross and to menu pricing which are functions of number of seats, seat turns, average cover, seasonality (caveat summer), lunch covers, dinner covers, etc.

Estimate gross by number of seats times average cover reflecting these factors:

  1. Determine desired profit—convert to percentage of sales to get sales required;
  2. Determine number of operating days—divide number of days into sales to get average daily sales;
  3. Estimate volume percentages for meal periods (breakfast, lunch, dinner);
  4. Multiply figures in step 3 by average sales per day to get dollar volume per period;
  5. Determine average check per meal period;
  6. Divide dollar volumes in step 4 by average check for the number of patrons per period;
  7. Estimate:
    1. Average seat occupation per meal period;
    2. Time per meal period;
  8. Divide time per period by average occupation to get seat turnover per period;
  9. Divide possible seat turnover into number of patrons to get number of seats required per period;
  10. Take the largest seating requirement in step 9 and add a 20% safety margin for the seating capacity.

This is part of a series: “So You Want to Open a Restaurant?” Click here for the rest of the series and other articles pertaining to the restaurant business.

If you are thinking of opening a restaurant, we’ve got mentors who have been there and done that! Click here to schedule a free mentoring session at a Phoenix location near you!

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

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Who’s Your Restaurant’s Target Market?

This is the next in the series of posts on opening a restaurant. In this part we cover how to determine a restaurant’s target market, the marketing plan and location, location, location!

Target Markets

Who's your restaurant's target market? No single food-service operation has universal appeal. Focus on the 5 or 10 percent of the market you can get, forget about the rest. The main market targets of food-service business customers:

  • Generation Y. Born between 1980 and 2000, A prime target for a food-service business, Generation Y goes for fast-food and quick-service items. About 25 percent of their restaurant visits are to burger franchises, follow by pizza restaurants at 12 percent.
  • Generation X. Born between 1965 and 1977, they are concerned with value, they favor quick-service restaurants and midscale operations that offer all-you-can-eat salad bars and buffets. Offer a comfortable atmosphere focusing on value and ambience.
  • Baby boomers. Born between 1946 and 1964, boomers make up the largest segment of the U.S. population. Many can afford to visit upscale restaurants and spend money freely. Many are becoming grandparents. Offer them a family-friendly atmosphere and/or provide an upscale, formal dining experience.
  • Empty nesters. Early 50s to about age 64, typically have grown children who no longer live at home. They continue to increase as boomers grow older and their children leave home. With the most discretionary income and the highest per-capita income of all, they typically visit upscale restaurants. They focus on excellent service and outstanding food, they like elegant surroundings and a sophisticated ambience.
  • Age 65 and older, often on fixed incomes they tend to visit family-style restaurants that offer good service and reasonable prices. They typically appreciate restaurants that offer early-bird specials and senior menus with lower prices and smaller portions.

Marketing Plan – concentrate on local area

  • Generally lunch requires at least 10,000 potential customers within a radius of 1 mile
  • Generally dinner requires at least 60000 potential customers within a radius of 3 miles
  • Identify competitors
  • Loyalty programs with significant rewards
  • Direct mail
  • Churches (ads in directory)
  • Schools (fund raisers – PTO/PTA)
  • National Restaurant Association (NRA) for additional information see website
  • Door hangers
  • Inserts in local papers
  • Co-op marketing with non-competing businesses
  • Personal contacts with hotel concierges, car dealerships, large employers
  • Grand opening campaign / specials

Location, Location, Location

Where you locate your restaurant is importantChoosing the right location for your business is important. Considerations include the needs of your business, where your customers and competitors are, and such things as taxes, zoning restrictions, noise and the environment.

The better the location, the fewer marketing funds you have to spend. Your restaurant should be highly visible and located in an area with a large number of customers you’re trying to attract – don’t forget to include availability of easy parking.   Don’t make the mistake of leasing a location before you’ve got a solid business model. Don’t sign a lease until the concept and business plan is complete and you’ve reviewed it with a SCORE counselor and an attorney.

Note that not every food-service operation needs to be in a retail location, but for those that do depend on retail traffic, here are some factors to consider when deciding on a location:

  • Anticipated sales volume. How will the location and seasonality contribute to your sales volume?
  • Visibility, Signage, Accessibility to potential customers. How easy it will be for customers to find you, to get into your business. If you are relying on strong pedestrian traffic, will nearby businesses will generate foot traffic for you?
  • The rent-paying capacity of your business. Do a sales-and-profit projection for your first year of operation? Use that information to decide how much rent you can afford to pay.
  • Zoning, Restrictive ordinances. You may encounter unusually restrictive ordinances that make an otherwise strong site less than ideal, such as limitations on the hours of the day that trucks can legally load or unload.
  • Traffic density. Carefully exam of foot traffic. Two factors are especially important in this analysis: total pedestrian traffic during business hours and the percentage of it that is likely to patronize your food service business. Estimate sales potential based on pedestrians passing a given location.
  • Customer parking facilities. The site should provide convenient, adequate parking and lighting as well as easy access for customers.
  • Proximity to other businesses. Neighboring businesses may influence your store’s volume, and their presence can work for you or against you.
  • History of the site. Find out the recent history of each site under consideration before you make a final selection. Who were the previous tenants, and why are they no longer there?
  • Terms of the lease. Be sure you understand all the details of the lease, because it’s possible that an excellent site may have unacceptable leasing terms. Be sure to negotiate a tenant improvement allowance for build out costs. Caveat CAM (common area maintenance costs).
  • Future development. Check with the local planning board to see if anything is planned for the future that could affect your business, such as additional buildings nearby or road construction.

If you are thinking of opening a restaurant, we’ve got mentors who have been there and done that! Click here to schedule a free mentoring session at a Phoenix location near you!

About the Author:

Roger_RobinsonRoger Robinson, PhD has been a SCORE mentor for over 16 years. His specialties include non-profits, business planning, specifically in restaurants and hospitality, recreational and arts and Entertainment verticals. Read more about Roger here. Click here to schedule a free mentoring session with Roger or another SCORE mentor.

 

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