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Starting a Restaurant Business
4 Keys to Longevity

Implementing the 4 keys to starting a restaurant business will ensure you remain operational long after other restaurants have closed.


There are many factors contributing to your success; among them is seeking and following the advice of restaurateurs who have proven success in the key operational elements of the restaurant business.

If you have ever watched the TV show Restaurant Impossible you already have a hint at how to start a small restaurant the right way.

To get you started on the right foot, I interviewed Jason Lawson, an owner-chef of multiple profitable chophouses and cafes in the Midwest. He was kind enough to spend 3-hours with me. I relay the key points of our conversation.


The 4 Management Keys to Restaurant Longevity

  1. Location
  2. Pricing Your Menu Correctly
  3. Guest Service
  4. Marketing


1.   Starting a Restaurant Business: Location

We have all seen first hand the need to select the right location for your eatery. Many come and go with regularity; here today, gone in 8-months or so.

“The #1 key for a café’s location is actually three-fold,” says Jason.

They are:

1. Visibility:

“A street corner in a high traffic spot is the highest priority followed by great signage and plenty of lighting at night. Ample lighting makes your place look alive and inviting! Paying a higher rent (or land costs, if buying real estate) is well worth the extra expense. Having your business out of sight is having it out of potential customer’s mind. Locating in a strip center is generally a sign of certain death.”

2. Accessibility:

“Locating your establishment near the Interstate and/or at high traffic cross streets is a no brainer,” according to Jason. “Just think to yourself, how I could give simple directions to folks calling to find where you are located. Why spend dollars marketing your place if people can’t easily find it?”

3. Parking:

“Free parking is always better than off-site having-to-pay-parking. But the key is Parking, Parking and Parking,” emphasizes Jason. "Entrepreneurs tend to fall in love with their restaurant concept and do not adequately analyze the parking situation when starting a restaurant business."


2.   Starting a Restaurant Business:
Pricing Your Menu Correctly

“The #2 key for successful longevity is something most entrepreneurs have no clue about, let alone understand,” says Jason. “Pricing your menu is critical.”

“Most people opening a restaurant just look at their competition and price their menu accordingly.

They pay no attention whether the competition uses frozen or fresh products, their location, their service, their cleanliness, etc., etc., etc.

The only thing they care about is NOT over pricing their food items.

What a terrible mistake this is.”

Profitable eating establishments always have 2 components:

 

  1. “Your menu must always be made up entirely of fresh ingredients, never frozen,” says Jason with empathic emphasis.
  2. “Your menu must be a reasonable size consisting of 4 or 5 appetizers, 3 or 4 salads, no more than 8 to 10 entrées and 3 or 4 deserts. One or two entrées should be house specialties. Of course the breakfast and lunch menu can vary, but the theme is the same: less is better.”

The point of having a manageable menu is:

  • Reduces number of fresh products on hand thus reducing spoilage and costs
  • Promotes fast turnaround time in the kitchen
  • Doesn’t confuse or delay your guest from making a food selection
  • Wait staff training is simpler and more through resulting in better service
  • Most efficient way to operate you business
  • Pricing is easier and more accurate

“Whenever I see a restaurant with a huge menu, I know it is failing or about to fail. I’ve seen it happen again and again,” pointed out Jason.

The cost of any item on your menu is the cost of the food used to prepare it. Therefore, it is exceedingly important to establish specific measurements for each product used for each menu item.

Following your measurements easily produces the costs of each item served to a guest.


Here is the formula:

Total Cost of all items used to prepare a dish divided by .30 (max of .35) = retail price of each menu item.

As an example:

Your super duper hamburger has a total ingredient cost of $1.78. This divided by .30 means you retail it on your menu for a minimum of $5.93. I would price it at $5.99.

“Guest will pay more for high quality, fresh ingredients and well presented menu items. Price is not the determining factor to your guest. My 28-years of restaurant ownership has proven this time and time again,” emphasizes Jason.

3.  Starting a Restaurant Business: 
Service, Service and Service

“The #3 key to restaurant longevity is training every single person you have hired well, period,” says Jason.

“The focus is only on the guest and the guest experience. There is nothing in second place!

In every one of my establishments, I always train my servers to engage our guests in chitchat.

This makes our guest feel like real people getting personalized attention.

Totally at the servers discretion, they may bring to their guest’s table a sampling of a dish saying something like,” Our chef thought you may want to sample this dish. He believes you will also enjoy it.”

“Oh, one other item. Everyone in the front of the house is responsible to refill guest drinks no matter who initially served him or her. Attentive attention to a detail like this builds strong relationships.

Having systems in place to facilitate service and other operational tasks is paramount to a restaurants longevity.”

Jason’s voice kept rising as he told me these service tips. That’s how important guest service is to him.

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4.   Starting a Restaurant Business:  Marketing

The #4 key to restaurant longevity is proper low cost marketing.

Competing with the big guys and restaurant chains doesn’t need to drain your bank account.

ONE: If your located in a neighborhood, check to see if there is a neighborhood council or business district association. Offer an evening where you give away an entree and desert for free.

TWO: If your located in the City Center, hire a person to stand outside your restaurant passing out a flyer offering to give away for free an entree and a desert on an evening.

THREE: If you want to link up to a non profit social service organization, offer the same deal (entree and desert) but with a hitch. The social service agency will ask for a donation.

Why is giving away food a money saving strategy?


Your food cost is (or should be) .30 on the dollar. If you do an amazing job preparing and presenting your food on your free food night, your returns should be multi-fold of your expenditures as these people spread the word about your fantastic restaurant.

It is way cheaper to advertise this way, than spending multiple whole dollars to do newsprint advertising which, I suggest, will have way less benefit per dollar spent.


Thank you for visiting Starting a Restaurant Business: 4 Keys to Longevity.

Proven Resources for Any Restaurants Profitability

  1. How to Improve Dining Room Service by Richard Saporito, an excellent and well known authority on improving restaurant service and increasing your profits at the same time.
  2. How to Start a Restaurant Business by Ray Freeman is an exceedingly helpful account of his many years of experience. His ebook is a natural choice for many entrepreneurs.

Helpful Professional Resources

U. S. Small Business Administration: Opening and Running a Restaurant

National Association of Women Business Owners


Additional Small Business Ideas

 

 

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