by R. Asmerom
You’ve thought about it before: opening a bar or restaurant would be a great business venture. And you’ve certainly heard this before: most new restaurants go out of business within the first year of opening. The fact of the matter is that opening an eatery is extremely challenging but very doable for a dedicated individual and/or a hardworking team. But many things have to align to make it happen: quality, ambiance, location, and, of course, food. For those who haven’t gotten training by working in a restaurant before, we asked restaurant consultant Dan Simons, a principal with the Vucurevich Simons Advisory Group, about key pointers for launching your own spot and making it happen.
Get Your Concept Down
You should map out everything from the food choices to the atmosphere you’re trying to achieve. Are you going for high-end, casual or just trying to run a take-out type of business? Every large detail will determine the the million of other smaller details involved in the planning. Having a clear vision of what you’re trying to accomplish is crucial.
Do Your Research and Formulate A Business Plan
“Make a map of the competition, gather information on the restaurants in the neighborhood: How big are they? How many seats? What style of service? Gather all their menus and create a chart of what they offer and the price,” says Simons. A business plan is essential for plugging in the conceptual and hard data to get a better picture of what you’re getting into. “The National Restaurant Association can be a good source of information for basic data to enter into your plan,” he adds. You’ll need a business plan to help justify your idea to potential business partners and lenders as well.
Scout Out A Great Location
Your location is critical to your success so think about foot traffic and neighborhood culture when you’re scouting out space. Also, you have to make sure you can afford it. “Gather intelligence from a real estate broker on the average rents in the area and the high-low rents,” says Simons.
Decide To Go in with a business partner or go at it alone
“Every entrepreneur needs to know her/himself. For me, personally, I’m a partnership guy – it’s how I’m built, how I thrive and I’d always choose partnership over doing something solo. Some people are best as the solo leader, some are best in partnership. Be honest with your style, your personality, your skill sets, and determine what sort of arrangement brings out the best in you.”
Raise Funding Via Your Network
Simons says the the best funding for a restaurant comes family and friends. “Nowadays, banks will only loan you an amount they can secure with collateral. For example, your house, your car, your brokerage account. Don’t be fooled into thinking that an SBA loan will get you off the hook if you fail – it makes it easier for the bank to loan you the money, but there’s still no escaping owing the money unless you file personal bankruptcy. Be prepared to sign personally to guarantee any loan. You are much better with equity than debt on your first restaurant.”
Get Permits
Anyone whose ever rehabbed a residence or done improvements on their home knows that upgrades involve getting past some red tape with the city. Make sure you set aside time and money. Although your contractor may be able to handle most of these permits like construction, certificate of occupancy, and fire safety, other permits like a food and/or liquor license will require some legwork on your part.
Although many restaurants and bars generate a lot of cash from sales of alcoholic beverages, liquor licenses are generally not cheap or easy to come by. In some cities, it is much easier to buy a restaurant that already has a license than to try to obtain one for a brand new restaurant. Some places like Los Angeles utilize a lottery system to dole out the few available licenses and even after securing a license, you’d still have to fork over $25,000 for it. Brokers and expediters are available to help with buying and transferring licenses. Check with your city and state for specifics.
Create All The Food/Systems/Brand
“You need to develop the idea that is the epicenter of the brand, from which everything blossoms,” says Simons. “Write the menu, create the recipes, select all the brand touch-points such as plates, silverware, table-top items, uniforms, music, signage, anything that conveys the voice of the brand or the emotion of the brand.” He recalls that for one of his clients, they decided to put fun artisan whittled farm animals strategically placed around the restaurant and use glass milk bottles as water pitchers.”
Hire a designer/contractor who has experience with designing restaurants
“When it comes time to hiring a construction company, Simons says it’s best to go with a company that has restaurant experience. But he also advises going to a restaurant consulting/development firm like VSAG as the first step to understanding what vendors you will need to hire. “It takes expertise just to hire an architect or designer or contractor – and that’s where a restaurant consulting firm can provide huge value,” he said.
