Restaurant Start Up Mistakes To Watch Out For

By on October 16, 2013

Running any new business is a challenge, and restaurants are a particularly difficult lot; competition is stiff and failure rates high. The experience comes with a big learning curve and mistakes are to be expected. But, you can learn a lot by educating yourself on the experience of others and the lessons they learned. The following covers a few key areas that will make or break your success.

Restaurant Start Up Mistakes To Watch Out For

Underestimating Capital

It takes money to make money, and opening a restaurant comes with a host of costs, from building permits to construction. Even the best planned restaurant will falter if you do not have adequate funds to get it up and running. This is one of the biggest problems new restaurant owners come up against. Typical issues include unforeseen costs mandated by building authorities or local inspectors, delays, change orders , construction overrun, and soft costs like permits and insurance binders. While it probably will not be possible to outline every cent you will need, working with a professional knowledgeable in estimating these costs can help you determine your money needs more accurately. Even once you get these numbers, consider adding another 10 to 15 percent just to be sure.

Overestimating Time to Profitability

You just poured a whole lot of money into your restaurant and it can take some time to recoup these costs. Many make the mistake of expecting profitability right from the get-go. But, you may not be in the black for at least a couple of months, maybe more. Your start-up budget should include adequate allowances for funding operating deficits.

Not Focusing Enough on Customer Preferences

You probably have a very strong idea of what you like, and naturally this will influence the menu. But, in all your enthusiasm, it is easy to overlook what the customer likes. And ultimately, this is the only thing that matters. Before you tackle your menu design, do a bit of research into your local market. Take surveys, have focus groups, or whatever else you can do to find out what people want and, just as important, what they are willing to pay for it.

Skimping on Location to Save on Rent

While budget constraints may keep some restaurant hopefuls from getting the absolute most prime spot possible, you should get the best location you can possibly afford. Rent is a major expense and it is tempting to pick a less-than-ideal spot to save some money. You are convinced your restaurant will be great and people will go out of their way to get there. This is probably not going to happen. Restaurants are everywhere and people are not lacking choices. And chances are, you will not end up saving much since you will end up spending more money on getting the word out about your place.

Lack of Established Systems, Procedures and Training Manuals

One of the reasons restaurant franchises are so successful is that they have a documented set of rules, procedures, checklists,etc… This consistency ensures order, a good customer experience, increased efficiency of the staff, and consistent staff performance and food quality. For the individual restaurant owner, you may be making up this stuff as you go, and this can spell trouble. It is crucial to develop your own systems, procedures and training and get it down in some sort of manual that is given to everyone in the restaurant. This way, no matter who is working the kitchen, or serving the customers, the customer experience will be consistent.

Being Everything to Everyone

Your best chance of success lies in finding an unfulfilled niche in area and filling it. Many new restaurants make the mistake of trying to be everything to everyone. This creates a complicated kitchen and confused customers. You will not succeed in creating a unique identity.

Kelli Cooper is a freelance writer who blogs about a variety of topics in the restaurant business. She recommends visiting Menu Shoppe for more information on custom menus.

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