9 Biggest Mistakes in Starting a Restaurant

You’re ready to pour your blood, sweat and tears into your restaurant start-up, but you’re worried that things may not go as smoothly as you had hoped. About 17% of restaurants will close in their first year, but in many cases, the owners made mistakes that could have been avoided.

To succeed with your restaurant start-up, make sure to avoid these mistakes:

1. No business plan. A business plan will outline your future objectives and your strategies to reach them. It will also help you budget while saving time, money and stress. If you plan to apply for any type of financing, a business plan is a necessity.
2. Undercapitalization. It’s always better to overestimate than to underestimate your start-up costs. Consider setting aside money for working capital to cover one year of rent. It may also be a good idea to set aside contingency money for unexpected problems that may arise (and they will). As a general rule of thumb, you want to set aside 10–15% of the total required investment as contingency.
3. No market research. Aspiring restaurant owners often make the mistake of choosing the food they love instead of the food people in their target audience want to eat. If there’s no demand for the type of cuisine you want to serve, your restaurant will have a hard time keeping its doors open — even if you hire the best chef in town.
4. Assuming you’ll make profit right away. Your restaurant may be a hit from day one, but most restaurants experience high food and labor costs during the first few months of operation. Make sure you have capital set aside to cover any initial losses you may experience.
5. Overcomplicating the menu. Some restaurants try hard to please everyone, and as a result they wind up putting items on the menu that don’t really fit with the restaurant. Start with fewer dishes that match your restaurant’s concept and focus on quality.
6. Under-prepping for the opening day. The customer’s first impression is crucial, particularly on opening day. These first customers will be the ones to leave the first reviews for your restaurant and share their experiences with their friends. Before you have your grand opening, consider having a few soft openings first. Make sure that you hire extra staff for the grand one.
7. Inadequate employee training. Take time to create training, operation and procedures manuals. These manuals will cover everything from cashier procedures to detailed recipes, waiter training and customer service standards. They ensure that your employees know how to do their jobs and what to do if something goes wrong.
8. Ignoring technology. Some restaurants have point-of-sale systems right at the table, which allows to pay for food as soon as a customer finishes eating. Loyalty programs and online payment options are other affordable technologies that may turn first-time customers into repeat customers. You don’t have to have the most technologically advanced restaurant in town, but adding customer-centric features, like online ordering and payment, could give you an edge on the competition.
9. Underspending on marketing. Even in small towns, there are at least two well-established restaurants that you will have to compete with. Without a solid marketing plan, most people will have no idea that your restaurant even exists. As a general rule of thumb, established restaurants allocate 3–6 % of their budget to marketing. But new restaurants typically spend 15% of their sales on marketing. Fortunately, you only need to spend that much in the first 3–6 months of opening.

There may be many other mistakes that you can make when launching your restaurant, but these are the most common — and costly — ones. Don’t let your fear of mistakes deter you from opening your restaurant. Even the most successful restaurants experienced a few hiccups before they figured out what worked.

Source: https://mcdonaldpaper.com/blog/9-biggest-mistakes-when-opening-a-restaurant