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Starting a new restaurant, even starting a small restaurant is a massive undertaking. In fact, size is little guide to how much hassle you are going to have, except in the largest venues (100+ covers) where things can become very tricky indeed.
Remember that starting a new small restaurant can actually be a mixed blessing. You are never going to earn huge amounts if your turnover is low, no matter how efficient your restaurant is. Remember that starting a new restaurant means spending money on marketing. The more opportunity for a return on your investment the better. A small restaurant might cost as much as a larger restaurant to market without the same potential return because of the lower number of covers.
Before starting a new restaurant it is worth considering a small list of points. These are things we’ve seen every new small restaurant owner struggles with.
Never underbudget. In our own experience most people starting a new restaurant spend the most money on refurbishment, then they overstaff during the opening period but they don’t spend enough on marketing, management or on a quality menu. This keeps turnover small and customer loyalty low which means business for the new restaurant is tough from the start. You need to allocate at least 3% of your projected turnover for marketing, even in a small restaurant.
Forget you are starting a new small restaurant and play the hard nosed customer or accountant. Ask your self constantly; Why should anyone come to the new restaurant? Why would anyone pay these prices? How can I show my small restaurant is different? Do enough people know we have started a new restaurant? Are the profits of the new restaurant too small? From starting a new small restaurant until the day it generates good cash profits you can never be too harsh on every aspect of the business.
Restaurants need a great location. Before starting a new restaurant, or more likely taking over an existing restaurant, you need to take a small tour of the restaurant location or choice of locations. Your guide should be anyone that knows the area intimately and eats out regularly in restaurants. Analysing this, BEFORE you open and looking at the local competition is essential. The restaurant business varies enourmously from site to site.
Some small restaurants have huge footfall during the day or during the evening. While some large new restaurants are badly positioned or in poor areas. Others attract a small number of wealthy clients. Some restaurants are seasonal while others are a good bet all year round. Starting a new restaurant in the right location can boost your turnover considerably.
More than any other factor, your location will affect your cashflow. Remember also that the worse the location the more you MUST spend on marketing and the better your food, ambience and service have to be. Starting restaurant by saving money and getting a poor location, starting with a cheap offering and spending very little on marketing.
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