Depending on your source, the failure rate of restaurants is anywhere between 20 and 60 percent in the first year of business. Some media outlets even report it's as high as 90%. Couple those statistics with well-known issues like high rents, finding the right staff, and a whole load of regulatory and food safety issues, and it's a wonder anyone dips their toe into the restaurant industry.
And yet, that's exactly what I did.
I started, built, and sold a restaurant brand with zero prior experience.
Well, zero unless you count a summer working at KFC fresh out of school (which I don't).
So Why Start A Restaurant?
Despite the oft-cited risks, starting a restaurant isn't as crazy as it seems. For one, people are always going to need to eat. And eating out - or ordering in - is still a great way to break up the monotony of a week at work and save yourself the effort of food-prep.
It's also a pretty accessible industry in which to start a business when compared to some others.
I mean, sure, you could create a tech startup. But you're going to struggle to write code, develop apps, or get funding without some sort of background in the industry.
Same for accounting, anything medicine related, or even something in the crypto industry usually face similar barriers.
Restaurants, quite simply, are attractive because:
When it comes to expertise, the barrier to entry is low
There will always be demand for restaurants (everyone needs to eat)
What Do You Need To Do To Start a Restaurant?
It turns out, from my own experience, quite a lot of things. A lot depends on where you're starting your hot new eatery (so check with a specialist in your area), but most of these steps can be applied wherever you are.
Here are 7 things you need to know when starting a restaurant with zero experience.
Make Sure You Have Money (Double What You Budget)
I can't stress how important this is.
Whatever you think you'll have spent when you hit opening day, you're going to be wrong by a factor of 50% or more. No matter how cool your budgeting spreadsheet is.
Because you'll have forgotten something
You'll not have known about something that a specialist points out to you
Something will crop up that neither you or your specialist could have known about
Trust me on this.
If You Don't Know Something Work With Someone Who Does
When you're starting a restaurant business there are sure to be many many sleepless nights ahead of you. Mostly because there's a mountain of uncertainty you have to climb about how to do things legally, while still creating the kind of brand you dream about (when you do actually sleep, that is).
In our case we needed:
A Licensing consultant who could help navigate the type of license we needed to operate, based on the kind of food and drinks we were serving.
A Chef (actually two chefs for us).
Sure, we could have hired a chef but our plan was to build a business that could scale, which meant creating recipes and combinations that could be put together by anyone after just 1 day of training. And in our case we actually used two chefs:
A world-class pastry chef who helped us perfect the bagel recipe we learned to make at The Center for Kosher Culinary Arts in New York,
An incredible chef / restaurant consultant who not only helped us create the kind of combinations we wanted to serve, but also set up our kitchen layout and nail down exactly what kind of equipment we needed in there.
Find a Place
Scope out traffic in the neighbourhood where you're interested in opening your place.
And when I say scope out I mean take a week off whatever you're doing and literally sit there to observe footfall at busy and non-busy periods. Count how many people are around, what are they eating, where is busy, how much money do these people look like they have to spend on food?
You're also going to need to take careful notice of what's around there now.
A popular restaurant next door is a good sign, a standalone lot that's difficult or creepy to get to is not.
In our case we were torn over two places
A former clothing store tucked away in a busy street in the central business district. It would need a lot of work (and money) to convert it into a code-meeting restaurant but it was right next to a noodle shop that had lines out of the door every single day.
A restaurant in a secondary business-area that had just closed down and the previous owners had left all of their equipment that would come with the unit. This represented a huge saving as we could have sold what we didn't need and kept the rest.
We went with the clothing store in the business district because more of the kind of customers who we thought wanted our concept could be found there at key eating times. Having the noodle store next door was a bonus as people queuing for that could see into our place at the same time and maybe get tempted into getting a bagel sandwich for lunch instead.
That was a tactic that worked a surprising amount of the time.
Create a Marketing Plan
You don't need to be a marketing genius to create a marketing plan. But you do need to think about more than just posting on Facebook or Instagram once a day.
A key part of our initial strategy was getting photos of our food and drinks that made your mouth water. After that we wrote copy to accompany the photos, strategically written in the voice of our target customer. That made it easier for people to understand what we were serving and the kind of experience they could expect.
Which brings me to an important point:
Your marketing efforts should always be centred around your potential customers and, ideally encourage them to get involved too.
We started out with a competition that gave a free meal every month to whoever posted the best photo in the restaurant and tagged us and their friend. It was low-tech and gimicky but it encouraged people to have a little bit of fun in the restaurant (which added positivity to their visit) and created traction for us on social.
Make Sure Your Product Is Good
But it's key.
Our restaurant consultant spelled this out for us early-on in the process: if you're driving people to your restaurant to spend their money, they feel like they own you for the duration of their visit. So make it brilliant.
Sure, you might miss the mark a few times a month, but day-to-day dining at your restaurant should be something that people want to do again and again.
Learn How To Do Everything
'But I'm going to hire staff for that'.
I'm glad to hear that. But if you don't know how everything works inside your place, how are you going to know what to do when something breaks and your maintenance person isn't around for 4 hours?
Or how are you going to know if your food wastage levels are about right?
Or how to respond to a negative review about something?
You don't need to be there 24 hours a day for the rest of your life (unless you want to be) but you sure do need to spend a few weeks getting your hands dirty with the rest of your team, learning how everything works. Not only will this make you more able to make good business decisions, but it will also make you a better, more respected leader.
Have a Soft Opening
A few days before your grand opening, invite your friends and family to come and dine at your place. This is a great opportunity to get feedback and iron out any wrinkles in both front and back-of-house processes before you start serving people who are unlikely to be so kind with their reviews...
And that's it - how to start a restaurant with zero experience in 7 steps.
Rob Barratt is the Co-Founder of The Industry Leaders and passionate about helping first-time entrepreneurs get the attention their business needs while learning from industry leaders in their field. After creating and selling his first business (a restaurant) Rob found out just how hard it is for small business owners to get the word out about their businesses on a budget. This lead him to create The Industry Leaders and offer opportunities for entrepreneurs to get published alongside industry leaders and appear on podcasts in their niche. You can find out more about publishing and podcast opportunities here.