Opening a restaurant? Avoid these 3 common mistakes!

 

Starting a business is challenging. It demands dedication, strategy, leadership and most of all, capital. A restaurant business is no different and in 2020 we saw 6,267 new restaurants and cafes open across the UK - an average of 552 a month!

If you’re also looking to open your first restaurant, it is inevitable you’ll make mistakes right before you even first open your doors. You’ll face difficult decisions and complex challenges, especially in a post-pandemic world and so the key is to avoid those mistakes that have been responsible for most failing restaurants.

Here are 3 common mistakes to look out for when going through the process of opening a new restaurant.

 

Not choosing the right location

 

Location is known to be the number 1 reason why new restaurants fail. When thinking about what location to choose, make time to go and visit the location and explore the community a little. Don’t be afraid to meet and talk to locals and business owners to see how people are spending their time.

Are these people in line with who you want to serve? Are they likely to visit you when you open?

It’s also worth spending time at your competitors’ establishments. Observe who’s visiting and how people are engaging. Is there a sense of belonging? Can you do a better job?

If you are satisfied with the community, start to look for a location that has good visibility. Focus on areas that have good foot traffic. Note that busier areas are likely to have higher rental costs.

After you find a potential location, go to neighbouring cafes/restaurants, and count the foot traffic. Find out when it is slow and when it reaches its peak. The closer you are to consistent and heavy foot traffic, the easier it will be for customers to come your way.

Gather this information and use it to see if you can negotiate a suitable contract with the landlord.

When reading the lease, make sure that you understand it all, if something doesn’t mak sense, get advice. Restaurant owners make a mistake by getting a lease that is too short. This is because once the lease is up, rent can get hiked and there aren’t any options to negotiate.

Hence, it’s important to keep this in mind when finalising a duration for the lease. You are likely to spend many years at this location so it is worth putting in the time and effort to decide if it’s the right one for you and your establishment.

  

Not knowing your numbers.

 

Having a delicious menu is great, it keeps people coming back and spreading the word. Yet a restaurant is more than just a place that serves food, it’s a business with financial needs.  

Many food businesses fail because they don’t know their numbers. By keeping track of it all, it allows you to see where certain improvements can be made in specific areas and you’ll realise the maximum potential of your business.

 

accounting

 

There are 3 costs to take into account:

Rental costs

Food costs

Labour costs

 

Go to a competitor who has a similar establishment or concept, study their menus and traffic. It’ll allow you to project how much you might make.

Its best practice to start small and keep a healthy amount of capital that can support your operations for at least a year. Your restaurant may not start making a profit in its first month, it can take some time to reach a breakeven point.

Once your doors are open, there are different frameworks you can follow when it comes to finances. Having worked with many chefs and restaurant owners, we suggest the following figures to stick by:

You shouldn’t be paying more than 15% of your total revenue on rental costs. Food costs shouldn’t exceed 30% and you should also look to spend no more than 30% on labour. These figures are what we found kept restaurants operating successfully.

 

Not connecting with people

  

Finally, remember to connect with your customers and your team. Without the two, your business ceases to exist.

Restaurants have failed in the past because they haven’t prioritised their team. It’s important to encourage them by showing them your values, your vision - a reason to clock in for every shift. It's also good practice to introduce incentives to further boost morale.

Engage and connect with your customers to create loyalty and trust. Ensure your customers have a good first experience and they’ll keep coming back.

Read more about how you can improve customer experience at your restaurant.

 

How can we help you get started?

 

We help new and current restaurants find the best deals from a range of high-quality suppliers all on one platform, saving crucial time and money. The platform lets you keep track of all your spending and the convenient self-service allows for fast re-ordering of all your kitchen supplies. Importantly, it also allows you to easily compare the prices between suppliers so you know if you are getting the best market rate!

And so if you’re looking to open a restaurant and unsure where you’ll find your supplies, we’ve got you covered at Rara.