Should You Open a Restaurant?

January 2, 2013

Open a Restaurant

Open a Restaurant Opening a restaurant is much like writing a book – most people have dreamed about it at some point, few will attempt it, and even fewer are truly cut out for it. Neither one is nearly as easy as pop culture would have us believe. We’ve all seen the glamorous portrayals of young and fashionable restaurant owners, but they almost never show the chaos and incredible stress that goes along with opening a restaurant.

If you’re thinking about opening a restaurant, the first thing to consider is whether you want the reality of a restaurant or the imagined version. Would you still want to open a restaurant if you knew in advance that you wouldn’t make much money? Would you do it if you knew you’d be working long hours and doing grunt work alongside your employees? If not, there’s a good chance you’re not meant for the restaurant business. True, there are celebrity chefs and extremely well-funded high-end restaurants, but very few of us play in that league – and most of those who do paid their dues at some point in their careers.

The next big consideration is whether your area can support the kind of restaurant you want to build. If you’re in a small town in the middle of nowhere, extremely specialized restaurants (gluten-free, vegan, sushi, etc) will most likely face extreme difficulties. You’ll also need to study the micro-environment of your potential restaurant site. Is it well-trafficked? What other businesses are in the area? How’s the parking? In general, your restaurant should fit into the neighborhood. Fine dining rarely works well in between payday loan stores and fried chicken joints. It doesn’t make sense to take a lot of unnecessary risk when you open a restaurant for the first time.

Once you’ve studied your intentions and the target area, you’ve got to start thinking about the money you’ll need to open a restaurant. Do you have the funds to keep going, even if the opening months are rocky? Have you studied the margins on your proposed menu? Do you know how much prices fluctuate on the items you’ll be using most, or are you prepared to re-vamp your menu seasonally to take advantage of items that are most cost effective? How many typical diners will you need each night to break even? Where will your investment money come from? Will you need to hold another job when you open, or do you have a spouse or relative who can cover the bills while you’re working on getting profitable? Whatever you envision, imagine it being worse than you expect, financially speaking. You might be lucky, but it’s better to know what you’ll do if things don’t go smoothly than to be forced to shut down and lose your initial investment.

Finally, before you go any further towards opening a restaurant, you need to get a realistic idea of whether you’re any good. Will you be doing the cooking? If so, it’s a good idea to request brutally honest feedback from friends and acquaintances. Find out what they really think of your food and ask what they’d be willing to pay for it in a restaurant. Get several opinions, especially from people you can count on to be honest. If you really want to market test your food, consider doing some catering jobs, or offer to cook for a local group or nonprofit in exchange for brutally honest feedback. Again, make SURE you let them know you want both positive and negative feedback. It’s better to hear bad things now rather than after you’ve heavily invested and your new restaurant is getting slammed by Yelp reviewers.

If you can get through these steps, there’s a good chance you may have what it takes to open a restaurant. You’ll still have to contend with hiring and management and all the usual restaurant issues, but these things can be learned as you go. The main thing is that you have skills, money, determination, and the right market for your restaurant idea.

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