How to Avoid Restaurant Startup Mistakes

Many people dream of opening a restaurant. They’ve planned their menu in their head and put it to paper. They’ve even designed their restaurant layout and picked out dishes. But this is where many entrepreneurs stop. They miss the boat on the myriad of other things that need to be taken care of before opening that restaurant.

In this article, we look at how to avoid these restaurant mistakes, so your restaurant startup is around well into the future.

Mistake #1: Underestimating the Amount of Capital

A very common mistake for startups is not having a clear grasp on how much capital they need. They think they have enough, but then they overspend, there is an unforeseen cost, and an emergency, and suddenly they are shutting their doors because there isn’t enough cash. The best thing your restaurant startup can do is overestimate the amount of money you’ll need. For example, plan for about 12-18 months’ worth of expenses and at least six months of standby cash for emergencies. Our first step is to make a comprehensive business plan that outlines all of your expected and potential expenses. Then research the current cost so you have detailed accounting. Plan for enough money on hand to cover your restaurant costs such as rent, labor, food, and marketing for no less than one year.

Finally, have a very detailed budget and stick to it as much as you can.

Mistake #2: Not Obtaining the Right Permits

Every restaurant startup must have the proper licenses and permits to operate in your city and state. You must also obtain federal permits as well. These are going to cost you money. Plan for at least several thousand dollars and much more if you are getting a liquor license. Check with your city government and the Small Business Administration for all the costs and include these in your budget.

The biggest mistake you can make is neglecting to get the proper licenses and permits. If you do, the government could shut your doors and give you a hefty fine in the tens of thousands of dollars

Mistake #3: Thinking you’ll make Money on Day One

Many restaurant startups think they’ll be in the black on opening day. Even the most well-known chain restaurants aren’t this successful. Remember, you have startup costs, food costs, marketing, payroll, insurance, licenses, rent or loan payments, and much more. It will take at least two or three months and often more for the new restaurant startup to start seeing money stay in the bank. You’ll find it also takes several months before your employees are at their most productive.

The best way to avoid the mistake of thinking you’ll make a lot of money off the bat is having enough in reserve to help you in the first months of your restaurant.

Mistake #4: Not Having a Vision

Why does your restaurant exist? Who do you want to serve and why? Is there a specific reason you think people will like your restaurant? If you can’t vocalize your value proposition, then your employees can’t either. And, if they can’t, you can bet your customers have no idea why they should frequent your restaurant.

Define your value. Research the competition and know why you’re better. Have an elevator pitch ready that you can tell anyone who asks why they should eat at your restaurant.

Don’t make the mistake of missing this. If you do, your restaurant startup is going to struggle to get off the ground and plant its feet firmly.

Mistake #5: Hiring the Wrong People

Many restaurants think hiring some friends and family or just simply people who’ve worked in a restaurant before is good enough. This is a major mistake. You must be picky when hiring your first set of team members. Customer service is integral to your success in the restaurant industry, and your servers are your top assets next to your menu. If you don’t think your candidates will do the best job possible, then don’t hire them.

From the chef to the greeters, to the servers, and the kitchen staff, you want the absolute best you can find. You want employees who are going to be passionate about your restaurant and your menu. After all, they are the ones selling your restaurant. As the face of your business, your team members are incredibly important.

Mistake #6: Not Understanding Your Target Market

Many restaurant startups don’t know who they’re targeting. You may have the tastiest menu in town, but if you aren’t targeting the right people, you won’t have any diners coming to your restaurant.

For example, if your menu is upscale, but you’re targeting families with children, you’re missing out. Make sure that you are providing the right food to the right demographic. This means conducting market research and finding out what will sell in your chosen location. You may find a different location would even suit you better.

A lack of proper planning is a huge mistake for restaurant startups. By avoiding the mistakes in this article, you are well on your way to a successful restaurant. Take your time. Do your research and make a business plan. Be as detailed as possible and realistic about potential roadblocks. Then, you can present this plan to investors and find yourself welcoming a flood of diners in no time. 

Hope you liked the blog. If you are looking to set  up a new restaurant, taking franchise, looking chefs for your restaurants SelectDine is here to help you out. SelectDine is one stop solution for all your restaurant need. Call us or visit our website to know more.