What does it take to set up a restaurant? Well, some say money, others say skill, many would say its all about having passion! We could not agree more that these are all vital ingredients to get things going. In this article, we will dig a little deeper and present to you some of the key things to note and prepare if you intend to set up a restaurant.
1. Budget and cash flows
One of the common traits that entrepreneurs possess is optimism. While having a positive outlook helps them tide over difficult times, it could also interfere with their mindset when it comes to planning for budgets and cash flow. There is usually lesser deviation from the budget of capital expenditure since estimates are fairly accurate based on market research.
However, operational expenditure tend to vary based on market response, staff costs, marketing expenses (especially when demand fail to meet expectations, the owner may have to consider spending more on marketing efforts). This would imply that your cash flow will likely be in the red at least for the first 6 months. So do set aside sufficient cash to keep the operations running smooth.
Having at least 6 months of cash flow and having a well estimated budget on aspects will position your business to have a good start and also being able to last the distance.
2. People matters
People matters can be divided into macro and micro factors. The overall market demand and supply will affect the ease of hiring, staff turnover rate and labour cost.
At the company level, the owner will have contend with issues like recruitment, training, management, motivation, compensation and retention. As a new set up, the business may not be able to offer attractive incentives and pay packages. Hence, being able to recruit staff that is both passionate and skilled will be a great asset to the company.
For businesses that are mindful about their bottomline, retaining your staff could be one of the best investments you can make and it doesn’t have to be costly.
Here are some suggestions:
a) Take time to find out more about their desire and motivation.
b) Showing simple gestures of love by providing meals or inviting their families over to enjoy some snacks together once in a while to help build stronger bonds and relationships.
c) Flexible working hours: giving staff the flexibility to work on the hour versus the traditional shift timings could be useful in retaining staff. While it might require more effort in manpower planning, this arrangement could make it easier for the business to attract and retain staff in the long run especially when supply is tight.
Location, location and location. This is true for buying real estate and exceptionally vital for industries that is affected by human traffic flow. When searching for a location, always calculate the crowd flow (you might even want to be physically present in the location to do a manual during the peak and off peak hours. Also bear in mind your target audience and ensure that the location you intend to choose naturally attracts the same type of demographic profile.
Next, check out the surrounding vicinity and look out for competitors and complementary types of businesses. For example, if you are setting up a ice cream, it might be great for you to be positioned next to a spicy hotpot restaurant.
4. Supplier management
Start investing in your relationships with your suppliers. These partners are vital. They can dictate the freshness of your ingredients, consistency of quality, timeliness of delivery etc. Do not just maintain the relationships but learn to grow and build strong relationships. Having favour with your suppliers will give you a good stead in your business.
We cannot emphasise enough on the importance of marketing. Many owners get so caught up with the physical setting up of the restaurant and overlook this aspect until the business is already up and running. Soon they realise, they do not have a plan to draw the crowds in.
A good marketing strategy and plan should be well thought and crafted right before the actual set up of restaurant. Having an aligned and integrated marketing strategy creates a strong first impression for customers and this is vital needs to go in tandem with the process of restaurant set up. Get started early and the rewards will kick in faster and earlier!