The 3 Essential First Steps for Opening a Restaurant

    Before making any concrete decisions for your restaurant concept consider these points.
    Cheeseburger with fries served on a white plate.

    pexels/Robin Stickel

    You command the vision of your business, and how it will be represented to the public, but you must have a unique edge.

    Opening and owning a restaurant can sound like a glamorous pursuit; designing the interior space, selecting decor, choosing a logo; but true restaurateurs know that their job title is among the most stressful and the most competitive. Around 17 percent of restaurants are at risk of closing in the first year, so if you’re seriously considering opening a restaurant, there are a few crucial decisions that need to be made from the very beginning, and they do not involve fonts or fabrics.

    Before making any concrete decisions for your restaurant concept you must:

    Write a mission statement for your restaurant

    This is arguably the most important step you will take in your restaurant journey: every decision you make for your business should relate back to these few sentences. A restaurant mission statement should be a reflection of yourself and your values, and should embody exactly what it is you hope to achieve with this business venture. Having a comprehensive statement that details your purpose will be a valuable tool, acting as a guide for the complex decisions attached to the title “restaurateur”.

    When writing your statement, first draw from the topics you’re passionate about such as sustainability, or supporting local farmers. Then examine your audience and what you envision for the dining experience. What kind of clientele do you hope to attract, and what mood will you set? If you’re having trouble articulating your pursuits, look for examples from admirable brands.; if there is a restaurant that inspires you, find their mission statement and breakdown what you hope to emulate from this business. Then find the competitors in your area, to ensure that your dining experience will be unique.

    Your mission statement may be a few words or several sentences but, it should be the North Star for your business endeavor. Be absolutely certain that you’ve written exactly what it is you hope to realize.

    Calculate upfront costs that will be long term investments

    Food and supply chain costs are the obvious considerations, but it can be easy to forget that a restaurant is a business, and one with extremely tight margins, dozens of touchpoints in other industries, and high upfront costs. These include:

    Licenses and permits: a business license often costs around $500, which is nothing if you’re planning to serve liquor at your establishment. The liquor license is notoriously difficult to acquire and very easy to lose; in a few notable instances in the state of New Mexico, the price rose to over $350,000. Clearly, the cost for the mere legalities of operating a restaurant add up quickly, so sit down with paper and pen (or even better, with an accountant) and draw up what these upfront legal costs will look like. Remember also to keep your mission in mind; liquor might not be an absolute must for your concept, and if not, you can avoid a significant cost.

    The space and the staff: If you’ve gotten this far in the process, then you likely have an idea of the size of space and the amount of kitchen, wait, and management staff you’ll need to fulfill your vision. Plan out what employment costs will look like, and be aware of the tipping laws in your state or city-this will affect the server wage. Many new restaurant owners choose to lease their restaurant space to begin with as it allows leeway for other major investments. By renting, you’ll likely have more capital to put towards operating technologies.

    Technology: Of course, there are massive back of house appliances to consider—industrial ovens, freezers and refrigerators, the list goes on. However, do not neglect investing in top notch restaurant management software. A full service restaurant POS system will be an advantage for your business, saving time and cutting costs to improve profitability. Your POS should have a clean interface, real time analytics on menu items and server performance, online ordering, and allow for updates so your business can grow. Additionally, easy-to-use technology, makes your job and your employees’ jobs simpler. Turnover cost the average full-service restaurant operator about $146,000 annually in 2016; offer employees top technology, and you’ll save in retention.

    Differentiate your restaurant from 600,000 competitors

    Once you’ve built out the major operating costs of your concept, consider how you will be different from the competition. With literally hundreds of thousands of competitors, your restaurant must stand out. Go back to your mission statement, and think about what you aim to achieve with your dining space, keeping in mind your strengths and what is missing in your area.

    Your restaurant will be most successful if you do one thing well as opposed to several things okay. Although the customer is always right, try not to be a people pleaser. Some restaurants think that expanding their menu to appeal to everyone is a solution, but getting a competitive edge does not necessarily mean offering sushi alongside sweet potato fries; it can be as simple as allowing canines into the dining room. In fact, according to a survey from Upserve, 56 percent of respondents said that being family and dog friendly was important or very important in their decision.

    You command the vision of your business, and how it will be represented to the public, but you must have a unique edge. Find what you do best, and use it to your advantage.

    Once you’ve carefully mapped out the three key considerations above, and feel each is realistic and achievable, you will have a sound foundation for the beginnings of your restaurant pursuit.

    If, however, you’re not certain that your calculations are accurate, or that your mission is sound, press pause. With little room for error, especially at the beginning, be sure you’ve meticulously thought through your concept, before taking any major (or minor) steps. Fonts and frills will come with time, but a restaurant’s initial foundations will determine its eventual success. Your friendly restaurant technologies can offer guidance on how to be successful if you need it.

    Andrea Kayal is the Chief Marketing Officer at Upserve. She brings over 15 years of Marketing experience and a track record of driving growth and scale. Prior to joining Upserve, Andrea led marketing teams at Sailthru and Signpost. Before transitioning into the tech industry Andrea also worked at Octagon where she managed global marketing initiatives for BMW of North America and MasterCard. Andrea studied Communications at The University of Michigan and received her MBA from American University.