Top 10 Pitfalls to Avoid When Opening a New Restaurant

Posted by Flanagan Foodservice on Feb 19, 2019 1:56:00 PM
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 By David Hopkins

Opening a new restaurant requires good decision-making, the kind of decision-making critical to avoiding pitfalls along the way. Here are some of the most common missteps new owners make when opening a new restaurant.

1. Under-capitalization

The easiest way to set yourself up for failure is to get to opening day without a penny in the bank and still owing money for construction, inventory, etc. A successful restaurant is carefully thought out, and all aspects are important to its success – consistent brand, great menu, unique atmosphere and décor.

When you realize you are running out of money, you start to swerve away from the original game plan. New owners tend to cut corners on the brand and décor, cut back on staff training, drop the marketing program and withhold on the product.

2. Conceptualizing on “If you build it, they will come”

Today, being new and open isn’t enough. The restaurant world is a very competitive landscape. Guests need a reason to come to your establishment. Partnering with a marketing company (even if just for the opening) to execute a communications strategy is crucial. New owners will benefit from this, as it will help to generate the buzz and continue the narrative for your brand.

 

3. Taking possession of the space too early

Once you take possession of a space, you are on the clock with the landlord. Whether you have a fixturing period or free month’s rent is irrelevant – the clock has started and you are now into your fixturing period. You want to ensure that when you get possession, you are ready to rock. Contractors should be starting renovations on day one. This means you need your drawings done, your contractor selected (either by tendering process or other) and your building permit in place. All of this can take six to eight weeks.

When you negotiate and finalize your lease for the space, ensure your possession date is two months in the future.

4. Not creating a detailed business plan

A business plan helps you make certain the space is right for you. The business plan defines the space requirements, location, and how to profitability model is going to work. So many people start looking for a location without a business plan completed. For example, new owners might go out looking for a 3,600 sq. ft. space, when perhaps what makes the most sense (after flushing everything out in the business plan, is a 2,800 sq. ft. space.

Also, a proper business plan can help realistically plan out an opening budget and help avoid Pitfall #1.

5. Not conducting dry runs

Conduct as many dry runs as needed to ensure things are running the way they should. Remember that when you first open, every guest is critiquing you, even more than with an older restaurant. From the very beginning, it is fundamental to be delivering that 11 out of 10 guest experience.

6. Lack of staff before you open

Don’t hire what you need – hire about 20% to 30% more than what you need. Some staff will quit before even starting and in the first few weeks, some others will feel overwhelmed and not make the cut.

You don’t want to be left short-staffed one month into your opening.

7. Not overstaffing when you first open

The first few months of a restaurant opening are all about one thing – making guests happy! Set yourself up to make profit for the next 10 years, not a plan for only the first three months. Too many operators worry about controlling labour cost as soon as they open and end up delivering an exceptionally poor guest experience.

Overstaff…by a lot!

Ensure that guests are wowed by their entire experience.

8. Printing expensive menus

New owners will make the decision to print very expensive menus before opening. If you are a new concept, remember that everything is “theoretical” until you open to the public.

Once you conduct the dry runs and when the doors open, you start to see how your menu plays out—pricing, kitchen bottlenecks, etc.

9. Overpricing menu items

You are being judged more than ever when you first open a restaurant, as you are new and untested. New owners need to remember that judgement is all about value and you need to ensure you are providing exceptional value.

If anything, underprice your menu (again, the first few months are not about making money). It’s easier to increase your price points a bit after three to six months than to be overpriced at first and try to win guests back who didn’t see the value in your offering.

10. Not hiring experts to help you

Opening a restaurant is one of the hardest things to do. However, hiring industry professionals is the best investment you can make to ensure you are a successful restaurant. This is one of the main reasons approximately 80% of new restaurants fail. It is imperative that you hire experts in the industry who will help you avoid falling into the pitfalls.

 

* David Hopkins is the president of The Fifteen Group Inc., a consulting company dedicated to maximizing restaurant profits through effective sales generation and disciplined cost control management.

 

This article originally appeared in the Fall/Winter 2018 issue of Chef Connexion.

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Dry runs are dress rehearsals for your opening. Friends and family are invited and play the role as real guests who have the chance to experience the restaurant before it is open to the public. This allows the new owners, chefs and servers to fix any kinks and mistakes.

Topics: Maximize Profits

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