Here’s the Skinny on Eating Out:
• 2015 is expected to be the 6th year in a row that restaurant revenue has gone up in the United States – it’s projected to be $709.2 billion by year end.
• Half of all US adults have worked in the restaurant industry at some point in their lives.
• About 10% of the US working population (about 14 million people) will work in a restaurant in 2015.
• 47% of the money Americans spend on food goes to restaurants.
• The total number of restaurant locations in the US has surpassed 1 million, with 70% of them being single-unit operations as opposed to large scale franchises.
As you can tell from the stats listed above, the restaurant industry is in the midst of a long and steady upswing in the United States. And unlike some other business undertakings, experts and in-the-trenches employees agree that opening a restaurant is a realistic and achievable way to manufacture business success.
But, it's also going to be a tremendous amount of work, and a very costly undertaking.
Can an entrepreneur succeed in the restaurant industry? Absolutely.
Is it going to be easy? Not at all.
But it’s not as hard as you think.
“90% of new restaurants fail in their first year.”
While that scary statistic makes for great eye-catching headlines, it simply isn’t true.
Instead, the facts show that failure rates when starting a restaurant hover between 50-60% in the first year, which is no riskier than starting any other small business.
Also like other business ventures, realistic and strategic planning is key to long-term success when opening a restaurant. Everything from the initial concept and name to the design of the menu and the color of your tablecloths needs to be planned out in advance if you want to avoid costly future headaches.
Coming up with the cool, unique restaurant concept is the fun part. But there are other practical issues that some restaurant owners overlook, costing themselves a lot of money and hardship.
The fact is, starting a restaurant is going to require some significant funding up front, to the tune of $200,000 to $500,000 or more. The startup costs include: • The initial purchase – or, more commonly, lease – of an appropriate location
• Any necessary renovations or upgrades
• The purchase of supplies
• Operating expenses
• Food purchases
• and the inevitable unexpected expenses during the first several months after your grand opening.
Putting together a smart business plan ahead of time with an eye on intelligent cost savings and realistic revenue expectations can do wonders in keeping the startup cost under control. Hiring an accountant with restaurant experience can also be a huge help.
But remember, you don’t want your restaurant to start off on the wrong foot just because you wanted to save a few dollars. Spend where you need to in order to create an appealing, welcoming, and enjoyable atmosphere with great food and service, or the whole effort will be worthless.
The most incredibly unique concept and the highest-quality food can mean nothing at all if the marketing isn’t there to make it known. Really, it's the dining public that you need to convince, not the critics or the investors.
Here are some questions to consider as you add marketing to your business plan:
• What does the dining public actually want or need in the area? And what are they tired of?
• How are you going to differentiate yourself from all the other restaurants in the area?
• How are you going to entice drive-bys or pedestrians to choose your restaurant when they're wandering around looking for someplace to go?
• How will you encourage first-time customers to become regular patrons?
• Will you have ready access to locally-produced food? (Pro chefs believe offering locally-produced meats, seafoods, and produce will make up the single biggest trend in restaurant popularity in 2015 and 2016.)
One of the items that nearly every successful restaurant owner has been forced to realize is that it’s not a simple 9:00-5:00 job.
Few, if any, first-time restaurant owners expected to work as long and hard as their opening months or years required. 70-100 hour weeks are very common, especially for chefs who own their own restaurants and need to wear multiple hats throughout the day. While hiring plays an important role in spreading the work around, you should expect to be working from sunup to sundown to get your restaurant off the ground at the beginning.
None of this should be seen as a reason to give up your restaurant-owning dreams. While it is a lot of work and a significant expense, it’s also an extremely popular and profitable business that tens of thousands of entrepreneurs have enjoyed over the years. With good planning and a strong work ethic, it can be a deliciously successful venture.