The allure of the restaurant world is strong to me. Sampling savory dishes, carving out sleek ambiences and creating memorable customer experiences entices countless hospitality hopefuls to embark on their own culinary ventures.
As exciting as it may seem, it is also notoriously tough to be successful in the food business. In fact, around 60 percent of restaurants fail within the first year and 80 percent don’t make it to their fifth, at least in the US. Depending on your location, those odds can be even tougher. Take New York City, for example: there are 12,508 restaurants listed on reservation platform, Open Table. And according to a 2016 study by NPG Group, only 2.7 percent of Gotham restaurants are independently run.
Needless to say, the culinary world isn’t exactly waiting with open arms for new members to join the ranks. Despite those discouraging odds, opening a restaurant continues to be a highly sought-after dream for foodies and entrepreneurs alike.
As I’m working on opening up my own restaurant now, hearing the statistics above was not encouraging. But the news isn’t all bad: There are still new entrepreneurs building successful restaurants all the time. And after digging through more research, I found that 2017 might actually be the perfect time for entrepreneurs to get in the restaurant business, considering the growing trend of Americans eating out.
Although the market is tough, there is definitely a demand for restaurants. According to a 2016 QZ report, Americans spent more money at restaurants than on groceries in 2016 –thanks, in part, to a cultural shift pulling people away from their kitchens. The upward trend of dining out is great news for future restaurateurs. But taking advantage of this trajectory requires some strategic planning. There are things you can do to set yourself up for success before you even open your doors.
One of the best ways to make a splash on the culinary scene is by offering a brand new experience. Regardless of where you live, the locals probably aren’t begging for a brand new pizza parlor, which means that if you have dreams of flipping dough, it might be more difficult to break through.
Consumers will always be intrigued by a brand new idea. Furthermore, there’s always potential to take advantage of an untapped niche—it just might require some outside-the-box thinking. In 2016, actress Jessica Biel opened Au Fudge, a kid-friendly restaurant in Los Angeles. Now, you might be rolling your eyes at another star taking a stab at the food industry, but Biel’s intentions weren’t merely to expand her personal brand. Rather, she saw a distinct need for a new type of restaurant.
Biel, a new parent herself, wanted to be able to dine out with her child without sacrificing quality and dining experience. Typically, restaurants that cater to children tend not to have the most innovative or healthy menu options. Au Fudge satisfies both needs and has opened the door to a brand new restaurant niche in Los Angeles—upscale, kid-friendly and organic (this is Los Angeles, after all). Within Au Fudge, the kids nosh on healthy versions of kid staples, while being looked after by au pairs in playrooms. Meanwhile, their parents enjoy some respite over a cocktail and a vegan quinoa Caesar salad. It’s a win-win for all and a brand new take on a family friendly dining experience.
2. Business plan
A solid business plan is as essential to a restaurant’s success as a competent chef, but it often gets hastily overlooked in the planning process. Your business plan will help you, your partners and investors chart the map to success—and also plan for the worst. Your business plan must include a market overview, competitive analysis, target audience insights and realistic budget projections.
Opening a restaurant can be a volatile process, but planning out every possible scenario can help you make the best decisions for your venture. A comprehensive business plan will also help you thoroughly chart your capital needs. Restaurant experts recommend securing six to nine months of working capital before you open your doors.
Scott Mowrey, a managing partner at hotel and restaurant consulting group VSAG, cites incomplete planning as a highly preventable, yet all-too-common pitfall among first-time restaurateurs. “It’s tempting to pour all of your time into designing a sleek space and creating an innovative menu, but the operations of your restaurant, from creating a realistic financial model to systems, to training and expense control systems are the real contributors to success and longevity," he says. "Determining your operational needs starts with a solid business plan.”
3. Prime location
A poorly plotted location will make or break your restaurant’s success. Opening up in an area without much foot traffic or roadway access will discourage potential visitors. On the other hand, renting a space on a block filled with beloved establishments will also make it difficult to attract new customers.
Finding the best location largely depends on your city and varies from urban areas to suburban areas. Additionally, leasing requirements and building permits will also affect your final location selection, and as those processes can take months to finalize, it’s best to start the location scouting process as early as possible.
These three priorities will serve as the building blocks to your restaurant’s success. With an original concept, business plan and location, you can then move on to developing the more creative aspects of your business, including finding the right talent, developing a menu and designing the customer experience.
Starting a restaurant can feel like the Hunger Games, but with careful planning you can set your future venture up for a successful run.
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This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors.