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How to Start a Restaurant Business: Pros & Cons



How to Start a Restaurant Business Pros & Cons

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The demand for restaurants is growing as people prefer restaurant food over home-cooked food. If you are planning a restaurant or a food service business venture, this is the perfect time to launch it. Starting a successful food service venture involves careful research, planning, and execution from your end.

In this article, we discuss the things to know before opening a restaurant, the pros of opening a restaurant, and the cons of opening a restaurant.

Things to Know Before Opening a Restaurant

Here we list the things that you need to know before starting your restaurant:

Determine the perfect location for your restaurant

Finalize the best location for your restaurant. You can choose locality depending on the cuisine you are going to serve at your restaurant. If you plan to serve exotic dishes, then select a location with existing premium restaurants.

Obtain permits and licenses

Restaurants or food service businesses need multiple licenses and permits. For example, if you wish to serve alcohol at your restaurant, you need a liquor license. Additionally, you will need business permits, health permits, and various other permits for regular business operations.

Invest in the right restaurant equipment

Obtaining the proper commercial kitchen equipment for your restaurant is essential for your success. Equipment purchase is one of the most significant expenses you need to undertake as a restaurant owner. Choose the perfect equipment for your business depending on your foodservice needs. You can also buy or lease equipment depending on your budget.

Hire quality people

Restaurant businesses need good-quality staff to ensure proper customer service. If your team misbehaves or provides poor service to customers, that will affect your brand image. Ideally, you need to spend a little extra on hiring the right people for your restaurant.

Advertise your restaurant to attract customers

Create a thorough marketing plan for your restaurant, including all your marketing and advertising spending. You can spend on offline and online advertising channels to gain more traction. Depending on your budget and viability, you can also promote your restaurant on local radio, TV channels or simply via digital signage.

Analyze the competition

Most first-time restaurateurs venture out without analyzing the competition thoroughly which can be detrimental to your business. Always research direct and indirect competition. You can also explore and analyze the menu items, business practices, brand positioning, and pricing of competitors.

How to Start a Restaurant Business

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Pros of Opening a Restaurant Business

Here we list the advantages of opening a restaurant business:

Demand for restaurants is high

People prefer to dine out with friends and family. That is a huge advantage for restaurant owners, as people are looking for new cuisines and dishes. If you serve delicious food consistently at economical prices, you will be able to turn profitable in a short period.

You are your own boss

You have the final say as a business owner. You can make decisions for your business, and calling the shots is empowering and liberating. You can decide what furniture to buy, choose your marketing strategy, select the menu for your restaurant, and make operational decisions.

You are free to work whenever you want

As you are the business owner, you can choose your working hours. You are also free to come and go as you please. You can also work from anywhere to handle your restaurant operations remotely.

You get to create what you love

You can focus your energy on something you love. If you are passionate about food, working for your business will help you become more proactive. You will also be rewarded for your hard work in terms of money and positive customer feedback.

It allows you to meet interesting people

Restaurant businesses drive interactions with more customers and employees. Many high-end restaurants have celebrities as patrons. As a restaurant business owner, you will also get invited to various events and parties where you can connect with interesting people.

Cons of Opening a Restaurant Business

Here we list the disadvantages of opening a restaurant business:

It demands more expenses

The startup costs of restaurant businesses are high. Most first-time business owners are unaware of the actual operational cost of restaurants. You will need to purchase high-value equipment, hire professional staff, pay rent, redesign the interiors and purchase furniture which can burn a hole in your pocket.

Lack of profitability in the first year

Most restaurants and foodservice businesses become profitable in 12 to 24 months. The first few months are the learning stage where you understand the viability of your business model, understand your customers and get feedback. During this stage, you will also be spending on marketing, training your employees, and purchasing essential equipment, which will lower your chances of becoming profitable in the first year.

The market is very competitive

The restaurant or foodservice business is highly competitive. Research and analyze your competition before starting your operations. The success of your restaurant business lies in understanding your competitor, their menu, pricing, and marketing strategy.

Employee turnover is high

Employees are either looking for short-term roles or better pay in restaurant businesses. As more players are coming in, there is a high employee turnover. You need to motivate your employees with great incentives and a good environment to make them stay.

The process of finding suppliers requires a lot of time

Most restaurant businesses spend a significant amount of time finding the right supplier. You need to dedicate time and effort to find reliable and consistent suppliers. With the right suppliers, you can become successful in no time.

You need to manage and plan various things before starting your own restaurant. Your foodservice venture will become successful if you can effectively manage expenses, taxes, staff, recipes, vendors, and operations. Additionally, you need a safety fund ready for emergencies to tackle unforeseen circumstances. For restaurant owners, the passion for food provides them the drive to run a hectic yet fulfilling restaurant business.

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Damon Shrauner, Senior Sales Consultant and VP on B2B Sales at CKitchen, working in the food service equipment sector since 1994. With his expertise in market analysis, product placement, sales and project management, he will always tell you what to do for the best of your business.

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