Want to open your dream restaurant? We don’t blame you. If you were to take the total income that the restaurant industry brought in last year ($683.4 billion) and divide it by the total number of restaurants in the United States (990,000), you would have each one of them making around $690,000. That’s a pretty nice profit potential!
But you don’t want to open the restaurant because of the money, do you? No. You want to open the restaurant because you love food, you’re in love with your cooking, you’ve been bitten by the cooking bug and have been in it all of your life. Do you have the chops to run your own place?
Here are five questions you want to ask yourself before opening your own place.
1. Have I done enough market research?
While you might still have stars in your eyes about your dream restaurant, you still want to check out the competition and concepts that are already in the area. Why compete with another restaurant on the same playing field?
With 3 out of 5 restaurants failing within the first three years, it’s absolutely necessary to do your research.
Related Article: How to Stay on Top of a New Competitor
2. Do I have my concept nailed down?
What type of restaurant are you going to open? Do you want a romantic fine-dining establishment? Do you want a sports bar where sports fans can come and watch the game? Do you want to bring your visitors a taste of Rome? Be very sure about your concept, as that helps decisions about menus, décor, restaurant equipment, location, and more.
A change in concept later can cost a lot of money. It could even make your restaurant fail. This is another reason why market research is so important. If you find someone else doing what you want to do in the area, figure out how you can present a concept that overshadows theirs.
3. Do I have the right location?
If you are dead set on opening a burger joint at the end of a pier, you’re not going to get as many customers as if you’d opened it near a college. Make sure that your concept fits your location.
Likewise, make sure you’re not in a bad location period. Make sure there’s enough parking and access for customers to come, and that you’re easy to see from the road.
4. Do I have enough money?
When you decide to open your own restaurant, you’re signing up to spend a lot of money. How much money? The number varies, according to the concept that you’re creating, but averages around $500,000 without land. We’ve got some financing solution tips and opportunities here at Business.com if you need to raise some more dough. Do your homework and budget thoroughly to make sure your restaurant doesn’t fail before you even open!
Related Article: What Successful SMB Founders Wish They'd Known From The Start
5. Do I know how to run a business?
Over our time, we’ve met a LOT of chefs. Most of the chefs that we’ve met know a lot about the food that they’re serving. They don’t care as much about the money spent to get that food. This can become a serious problem.
Business managers examine the costs of the food and work diligently to maximize that restaurant’s profits. They are proficient at striking the balance between what the chefs want and what the business needs in order to be successful.
If you’re more interested in the food you’re going to serve rather than a specific plan to turn your dream into a reality, you might need to have a business partner help you run that side of the business.
The ultimate question is whether you believe that you can bring your restaurant to fruition. We believe that with enough planning, you can open your dream restaurant and start earning your James Beard Awards and Michelin Stars.