Owning a successful restaurant is hard because of the competitive market. With so many restaurants opening, it can be hard to find your unique niche. Common wisdom has it that 90% of restaurants fail in the first year. But actually it isn’t quite that bad. The actual number is is about 26%. But another 19% fail in the second year and 14% more fail in the third year of business for a total of 59% failure rate in the first 3 years. So obviously there is more to running a successful restaurant than just knowing how to cook grandma’s famous baked beans. If you have a desire to succeed, you need to study the secrets of successful restaurateurs. [note: the proper spelling is without an “n”.]
Location is Everything
Legendary marketer Gary Halbert used to ask his students this question, “If you and I both owned a hamburger stand and we were in a contest to see who could sell the most hamburgers, what advantages would you most like to have on your side to help you win?” The students’ answers vary. Some say “superior meat from which to make their burgers”. Others say “sesame seed buns”. Others mention “location”. Someone usually wants to be able to offer “the lowest prices”. But Halbert says the one advantage that trumps them all is “a starving crowd”. Now some may say this is actually a function of location. But without keeping this factor in mind you might misjudge what makes a good location.
When it comes to choosing the perfect location, you have a few choices. For example, it’s always great to find a property near colleges because students love reasonably priced meals (and always seem to be hungry). On the other hand, if you want to run a high-end restaurant, you may want to think about the business quarter and try to attract people during their lunch break or business meetings. But be sure to keep Halbert’s advice in mind and find the location with the “starving crowd”.
Getting Started
Starting a restaurant can be a very expensive proposition. According to Restaurant Engine “the median cost to open a restaurant is $275,000 or $3,046 per seat. If owning the building is figured into the amount, the median cost is $425,000 or $3,734 per seat.” So if you are on a limited budget (and who isn’t?) you might want to start small. Unless you have a lot of restaurant experience and a Culinary Arts degree, consider getting a food truck and visiting events (this will put you in front of a starving crowd) and give you experience preparing food and dealing with customers. If this small venture succeeds you can consider looking for opportunities to expand into things like catering, etc. and then when you do open your restaurant you will be prepared and experienced.
