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A restaurant's size plays a significant role in its potential earnings. A small restaurant may require less capital for start-up, but will likely produce minimal returns. They almost always require active hands-on ownership, as revenue may not be adequate to support non-ownership management salaries and profits to non-working owners as desired.
Larger restaurants are not adverse to the risk factors of smaller restaurants, and financial risks are typically of greater magnitude. Larger capital investments come with greater expectations for returns. Successful larger restaurants may generate the revenues to support non-ownership management salaries, while producing overhead compensation to non-working partners and retained earnings for future growth.
Many variables impact the decision of what size restaurant you will build or purchase. Invested capital must be used not just to build a facility, rather building the right facility. A facility, that will generate financial returns that support sound financial business decisions, passing both ownership and outside investors and lender scrutiny.
FSSM's restaurant sizing analysis tool assists owners with deciding what size restaurant is right for them. It combines financial capital assumptions with operating methodologies and expectations, drawing conclusions supported by tangible criteria, rather than emotion. The conclusions are then reviewed for consistencies with your business plan. This review will support proceeding as planned or the need for revisions as applicable.
In the start-up of your new restaurant or foodservice project, you will contract many specialists providing design or construction services. In order to maximize the efficiency and quality of your project it is important to properly align specialty sub-contracting relationships. Who pays the sub-contractors, and who oversees their scope of services? As a general rule of thumb, sub-contractors should be hired by the group or individuals most qualified to direct their services.
The following represents a sample outline of the restaurant start-up process, with the essential tasks categorized into six primary focuses. The information is not intended to be all-inclusive, rather a highlight of each category's importance. More detailed lists and discussion can be had by contacting FSSM directly.
The pre-opening checklist can be an overwhelming document. While some phases of the document are implemented independently, many tasks will be taken on simultaneously, with direct relationship dependencies.
The pre-opening checklist is an essential piece to keep owners, managers and contractors on the same page, where they need to be, and when. It provides a comprehensive view of the overall tasks required to get the project off the ground. The pre-opening checklist is primarily an internal working document.
If used correctly, it assists in the planning process by pre-vetting the many decisions to be made with tangible conclusions, to be applied to the project accurately and in a timely manner.
The business plan is the most important element of the pre-opening checklist. It encapsulates the owner's pre-opening due diligence in a detailed and concise manner. It is used both as a internal document for owners, management, and marketing teams, and as an external document in the support of raising capital or sourcing of investors. It is the game plan that applies assumptions into speculative results.
Unlike the pre-opening checklist, the business plan is an ongoing document as long as the business is in existence. A well-prepared business plan will change very little, but will be reviewed periodically to gauge the business performance against its plan and market conditions.
They will be used for both internal and external use. Internally they define seating capacities, traffic and production flows, table and seating charts, equipment lay-outs, bar placement, restrooms and coat check needs. Externally, they are used for engineering plans, code compliance, licensing and permitting, construction documents and project bidding. They may provide support for funding prior to other elements of the design/build project being completed.
The schematic design plan should reflect the assumptions of the business plan, not a driver of it.
Schematic design provides the elements to the architect to encompass in a vibrant, comfortable, intriguing and energetic facility. Choosing the architect first and schematic drawings to follow, may force concepts and practices to be developed around a facility, rather than a business plan, compromising your project from the start.
Ownership and Operating Team
Your start-up business may include ownership teams of varying make-ups, from single owners to multiple ownership teams, seasoned industry veterans to owners new to the industry, active owners to silent partners. Expectations of all owners must be well understood, and documented.
Management teams are scrutinized heavily by funding institutions and investors; they play a major role in the approval decision of investors or commercial lenders. Candid assessment of your management team strengths and weaknesses should be performed so that strengths of your team are maximized while weaknesses are diminished through planned support and use of 3rd party resources as necessary.
Key employees must be brought on early to work with owners on the education of the concepts, cultures and practices that they will supervise as representation of the owner's plan, intentions, and expectations.
A "train the trainer" approach must be embraced by all to build consistency in deliverables and a culture of like-minded quality employees.
With the exception of financial impact, architectural and interior design discussions typically don't have significant emphasis in your business plan (unless it is a theme restaurant). They do play a significant role in providing the continuity to your brand and completing the guest experience and comfort, including elements such as proper lighting, temperature, acoustical materials and eye appealing colors and fixtures.
Architectural and interior design services define these features, their specifications, and call them out in your project bid documents.
Architectural firms typically sub-contract kitchen design to professional kitchen and restaurant design firms. In selecting an architect or architectural firm, choose one with significant restaurant design experience and specialization, one that is knowledgeable of materials well suited to the industry and embraces function and form in the project.
Technology for the restaurant industry can be sorted into two distinct categories:
Technology in various aspects are being infused in restaurant facilities to meet consumer lifestyle needs. Incorporating technology needs of today is vitally important, but planning for the future today, can save serious money tomorrow.
Technology is expensive, your business plan should identify the technology needs of of your dining patrons and operating team to ensure, the right technology decisions are made for your enterprise. Examples of such technology Items include reservation and payment systems, multiple channel simultaneous viewing, phone systems, gift card management, customer online buying, and wireless services just to name a few.
The right use of technology can play a major role in providing essential business reporting information. It may consolidate the use of software and equipment needs, while minimizing costs associated with redundant data collecting, inputting and reporting.
Starting a restaurant can be an extremely exciting endeavor. It is a time consuming and capital intensive project with many facets and variables. Whether you are a novice or a seasoned industry veteran, the pre-opening work and due diligence to a sustainable enterprise is the same. Prior to proceeding with your restaurant plan, one must have a crystal clear vision and expectation of the business endeavor. Begin with the end in mind, for what you build will have direct and long-term consequences to what the business may deliver.
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