Business owners who begin new restaurants may overstate the size of the market in their area and not take into consideration the tough competition they will face from developed restaurants with devoted clients. Doing a feasibility research study prior to investing the time and money to open a dining establishment can help a business owner make a more informed decision about the venture’s chances of success.
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Acquire Market Data
Studying demographic characteristics such as age and earnings will help you estimate the size of your possible market.
If you are planning a mid-price, family-style dining establishment for instance, you require to understand how numerous families reside in your location. A heavy population of singles or university student will probably not support your restaurant. The U.S. Department of Commerce Census Bureau website is a good location to start your research.
Examine Prospective Areas
A high-traffic place is preferable, one close to significant streets with lots of visibility to automobile or pedestrian traffic.
Make certain parking is adequate and easy for clients to access. Try to find businesses in the area that could create demand for your dining establishment– big workplace complexes, hotels or retail centers for example. Make certain to think about the tradeoff in between a location’s suitability and the lease expense. Saddling a new restaurant with a lease payment that is too high can make it incredibly hard for the venture to reach favorable cash flow.
Related Reading: Business Plan Vs. Expediency Study
Review the Competition
Look not only at the total number of dining establishments in your immediate area but also at the designs of dining establishments that prevail. Consider whether your location is already filled with dining establishments comparable to the idea you will be offering– similar food, price point and target markets. Evaluate the strengths and weaknesses of each significant competitor and figure out whether your proposed dining establishment will stand apart from competitors and be memorable to consumers.
Study the Industry
Join your state or local restaurant and hospitality organizations. Attend their meetings, talk with other restaurant owners and review any statistical information they publish about the growth and health of the industry. The National Restaurant Association also publishes studies and statistics about industry trends and growth. Decide whether given the current economic environment it is advisable to launch a new restaurant. Find out if any restaurants in the area have closed in the last two years and why.
Look at Your Cost Structure
Once you have a good idea what type of food you want to offer, break down the cost of each menu item. Determine who your major suppliers will be and ask them for pricing. Software programs are available to help you accurately calculate projected food cost. You may consider reducing the number of items on your menu to keep food cost down. You may also find that given the food cost projections, the prices you will have to charge are higher than your local market will support.
Evaluate Management Capability
An entrepreneur contemplating opening a restaurant should take a hard look at whether he has the skill set and experience to make the venture a success. He should ask himself whether he has the eye for detail to maintain high customer satisfaction. He needs to be able to train and motivate staff members who may have limited experience or education. He needs to understand how to make the kitchen operation run smoothly. He may determine that it is not feasible for him to be the general manager of the restaurant’s operations and elect to hire a manager who already has a track record of success in the industry.
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Restaurant Business Plan. (2016, Apr 01). Retrieved from https://studymoose.com/restaurant-business-plan-essay