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10 Common Mistakes with Restaurant Start Ups That You Shouldn’t Make

Posted by Leslie Hildula on March 30, 2017

jesson-mata-I2Erl2cU_A4-unsplashStarting a restaurant has many working parts all moving simultaneously, and if left unattended, could cause speed bumps in your start up process and success. Choosing the correct location (and getting the proper permitting), managing food and beverage inventory, and handling the employees, are just a few of the moving parts.

Unfortunately, many restaurant businesses struggle from the get-go because the owner gets overwhelmed or overlooks an important step in the planning process. So, if your heart is set on opening that chicken shack or eclectic Korean BBQ joint, keep these 10 restaurant startup mistakes in mind so that you don’t fall into the same trap:

1. Not Creating a Business Plan

A business plan for any new venture (not just for restaurants) is essential for success. It helps the business owner set future objectives as well as strategies to achieve them. It can help you budget, saving time, money and stress in the process. While a business plan takes time to create (which is why a lot of people avoid it), it will be time well spent if it saves you from making costly mistakes in the long run.

2. Not Paying Enough Attention to Location

Location can be vital to restaurant visibility and attracting customers, so you want to make sure that you are in a location that is highly visible and accessible to your target market. A good location can catch the eye of a hungry potential customer and bring in extra business outside of what your marketing provides. Don’t settle for the second choice location that’s slightly off the beaten path because of a cheaper cost.

3. Underestimating Start-Up Costs

Initial startup and operating expenses can be budgeted for, but don’t be naive to think that something won’t come up that’s unexpected. Ensure your start-up budget includes spare room for unexpected or higher costs than originally planned. It’s a good idea to overestimate your starting costs and put aside a year’s worth of working capital and contingency money.

4. Thinking That You Are Going To Make Money Opening Day

Until the word gets out about your new business and you gain some traction, be prepared to take some initial losses, ensuring that those first opening months are the best they can be, so visitors will return and help spread the word for future business. Even for those who blow it out of the water on their restaurant’s opening day, there are usually still high labor and operating costs that prevent a positive bottom line for some time from things like employee training, stocking dishes, and food, etc.

5. Unorganized Employee Training and/or No Procedure Manuals

Some new restaurant owners might not realize how much time training employees takes and the costs associated with it. For franchises, this is often provided by corporate, but it’s good to ensure you have this and create your own operation manuals specific to your business if you don’t. Training and informing employees of procedures can help to keep consistent food quality, service delivered and other things vital to keep that customer coming back (and telling their friends).

>> Learn more about Restaurant Business Builders

6. Focusing on the Food You Want and Not Trying to Please Everyone

Although you can’t be everything to everyone, you also want to ensure your signature dishes and food style derive from your main concept and passion that started this restaurant idea in the first place.  Do some comparison studies to restaurants that are like yours and talk to the locals about what kind of food they would like to see. Using this data and combining it with your ideas will help you create a menu that’s sure to please.

7. Not Planning for Permits and Licensing

There have been restaurants that start leasing their space in May, with plans to open in July, however, by March of the following year, they still aren’t open. Remodels and other tasks can take time to get approvals from the city and county, which can be a longer confirmation time than initially planned. Ensure that you do as much research as you can on the building, location, and previous tenants before signing the lease and expecting to open a month later.

8. Not Timing Your Opening Day Strategically

Research the permitting process and attempt to identify any potential speed bumps that might set you back. Also look at the timing of when you are opening your new restaurant and the ebbs and flows of the local population. For instance, opening your restaurant in the springtime in a ski town after the resorts have closed is probably not the smartest move if not enough patrons are around to enjoy your fare.

9. Having a Complicated Menu

Too many menu choices can confuse and overwhelm the customer, leaving a poor initial impression on them and possibly leading them to choose something they didn’t initially come to get. Once you have confirmed your concept, stick to that niche and achieve to be the leader in providing that style of food and atmosphere.

10. Not Understanding Your Market

Even if you have the best recipes that cannot wait to be shared with the world, you need to make sure that you’re offering food that people want. Not everyone may like your style of food and that’s okay, but you need to do market research and make sure that you are filling a need for a certain kind of food and offering it at the right price.

These are some of the most common mistakes with restaurants, but there are plenty of other horror stories about why restaurants couldn’t open and/or why they lost their life savings trying to fulfill their dreams in the process. Keep in mind that although it is tedious, a lot of planning and research, and investing time getting to know the locals, it will help you in the long run. Avoiding these mistakes will help you be one step closer to a flood of happy customers and positive restaurant reviews.

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The Oregon Small Business Development Center Portland Community College has  helped thousands of businesses over the past 40 years. We combine one-on-one  advising with programs taught by business experts, giving our clients the  resources they need to grow their businesses. We’ve celebrated many successes  with our clients. We'd love to celebrate your success. 

Topics: Small Business, Starting a Business, Food, Restaurants

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