As the number of customers who want to dine out or take prepared food to their home, the number of food-service operations is growing. But, don’t worry, still, there is scope for your restaurant business. In this article, we will discuss different ways to start a chain of restaurants. Moving demographics and changing lifestyles are driving the rise in food-service businesses. Busy customers do not have the inclination or time to prepare food. They want the taste of fresh bread without even baking. They want to have healthy and tasty meals but they don’t want to wash the dishes. In fact, the increasing popularity of to-go operations highlights a few clear trends in the restaurant industry. More and more single people, working people, and elders are demanding convenience when it comes to purchasing their meals.
Though the future seems to be bright for the food-service industry as a whole, there is no guarantee in this business. Even the most profitable operators will tell you that this is not getting a “get rich quick” industry. It is more like a “work hard and makes a living” industry. The reality is that several restaurants fail during their initial year, often because of a lack of planning. But, that does not mean your restaurant business has to be a complex operation. In fact, the more streamlined you can make it, the better are the chances of achieving success.
Experts say that, though all of us love it, running this business is difficult. It is a wonderful business, a great and satisfying business, and a lucrative option to make money. But, there are several moving parts and you must have an idea about all of them.
To assist you, we have compiled a list of different ways to start a chain of restaurants. Whether you want to open a traditional American restaurant, a cafeteria, a New-york style pizzeria or a simple hang out spot, you will get everything here.
Ways to Start a Chain of Restaurants
Decide the concept of your business- The first important thing to consider while starting a restaurant business is deciding the concept. You must keep several things in your mind before deciding on an idea, the important one being the amount of money you have for investment. The Average Price per Customer (APAC) offers you a clear idea about the average amount of finance a customer would spend in your eatery.
Once you have decided on the idea, you must ponder into the cuisine and theme of your eatery. Make sure the interiors of the restaurant are in sync with the theme of your restaurant. Next, you must prepare a business plan for your restaurant as it would help you in planning the development of your restaurant business in the future, and you can submit it to any potential investor.
Target Market- No single food business has a universal appeal. This is a fact that new entrepreneurs do not accept, but the reality is that you will never capture 100 percent of the market. When you try to satisfy everyone, you end up please nobody. So, focus on the 5 to 10 percent of the market that you can, and leave the rest. With that discussed, who eats at a restaurant? Looking at the main market categories of food service business customers is one of the important ways to start a chain of restaurants.
Generation Y. The generation, also known as the “millennial generation”, the “eco”, or the “boomlet” generation includes those people who were born between 1980 and 2000. Generation Y is the most racially diverse generation yet and is over three times the size of generation X. They are the main target of a restaurant business. Members of Generation Y go for fast food as well as quick-service items. Nearly 25 percent of their restaurant visits are to burger franchises, follow up by pizza restaurants at 12 percent.
Generation X. It is a label applied to those who people who were born between 1965 and 1980. This group is popular for having strong family values. While earlier generations strove to do better financially compared to their parents, Gen Xers are likely to focus on their relationship with their kids. They are concerned with value, and they support quick-service restaurants and midscale operations that provide all-you-can-eat salad bars and buffets. To appeal to this group, you must provide a comfortable atmosphere that pays emphasis on ambiance and value.
Baby boomers. This group comprises people born between 1946 and 1964. Most of the people who fall under this group can afford to visit upscale restaurants and spend a large amount of money. In 1980, they were regarded as the main customer group for an upscale and trendy restaurant. In 1990, most of the baby boomers were two working people in one household. These days, those on the leading edge of the boomer generation are becoming grandparents, making them a target of restaurants that provide a family-friendly environment and those that offer a formal and upscale dining experience.
Senior citizens. The senior market covers the aged people who are 65 years or older. Usually, most of the seniors have fixed incomes and may not often be able to afford upscale restaurants regularly, so they prefer visiting family-style restaurants that provide good food service at reasonable prices. Younger seniors are probably more active and have a disposable income compared to old seniors whose health may be deteriorating. Typically, seniors prefer those restaurants that have early-bird offers and senior-friendly menus with small portions and low prices, as their costs are less hearty than those of young people.
Funding- Deciding on the funding part is also one of the significant ways to start a chain of restaurants. Most aspiring restaurant owners’ dreams remain unfulfilled because of the lack of money, and this is one of the few important things to consider when you plan to open a restaurant business. Firstly, based on the idea of your restaurant you must finalize how much money is required to start a restaurant. When you have the exact numbers, then you can choose any of these ways:
- Self-funding- If you have sufficient money in your bank, then no worries. It is a good idea to start a restaurant in partnership, as it lessens the risk of investment.
- Loan- You can even take a loan from a bank to start your own restaurant. However, securing a loan from a bank may include troubles as they look for collateral or someone who can subsidize the loan.
- Angel funding- Getting investors on board can be tricky, mainly if yours is a first-time venture. Usually, investors look for the growth potential, scalability, and the quality of your restaurant. The performance of your first few outlets is considered before anyone agrees to invest in your startup.
Have a solid business plan- You cannot write a business plan on a napkin. You require a detailed business plan that charts the course for your success. That being said, experts suggest starting with a Lean Plan that keeps the business planning procedure simple. Think of your business plan as a living document that you return daily to help you plan for growth and calculate your progress.
Location- Deciding the location is one of the vital ways to start a chain of restaurants. You must choose a location that grabs the attention of people, can be reached easily, and has the potential to grow. Of course, choose a location that fits in your budget. Whether you plan to rent space or build from scratch, choosing a location is one of the best decisions that you will make as an owner.
Promotions and Marketing- Every business requires a marketing plan and the restaurant business is no exception. But, even as you consider different marketing vehicles, keep one important thing in mind: Studies conducted by the National Restaurant Association shows that word-of-mouth is still the best mode of advertising. Four out of five customers are likely to select a table-service restaurant they have not visited before on the basis of a recommendation from a friend or family friend.
Make sure you ask every new customer how they found about your restaurant, and make a note of this info so that you can find out which marketing effort of yours are working and which are not. You can then decide which marketing programs to continue and which one to eliminate.
As a restaurant owner, you must ask this question to yourself: Do your marketing materials including signs, menus, ads, and table tents- send the right message about you and your business?
The first important step in designing a complete marketing package is to understand your market, and it is not enough to collect demographic information just once. Markets keep on changing, and food-service business that does not change their marketing plans as per the population increase will miss a lot of opportunities.
Next, step back and have a look at every element in your facility. Everything starting from the parking lot to the interior decor to printed items in the restaurant contributes to your marketing message- and all should be a perfect reflection of your message.
One cheap and simple way to promote your restaurant business is by giving away gift certificates- like dinner for two, bagels and coffee for 10, or maybe a free pizza. Call local radio stations that reach the demographics of your target audience. Make sure your brand’s name, as well as the location, is announced many times on the radio show.
Also, you can donate coupons and gift certificates to use as door prizes at meetings and nonprofit organizations to be used as raffle prizes. Just make sure each gift certificate or coupon clearly identifies your location, business name, and business hours.