Start-up Essentials: Opening your Own Restaurant

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Figures indicate that Britain’s appetite for dining out is growing. The UK restaurant sector expanded by 39% between 2010 and 2015, and reports suggest that restaurant businesses now take up a large proportion of the most popular high street spots.

Our tastes are changing too. As a go-to socialising option, restaurants are taking place of traditional pubs, which have been hit by a spell of closures over the past decade. As UK diners seek top quality food and authentic new experiences, there are plenty of opportunities for those who want to take a bite out of the industry.

The restaurant recipe

In some respects, the recipe for building a successful new restaurant has always been the same. Serve great food, provide an incredible experience, and, of course, a willingness to take on hard work and long hours.

But these essential ingredients can no longer be served alone. There are a few additions that need to be added to the recipe. These include knowing how to successfully carve a niche, presenting your restaurant idea as a sustainable business model, starting out on the right footing with health inspectors, and being able to deal with online reviews.

Choosing a niche

Finding your niche and standing out from the crowd isn’t about coming up with a weird and wonderful restaurant, just for the sake of it. Fundamentally, it’s about drawing up a very clear concept of the type of your restaurant, who it’s likely to appeal to, and why.

Consider your proposed location as a starting point. Think about the characteristics of the local population, the profile of typical diners, and the options currently available. From this identify possible gaps in the market that your restaurant could fill. Your social and professional contacts can be a goldmine of information for this. Also, seek the views of local residents and restaurant owners. They are going to be your customers and your competition and can provide invaluable insights.

  • Are young professionals bored of the same old chain restaurants?
  • Are hoteliers and guesthouse owners advising tourists, who want ‘real local food’, to drive to the next town?

A fact-finding mission can flag up possible opportunities and spark ideas.

Building on what already exists

Many successful restaurants take familiar ideas and adapt them to changing tastes, consumer concerns, and habits. ‘Healthification’ is a good example of a trend which many restaurants have capitalised on. Chains such as Leon promote their healthy slant on our favourite junk meals, to deliver ‘naturally fast food’.

If your passion is rooted in a particular culture or part of the UK, there might be scope for a menu that showcases this, and addresses a growing desire for authenticity. Restaurant chain Wahaca is a great example, with its approach to ‘real Mexican food’: offering small dishes inspired by Mexican street food.

Finding the right premises

Taken as a whole, taking on a lease, fitting-out your kitchen, and equipping front of house will take up the bulk of your start-up budget. When your restaurant is up and running, rent and other property-related expenses will make up a large part of your outgoings. Estimate these costs as early as possible, so you can draw up an accurate business plan to present to banks and potential investors.

A3 Planning Licence

To be used as a restaurant, your premises will need an A3 Planning Licence from your local authority. Properties that have this designation usually attract a higher rent — but be wary of taking a lease on a property without an A3 licence in the hope of obtaining it yourself. There’s a risk that the application will be refused, for instance if the council wishes to encourage non-food retail growth, or if there are objections from residents.

Leasing on an existing restaurant

Taking a lease on an existing restaurant means higher rent. But with higher rent comes many advantages: having essential kitchen and bar equipment, storage facilities, and ventilation already in place. Be sure to find out why the previous occupant is leaving. Ask questions like?

  • Is there a problem with the location?
  • Are the premises fit for purpose?

Input from both an accountant and a surveyor is invaluable.

As well as rent, consider regular payments associated with the premises you will also need to include such as service charges, business rates, and any contribution towards buildings insurance stipulated in the lease. Depending on how your local council operates, you may also need to hire a waste removal service.

Finding the right staff

Typically, staffing costs represent roughly half of a restaurant’s overheads. But even if funds are limited, hiring less experienced workers in an attempt to keep costs down is not advisable. A tight-knit team of waiting, front-of-house, and kitchen staff is essential for a restaurant’s success. As you scale up, you have greater leeway to fill the ranks with cheaper manpower. Make enquiries with Jobcentre Plus and recruitment agencies for information on the going rates in your local area.

Pricing your menu

Your market research should give you an idea of the acceptable price bracket for your target market. Your aim is to devise a pricing structure that stays within that bracket, but which is sustainable for your business. Factor in ingredient costs, overheads, and staffing into the pricing of your menu. Avoid blindly following rules of thumb with profit margin calculations. For credible and accurate costings based on your specific circumstances, get the input of an accountant.

Spreading the word

Long before your opening date, contact an insurance broker for a comprehensive package of cover: with both employee and public liability insurance, to cover you against any possible claims. You must contact your local authority at least 28 days before opening, to arrange for an initial environmental health inspection. Find out more by browsing the Food Resources Agency’s knowledge hub. You should also notify HMRC as soon as you start trading, to register for tax purposes.

Spread the word

Most importantly, you need to spread the word to potential customers. Here are some options as to how:

  • Flyers to local businesses, advertising in local publications, and having an online presence are invaluable.
  • A great website, with your full menu and social media pages are not just promotional tools, but are now essential components in a restaurant’s success.
  • A ‘grand opening’ invite-only event can be an effective way of creating a buzz. However, be careful not to pack out your new restaurant beyond your comfort level. If you have to cut corners, you could give a bad first impression, leading to less than favourable early reviews.

Need further tips on how to fund your new restaurant? Browse our help centre, to find out how to present your proposals in the best possible light.

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