So you want to get into the bar/restaurant business, huh? And why shouldn’t you? With $782.7 Billion in projected annual sales for 2016 according to the National Restaurant Association ($19.9 Billion representing Bars and taverns alone), this industry is BOOMING!
(Click Here for a great snapshot of industry information; in fact the stats I am quoting in this article can be seen here).
If you’re currently working in a bar or restaurant right now and you’re dreaming of owning your own place someday, not only are you not alone, but you’re in GREAT company! According to the National Restaurant Association, 8 out of every 10 owners say their first job in this business was an entry level position. I for one have always LOVED this industry; and like many owners started my career at the entry level as a waiter and a bartender. Even though my career took me more along the path of consulting rather than ownership, it led me to being directly involved in the successful opening and operating of many fine establishments over the years; as well as awesome, fulfilling collaborations with some exceptional owners and industry professionals.
So how do you get started? Well, just like with any business, you start by putting together a business plan! Keep reading and you’ll see where I’ve outlined the key factors in the planning process, as well as sharing some tips and tactics with you from experts in the field on what they know will make your business a success!
(CLICK HERE if you want a sneak peek at my business plan formula specifically designed for bars and restaurants)
LOOK FOR AN OPPORTUNITY, PROVIDE A SOLUTION!
According to the National Restaurant Association there are over 1 million restaurants in North America, so how are you going to stand out among the rest and give yourself a fighting chance?
Is there something that there is a demand for that is just not available that you can provide? For example, is there a lack of affordable places to get a good meal? Are there any quiet places to get a drink with friends and a quick bite? Is there a lack of a particular type of cuisine? Make sure this need is something that is important to your target customers. If it is not important enough to them, they may not be willing to pay for whatever your solution is.
“I think the most important thing when opening a bar/restaurant is to ask yourself one question: Does this concept fill a need in the market that I am in or am I just doing what I want to do? In order for your business to be successful you have to give your possible customers what they actually want or need. Sometimes a sports bar with 100 TV's in an already sports bar saturated market may not be the best idea just because you’re a huge sports fan with a giant collection of signed jerseys.”
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Bob Peters, Bar and Cocktail Consultant. Follow Bob on Twitter by clicking HERE, and on Instagram by clicking HERE
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“Concept and Character! A Bar/Restaurant has to have a sense of place - a place where people want to be - a place that feels both comfortable as well as exciting and stimulating. I am both a Cocktail Writer as well as an Architect, so I see both sides of the challenge of building a successful restaurant. The project has to be on budget, it has to function well, and there has to be an element of magic to it in order to bring in customers. It's a difficult thing, but with the right designers it can be done. My best piece of advice? Don't under-estimate your professionals: the architects, designers, and engineers who can bring a lot of value to the project - both in design and efficiency.”
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Emily Arden Wells, Cocktail Writer and Architect. Follow Emily on Instagram by clicking HERE
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WHO ARE YOUR CUSTOMERS, AND WHERE DO YOU FIND THEM?
Now that you’ve gotten a winning concept in mind, now you have to figure out who your target market is? What types of potential customers will you be focusing on? Think about who your “ideal customer” is; then start thinking if your concept fulfills a particular need of theirs. Now I know your first thought might be “my place is going to be for everyone”. I know that might seem logical for a share volume standpoint, but it doesn’t work practically. You can’t sell to “everyone” because not everyone likes the same thing. Focus on servicing a specific group such as college students, young professionals, bikers, singles, sports fans, etc. Pick a group that best fits the theme/type of business you will be operating.
“Research and data regarding foot traffic and average sales numbers in the area vs. your rent/bills/overhead. Sometimes the numbers don't make sense, but people move forward anyway because they are passionate. Use your head, not your heart.”
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Vincent Toscano, Owner, Pennsyvania 6 in New York City. Looking to plan a wedding? Follow Vincent on Twitter here at Planestry
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WHO ELSE IS PLAYING IN YOUR SANDBOX?
Ok, so you’re moving right along! You’ve got a great concept and you’ve figured out who you’ll be catering to. The next question you have to ask yourself is “how many other people are going after the same group of people I am? Start out by making a list of the bars and restaurants in your area that are currently serving the same customers that you’ll be going after. If there isn’t anyone in direct competition with you doing the same concept (maybe yours is a variation on something that’s already out there. Higher-end, less expensive, or just a new spin on an old idea) then look at concepts similar to yours, and consider the other businesses in the area that your potential customers will be spending their money.
FORECASTING & FUNDING
Ok, no here’s where the rubber starts meeting the road! This is a crucial part of your research! Here’s where you ask yourself “how much money it will take to launch my bar/restaurant concept? Followed of course by the next most logical question, “how am I going to pay for it”? It’s important that you don’t skip a step here, you need to answer those questions in that order; because if you don’t know the overall price tag to get this business started, there’s no way of knowing things like “how much money you need to save, how much money to ask the bank for, or how much money to ask from a partner or investor.
Once you’ve figured that out and you’ve gotten the opportunity to get in front of these people, and you’re making your pitch to convince them to invest their time and money with you; there are 2 main questions they’re going to need you to answer for them: “How will you be spending the money; and how soon can I see a return on my investment?”
The funding aspect of your plan breaks down all the places you intend to get money for you business, how much you need, and what you’re spending it on. The forecasting is where you show banks and investors how you intend to pay them back and how much money there is to be made. The best way to do this is to outline it in your plan, and support it with financial statements like a profit and loss statement, projected balance sheet, projected cash flow statement, 5 year Profit and Loss Projection, and a break-even analysis.
“The only two things you truly have control over is your overhead - What you spend on goods and your staffing. Be conservative with both!”
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Matt Hogan, Owner, The Irish Haven, Brooklyn, NYC. Follow on Instagram by clicking HERE
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“It's all about cashflow. Whenever you have inventory of a physical product, and especially when that product is perishable, it's important to manage your working capital very carefully. You have to spend money to make money in a restaurant / bar environment, but don't take that as permission to overextend yourself. Instead, focus on accurate forecasting so you're always stocked but you never have too much product.”
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Evan Tarver, Business Consultant. Follow Evan on Twitter by clicking HERE
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“All projects take much longer and cost way more than anticipated. Operators must have enough working capital to get their bar/restaurant open and to guarantee their survival through the first year.”
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Leslie Lynn, Author and Writer for the Restaurant Industry. Follow Leslie on Twitter by clicking HERE
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“I am yet to open my own venue but I have assisted others in doing so and have found one of the most important things is time. I have seen many bars/restaurants open before they are truly ready because of the belief every day they spend getting ready without the doors open is money being thrown down the drain. Instead they open unprepared and unfortunately in many cases this is much more costly to the business than the extra time spent getting sufficiently prepared. Secondly; I believe strong staff are pivotal. The extra cost of a strong staff member may be the contributing factor between failure and success.”
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Natalie Migliarini, Cocktail Blogger, Follow Natalie on Instagram by clicking HERE!
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WHAT’S YOUR SALES AND MARKETING PLAN?
How will you build interest among your target market and how you plan to attract their attention is key to making your business a success. There are many ways you can get the word out about your business and generate enough of a buzz to get people excited about coming to your place and spending their money with you. Your plan can include anything from Social Media (you can check out last month’s article on using social media by clicking HERE), your website, print, radio, etc.
“Have a clear marketing plan. A well designed marketing plan is essential for the success of any restaurant or bar. It's not longer enough to provide good products and services in a good location. Restaurateurs and bar managers should be marketing-oriented and able to deploy effective strategies to hit not only the stomachs, but even the minds of people. Nowadays, anyone who runs a restaurant or a bar should act both as a manager and a marketer if they want to stand out from the crowd.”
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Nicola Barcellona, SME Marketing Consultant. Follow Nicola on Twitter by clicking HERE!
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“Understand your audience and use social media to compliment your brand's personality. If you're a taco truck going after beach goers in California, don't just share photos of your food on Instagram - post breathtaking beach shots, colorful surfboards, and other imagery that will appeal to your audience! Show that your business has the same ideals as your customers, and you'll win real fans.”
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Megan Marrs, Food Truck Blogger, Follow Megan on Twitter by clicking HERE!
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OPERATIONS
This section of your plan needs to include everything you need to not only get you business up and running, but to KEEP it up and running as well. You can map out this section of your plan by asking yourself questions like:
- What kind of technology will I be using on a daily basis? Point of sale
- What are my “Hours of operation” going to be?
- What’s my seating capacity?
- What procedures or systems will I have in place for purchasing and inventory Controls (software, stock taking, purchasing and receiving procedures)
- What will be on my menu (both food and beverages)
- How many people will be working for me and what will their roles be?
- What techniques or training will I have for my team to drive sales?
- What permits and certificates will I need to operate legally?
- What equipment will I need to buy and maintain to operate my business?
“When opening a bar, you need to understand how to obtain a liquor license, and other important permits and licenses, before even looking for a location. There are a number of licenses you’re required to obtain in order to operate a bar or restaurant legally; some are simple to obtain, while others are much more complicated. The liquor license, in particular, which is a state-issued license that allows you to sell alcohol in your bar, can have different classes and application needs. To apply for a liquor license, contact your local ABC agency to acquire the appropriate forms, fill them out, and submit them. In some states, you’ll need to submit an application to both your state and town or county. Do this as early as possible, as review times are often longer than 30 days. Either way, the price for a liquor license can range from $12,000 up to $400,000.”
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Allison Tetreault, Restaurant POS System Provider, Follow Allison Twitter by clicking HERE!
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“It might not be the most glamorous part of opening a restaurant, but making sure your operations are set up to run smoothly and efficiently is key. When evaluating restaurant technology, like a point of sale or reservation management software, make sure to read online user reviews and consider how they're core features will benefit your business.”
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Taylor Moore, Restaurant Tech Provider Follow Taylor on Twitter by clicking HERE!
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“Hiring the right people for leadership roles. Find people who inspire their staff and lead through example. Place these leaders in their appropriate roles where they will best contribute to the ongoing growth of the business and allow them to become the expert in those roles. At the end of the day, the quality of the leadership affects the staff's desire to excel, which in turn affects the customer's experience. An inspired staff is easy to spot.”
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Josh Suchan, Bar and Cocktail Consultant. Follow Josh on Instagram by clicking HERE!
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“A common dilemma for bar owners is resisting the siren call of the liquor sales representative. Your rep will ALWAYS have deals to offer you — deals that seem too good to pass up. Take a breath and question those deals before signing on. Is this something you can really sell? You want to be a lean operator. The last thing you need is a lot of unused stock gathering dust in your storeroom or on your rail.
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Matthew Griffith, Capital and Marketing Services Provider for the Restaurant Industry. Follow Matthew on Twitter by clicking HERE! |
“Staffing! Making sure you have the best people in place to execute your vision when opening a restaurant, and having them in the correct positions to ensure success. You want people with the right combination of experience, passion, and temperament”
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Seth Honeycutt, Restauranteur.
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“It’s very important to consider the audio system and music choices when opening a bar. It literally sets the tone for your bar. It definitely one of the first things people notice when they walk in.
When opening a bar, it is important to budget for a good sound system and to consider it during construction. You don't want to string wires around your beautiful new bar after construction, when they could have easily and elegantly hidden earlier in the process. Where will the equipment be? Will you ever have live music? Do you have a lot of hard surfaces such as hard wood floors, brick walls and large windows? This will cause the sound to reverberate in the space.
The music in a bar can shape the type of clientele that will frequent your bar. I've heard stories of bars being completely purged of one type of patron and replaced by another, just by changing the music.
The audio system should never be an afterthought. If budget can be allotted, consider contracting a professional Acoustician. You won’t be sorry and your ears, and bottom line, will thank you!”
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Brian Weber, Professional Bartender and Consultant, Follow Brian on Twitter by clicking HERE!
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“Make sure you and your staff have applicable experience in the hospitality industry. Working for other bars / restaurants will give you the opportunity to learn and make mistakes without putting your life savings on the line.”
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Chris Tunstall, Bar Industry Professional, Educator and Writer, Follow Chris on Twitter by clicking HERE
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CONCLUSION
Now I know we covered a TON of information here and it can all seem overwhelming. What I always do, and recommend to others is that you break up any massive under taking into to smaller components and tackle them each one at a time. It may feel like it’s taking forever to get to your end goal, but just keep in mind that slow progress is still progress; and each step you take is one step closer to you finally achieving your goal. If you’re ready to take your first step towards making your dream of ownership a reality, you can CLICK HERE and see which of our products can help you through whichever stage of the process you’re in. Best of luck to you!
Cheers,
