article comes from Entrepreneur Magazine Online
As you put together a
plan for your food-service business, be aware of
some of the trends in terms of menu content and
design: These factors could--and, in fact,
should--influence the type of food-service
business you open.
Restaurant operators report that items
gaining popularity include vegetarian items,
tortillas, locally grown produce, organic items,
fusion dishes (combining two or more ethnic
cuisines in one dish or on one plate) and
microbrewed/local beers. Pita dishes and wraps
continue to be in high demand, particularly as
an easy-to-consume alternative to sandwiches.
You will also see a strong demand for bagels,
espresso/specialty coffees and "real meals,"
which are typically an entree with a side order.
Consumers are eating more chicken, seafood and
beef entrees than they have in recent years. At
the same time, they expect to see meatless
alternatives on the menu. Diners also are
demanding "comfort food"--the dishes that take
them back to their childhoods, when mothers
baked from scratch, and meat and potatoes were
at the center of each plate.
Menus are also showing a number of ethnic
dishes and spice-infused offerings. It's not
surprising to find Thai, Vietnamese, Creole,
Tuscan and even classic French cuisines on the
same menu, and even the same plate.
At the same time, be sure to keep the kids in
mind as you plan your selections. If families
are a key part of your target market, you'll
want a range of four or five items in smaller
portions that youngsters will enjoy. If you
serve snack items as well as entrees, note that
kids are choosing healthier snacks more often
than they did a few years ago. For example,
while salty snacks remain popular, yogurt is the
fastest growing snack food based on consumption
frequency among kids under 13. The average child
in that age group eats yogurt 11 times more
today than five years ago. Fruit cups and
applesauce cups are also growing in popularity
among children and teens. While most restaurants
still offer fixed kids' meals, you might
consider allowing your young diners to make
their own choices among a selection of
Though menu variety has increased over the
years, menus themselves are growing shorter.
Busy consumers don't want to read a lengthy menu
before dinner; dining out is a recreational
activity, and they're in the restaurant to
relax. Keep your number of items in check and
menu descriptions simple and straightforward,
providing customers with a variety of choices in
a concise format. Your menu should also indicate
what dishes can be prepared to meet special
dietary requirements. Items low in fat, sodium
and cholesterol should also be marked as such.
Though we don't think of food service as
heavily regulated an industry as something like
medical services or public utilities, the
reality is that many aspects of your operation
are strictly regulated and subject to
inspection. Fail to meet regulations, and you
could be subject to fines or get shut down by
authorities. And if the violations involve
tainted food, you could be responsible for your
patrons' illnesses and even death. Issues such
as sanitation and fire safety are critical. You
must provide a safe environment in which your
employees can work and your guests can dine,
follow the laws of your state on sales of
alcohol and tobacco products, and handle tax
issues, including sales, beverage, payroll and
Most regulatory agencies will work with new
operators to let them know what they must do to
meet the necessary legal requirements. Your
state's general information office can direct
you to all the agencies you'll need to be
Restaurants are classified into three primary
categories: quick-service, midscale and upscale.
Quick-service restaurants are also known as
fast-food restaurants. These establishments
offer limited menus of items that are prepared
quickly and sold for a relatively low price. In
addition to very casual dining areas, they
typically offer drive-thru windows and take-out
When people think of fast-food restaurants,
they often think of hamburgers and french fries,
but establishments in this category also serve
chicken, hot dogs, sandwiches, pizza, seafood
and ethnic foods.
Midscale restaurants, as the name implies,
occupy the middle ground between quick-service
and upscale restaurants. They offer full meals
but charge prices that customers perceive as
providing good value. Midscale restaurants offer
a range of limited- and full-service options. In
a full-service restaurant, patrons place and
receive their orders at their tables; in a
limited-service operation, patrons order their
food at a counter and then receive their meals
at their tables. Many limited-service
restaurants offer salad bars and buffets.
Upscale restaurants offer full table service
and do not necessarily promote their meals as
offering great value; instead, they focus on the
quality of their cuisine and the ambience of
their facilities. Fine-dining establishments are
at the highest end of the upscale restaurant
category and charge the highest prices.
Restaurant patrons want to be delighted, but
not necessarily surprised. If they're
anticipating a family-style steakhouse but find
themselves in a more formal environment with a
bewildering gourmet menu, the surprise alone may
keep them from enjoying the restaurant. Concepts
give restaurateurs a way to let patrons know
what to expect and also provide some structure
for operation. Some of the more popular
restaurant concepts include:
Casual-dining restaurants. These type
of restaurants appeal to a wide audience,
ranging from generation Y to gen Xers and baby
boomers with families to seniors, and they
provide a variety of food items. These
establishments offer comfortable atmosphere with
mid-range prices. Many successful casual-dining
restaurants center on a theme that's
incorporated into their menus and décor.
Family-style restaurants. As the name
implies, these establishments are geared toward
families. Since they charge reasonable prices,
they also appeal to seniors. They offer speedy
service that falls somewhere between that of
quick-service and most full-service restaurants.
Their menus offer a variety of selections to
appeal to a broad range of customers, from
children to seniors. Family-style restaurants
have prices slightly higher than those at
fast-food restaurants, yet these establishments
still provide table service. The décor of
family-style restaurants is generally
comfortable, with muted tones, unremarkable
artwork, and plenty of booths and wide chairs.
Booster seats and highchairs for children are
Ethnic restaurants. Ethnic
restaurants enjoy a significant share of the
U.S. restaurant market. They range from
quick-service to upscale, and their menus
typically include "Americanized" versions of
ethnic dishes as well as more authentic food.
The three most popular kinds of ethnic
restaurants are Italian, Chinese and Mexican.
Other popular types include Indian, Thai,
Caribbean, English, French, German, Japanese,
Korean, Mediterranean and Vietnamese. An even
wider variety of ethnic restaurants can thrive
in metropolitan areas that have a culturally
Seafood. Quick-service seafood
restaurants generally offer a limited range of
choices, often restricted to fried fish and
shrimp. Midscale and upscale restaurants in this
sector offer a wider selection of seafood items,
prepared in ways other than frying, including
baking, broiling and grilling. Seafood can be a
risky venture, as seafood prices are always
changing and many kinds of seafood are seasonal.
Beware: Quality can vary tremendously from catch
Steakhouses. Steakhouses are part of
the midscale and upscale markets. Midscale
steakhouses are typically family-oriented,
offering a casual environment with meals
perceived as good values. Comfort is emphasized,
and Western themes are popular. Upscale
steakhouses offer a more formal atmosphere and
may serve larger cuts of better quality meat
than those served in midscale eateries. Upscale
establishments offer guests more privacy and
focus more on adult patrons than on families.
Pizzeria. You have two primary
choices when entering this $30 billion market.
One is a to-go restaurant in a modest facility
with a specialized menu highlighted by pizza and
beer, limited seating and a self-service
atmosphere. The other is a full-service pizza
restaurant with a menu that features not only a
variety of pizzas, beer and wine, but also
Italian entrees like spaghetti, ravioli and
lasagna, side dishes such as salads (or even a
salad bar), and a few desserts. The foundation
of a pizzeria is, of course, the pizza. If you
don't know how to make a good pizza, hire a good
pizza cook who does. Invest in top-quality
ingredients and preparation methods, and make
every pizza as if you're going to eat it
yourself. Do that, and your customers will keep
coming back for more.
Sandwich Shop/Delicatessen. One
reason sandwich shops are so successful is that
they enjoy high profit margins. Sandwich shops
and delicatessens can also change their menus
quickly and easily to adapt to current tastes.
For example, with the growing interest in health
and nutrition in the United States, sandwich
shops and delicatessens have started offering
more low-fat, healthy ingredients in their
sandwiches, salads and other menu items. Also,
many sandwich shops and delis have been able to
keep up with American workers who eat at their
workplaces by adding delivery and catering to
their sit-down and take-out operations. Sandwich
shops and delicatessens can be differentiated by
the foods they serve. Most sandwich shops serve
only sandwiches, possibly with some side dishes
or desserts. A delicatessen usually offers a
more extensive menu, including sandwiches,
prepared meats, smoked fish, cheeses, salads,
relishes and various hot entrees.
Coffeehouse. With more than 400
billion cups consumed every year, coffee is the
world's most popular beverage. Today's coffee
cafes cater to a marketplace as varied as the
coffee flavors themselves--some targeting the
breakfast and lunch on-the-go market, others
operating as evening destinations, with food
items and perhaps entertainment, and a wide
range of styles in between. Most successful
coffeehouses have heavy foot traffic and
high-volume sales. Profit margins for coffee and
espresso drinks are extremely high--after all,
you're dealing with a product that's more than
95 percent water. At the same time, your average
ticket amount is around $3, so you need volume
to reach and maintain profitability. Besides
specialty roasted coffee by the cup, most
coffeehouses also have espresso-based drinks
(cappuccinos, lattes, etc.), assorted teas,
bottled water and fruit juices, along with an
inviting assortment of baked goods, a selection
of desserts, and coffee beans by the pound.
Bakery. With the emergence of strip
malls and competition from supermarkets that
have in-store bakeries, "bread-only" retail
bakeries have almost disappeared from the United
States. Bakeries today sell cakes, scones,
bagels, cappuccinos and sometimes even offer
full dining menus, including sandwiches, hot
entrees, beer and wine. Consumers love fresh
bakery goods, but the market is extremely
competitive. As you develop your particular
bakery concept, you'll need to find a way to
differentiate yourself from other bakeries in
Before you can begin any serious planning,
you must first decide what specific segment of
the food-service industry you want to enter.
While there are many commonalities among the
various types of businesses, there are also many
differences. And while there is much overlap in
the knowledge and skills necessary to be
successful, your own personality and preferences
will dictate whether you choose to open a
commercial bakery, a coffee cart, a fine-dining
restaurant or other type of operation. Then,
once you have decided what business best suits
you, you must figure out the niche you'll occupy
in the marketplace.
For example, are you an early riser, or do
you prefer to stay up late and sleep late? If
you like--or at least don't mind--getting up
before dawn, your niche may be a bakery or a
casual breakfast-and-lunch operation. Night owls
are going to be drawn to the hours required for
bar-and-grill types of restaurants, fine-dining
establishments and even pizzerias.
Do you like dealing with the public, or are
you happier in the kitchen? If you're a people
person, choose a food-service business that
gives you plenty of opportunity to connect with
your customers. If you're not especially
gregarious, you'll probably lean more toward a
commercial type of business, perhaps a bakery or
even a catering service, where you can deal more
with operational issues than with people.
Do you have a passion for a particular type
of cuisine? Do you enjoy a predictable routine,
or do you prefer something different every day?
Are you willing to deal with the additional
responsibilities and liabilities that come with
serving alcoholic beverages?
As you do this self-analysis, think about
your ideal day. If you could be doing exactly
what you wanted to do, what would it be?
Once you've decided on the best niche for you
as an individual, it's time to determine if you
can develop a niche in the market for your
Working in a
Dealing graciously with customers and playing
the role of elegant host are only part of a
restaurateur's many duties. Food-service
business operators spend most of their time
developing menus; ordering inventory and
supplies; managing personnel; creating and
implementing marketing campaigns; making sure
their operation is in compliance with a myriad
of local, state and federal regulations;
completing a wide range of paperwork; and
performing other administrative chores.
Certainly the financial opportunities are
there--as are the fun aspects of the
business--but starting, running and growing a
food-service business is also hard work.
Regardless of the type of food-service
business you intend to start, the best way to
learn the ropes is to work for a similar
operation for a while before striking out on
your own. Doing so will give you significant
insight into the realities and logistics of the
Successful restaurateurs agree that the best
preparation for owning a restaurant is to work
in someone else's first. Think of it as getting
paid to be educated. Certainly you should read
books and take courses, but you should also plan
to work in a restaurant for at least a few years
doing as many different jobs as possible. And if
you're not actually doing the job, pay attention
to the person who is--you may find yourself
doing it when your own restaurant is
Ideally, you should work in a restaurant
similar to the type you want to open. You may
find you don't like the business. Or you may
find you're more suited to a different type of
operation than you originally thought.
Hopefully, you'll discover you're in exactly the
"As I started working in restaurants, I
realized this was my passion," says Scott Redler,
co-owner and founder of
Timberline Steakhouse & Grill in Wichita,
Kansas. Redler, 42, got his first restaurant job
at 15, opened a Chinese fast-food restaurant at
26 that failed in eight months, and now has five
successful steakhouses. He also opened two
Freddy's Frozen Custard restaurants. "When you
have a busy restaurant and you're watching
everything happen as it should," he says, "it's
a wonderful feeling of satisfaction."
Armed with practical experience, you're ready
to put together your business plan--the most
critical element of your restaurant. Map out
everything on paper before you buy the first
spoon or crack the first egg. According to
Melman, 80 percent of what will make your
restaurant a success will take place before you
ever open the doors.
Your business plan should include: a clear
definition of your concept; a description of
your market; your menu and pricing; detailed
financial information, including data on your
startup capital (amount and sources) and your
long-term income and expense forecasts; a
marketing plan; employee hiring, training and
retention programs; and detailed plans that
outline how you'll deal with the challenges
restaurateurs face every day. Including an exit
plan in your strategy is also a good idea.
How much money you need to start depends on
the type of food business you're starting, the
facility, how much equipment you'll need,
whether you buy new or used, your inventory,
your marketing expenses and your necessary
operating capital (the amount of money you'll
need on hand to carry you until your business
starts generating cash). It's easy to spend
hundreds of thousands of dollars starting a
restaurant. By contrast, when Jim A. started his
first bakery in Maine, he rented a space that
had been a commercial bakery and came complete
with mixers, benches, ovens and other equipment.
He was able to start with just $10,000 he'd
borrowed from family and friends, and he used
that primarily on inventory.
Regardless of how much money you'll need,
you'll definitely need funds to get your
food-service business started. Here are some
suggestions of where to go to raise your startup
Your own resources. Take a thorough
inventory of your assets. People generally have
more assets than they realize. This could
include savings accounts, equity in real estate,
retirement accounts, vehicles, recreation
equipment, collections and other investments.
You may opt to sell assets for cash, or use them
as collateral for a loan. Take a look, too, at
your personal line of credit. Many a successful
business has been started with credit cards.
Family and friends. The logical next
step after gathering your own resources is to
approach friends and relatives who believe in
you and want to help you succeed. Be cautious
with these arrangements; no matter how close you
are, present yourself professionally, put
everything in writing, and be sure the
individuals you approach can afford to take the
risk of investing in your business.
Partners. Using the "strength in
numbers" principle, look around for someone who
may want to team up with you in your venture.
You may choose someone who has financial
resources and wants to work side-by-side with
you in the business. Or you may find someone who
has money to invest but no interest in doing the
actual work. Be sure to create a written
partnership agreement that clearly defines your
respective responsibilities and obligations.
Government programs. Take advantage
of the abundance of local, state and federal
programs designed to support small businesses.
Make your first stop the Small Business
Administration; then investigate various other
programs. Women, minorities and veterans should
check out niche financing possibilities designed
to help them get into business. The business
section of your local library is a good place to
begin your research.
Depending on how much money you have to
invest in a food-service business and the
particular type of business you choose, you can
end up spending anywhere between $30,000 and
$1.5 million on a facility.
While not every
food-service operation needs to be in a retail
location, for those that depend on retail
traffic, here are some factors to consider when
deciding on a location:
Anticipated sales volume. How will
the location contribute to your sales volume?
Traffic. Consider foot and vehicle
traffic. How many pedestrians and cars go by
daily? How accessible is the location to
Area demographics. Do the people who
live and work in the vicinity fit the profile of
your target market?
The rent-paying capacity of your
business. If you've done a sales-and-profit
projection for your first year of operation,
you'll know approximately how much revenue you
can expect to generate, and you can use that
information to decide how much rent you can
afford to pay.
Restrictive ordinances. You may
encounter unusually restrictive ordinances that
make an otherwise strong site less than ideal,
such as limitations on the hours of the day that
trucks can legally load or unload.
Customer parking facilities. The site
should provide convenient, adequate parking as
well as easy access for customers.
Proximity to other businesses.
Neighboring businesses may influence your
store's volume, and their presence can work for
you or against you.
History of the site. Find out the
recent history of each site under consideration
before you make a final selection. Who were the
previous tenants, and why are they no longer
Future development. Check with the
local planning board to see if anything, such as
additional buildings or road construction, is in
Terms of the lease. Be sure you
understand all the details of the lease because
it's possible that an excellent site may have
unacceptable leasing terms.
If you're considering a location that's been
the site of another restaurant, study its
history so you know why the previous operation
failed--and be sure it's something you can
Layout and design are major factors in your
restaurant's success. You'll need to take into
account the size and layout of the dining room,
kitchen space, storage space and office.
Typically, restaurants allot 40 to 60 percent of
their space to the dining area, approximately 30
percent to the kitchen and prep area, and the
remainder to storage and office space.
Dining area. This is where you'll be
making the bulk of your money, so don't cut
corners when designing your dining room. Visit
restaurants in your area and analyze the décor.
Watch the diners; do they react positively to
the décor? Is it comfortable, or are people
shifting in their seats throughout their meals?
Note what works well and what doesn't.
Much of your dining room design will depend
on your concept. It will help you to know that
studies indicate that 40 to 50 percent of all
sit-down customers arrive in pairs; 30 percent
come alone or in parties of three; and 20
percent come in groups of four or more.
To accommodate the different groups of
customers, use tables for two that can be pushed
together in areas where there is ample floor
space. This gives you flexibility in
accommodating both small and large parties.
Place booths for four to six people along the
Production area. Too often, the
production area in a restaurant is inefficiently
designed--the result is a poorly organized
kitchen and less than top-notch service. Keep
your menu in mind as you determine each element
in the production area. You'll need to include
space for receiving, storage, food preparation,
cooking, baking, dishwashing, production aisles,
trash storage, employee facilities and an area
for a small office where you can perform daily
Arrange your food production area so that
everything is just a few steps away from the
cook. Your design should also allow for two or
more cooks to be able to work side by side
during your busiest hours.
As you put together a plan for your
food-service business, be aware of some of the
trends in terms of menu content and design:
These factors could--and, in fact,
should--influence the type of food-service
business you open.
Hire right. Take the time to
thoroughly screen applicants. Be sure they
understand what you expect of them. Do
background checks. If you can't do this
yourself, contract with a HR consultant to do it
for you on an as-needed basis.
Create detailed job descriptions.
Don't make your employees guess about their
Understand wage-and-hour and child labor
laws. Check with your own state's Department
of Labor to be sure you comply with regulations
on issues such as minimum wage (which can vary
depending on the age of the workers and whether
they're eligible for tips), and when teenagers
can work and what tasks they're allowed to do.
Report tips properly. The IRS is very
specific about how tips are to be reported; for
details, check with your accountant or contact
IRS (or see your local telephone directory
for the number).
Provide initial and ongoing training.
Even experienced workers need to know how things
are done in your restaurant. Well-trained
employees are happier, more confident and more
effective. Plus, ongoing training builds loyalty
and reduces turnover. The
National Restaurant Association can help you
develop appropriate employee training programs.
There are several categories of personnel in
the restaurant business: manager, cooks,
servers, busboys, dishwashers, hosts and
bartenders. When your restaurant is still new,
some employees' duties may cross over from one
category to another. For example, your manager
may double as the host, and servers may also bus
tables. Be sure to hire people who are willing
to be flexible in their duties. Your payroll
costs, including your own salary and that of
your managers, should be about 24 to 35 percent
of your total gross sales.
Manager. The most important employee
in most restaurants is the manager. Your best
candidate will have already managed a restaurant
or restaurants in your area and will be familiar
with local buying sources, suppliers and
methods. You'll also want a manager with
leadership skills and the ability to supervise
personnel while reflecting the style and
character of your restaurant.
To get the quality of manager you want,
you'll have to pay well. Depending on your
location, expect to pay a seasoned manager
$30,000 to $40,000 a year, plus a percentage of
sales. An entry-level manager will earn $22,000
to $26,000 but won't have the skills of a more
experienced candidate. If you can't offer a high
salary, work out a profit-sharing
arrangement—it's an excellent way to hire good
people and motivate them to build a successful
restaurant. Hire your manager at least a month
before you open so he or she can help you set up
Chefs and cooks. When you start out,
you'll probably need three cooks--two full time
and one part time. Restaurant workers typically
work shifts from 10 a.m. to 4 p.m. or 4 p.m. to
closing. But one lead cook may need to arrive
early in the morning to begin preparing soups,
bread and other items to be served that day. One
full-time cook should work days, and the other
evenings. The part-time cook will help during
peak hours, such as weekend rushes, and can work
as a line cook during slower periods, doing
simple preparation. Cooking schools can usually
provide you with leads to the best in the
business, but look around and place newspaper
ads before you hire. Customers will become
regulars only if they can expect the best every
time they dine at your restaurant. To provide
that, you'll need top-notch cooks and chefs.
Salaries for chefs and cooks vary according
to their experience and your menu. Chefs command
salaries significantly higher than cooks,
averaging $600 to $700 a week. You may also find
chefs who are willing to work under
profit-sharing plans. If you have a fairly
complex menu that requires a cook with lots of
experience, you may have to pay anywhere from
$400 to $500 a week. You can pay part-time cooks
on an hourly basis; check around for the going
rate in your area.
Servers. Your servers will have the
most interaction with customers, so they need to
make a favorable impression and work well under
pressure, meeting the demands of customers at
several tables while maintaining a pleasant
demeanor. There are two times of day for wait
staff: very slow and very busy. Schedule your
employees accordingly. The lunch rush, for
example, starts around 11:30 a.m. and continues
until 1:30 or 2 p.m. Restaurants are often slow
again until the dinner crowd arrives around 5:30
to 6 p.m.
Because servers in most establishments earn a
good portion of their income from tips, they're
usually paid minimum wage or just slightly more.
When your restaurant is new, you may want to
hire only experienced servers so you don't have
to provide extensive training. As you become
established, however, you should develop
training systems to help both new, inexperienced
employees and veteran servers understand your
philosophy and the image you want to project.
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