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10 Tips to Open a Restaurant

1- Do Your Homework: Conducting a Market research or study is not only for customer satisfaction surveys., or to identify problems. Before you start a restaurant (or any business Per Se) you need to conduct a full Market Study. By that, in technical terms, you need to conduct:

  • MACRO Environment Analysis: Look at the overall ecosystem of the geographic location where your business/restaurant will open, is it the right place and time for you to open this concept, is it the right environment? Is it the right society for it? Do you have the technological or Legal factors that could help you open and operate smoothly? More details about this will be shared in future articles.

  • Competitive Analysis: Get down & dirty and visit ALL your potential Competitors and see what they are doing, what they are offering, what marketing tactics are they using to attract their customers, and even sometimes sit there monitor how many people come in, what they order the most, how long they stay, the general vibe, and so. This could also be done by hiring Mystery Shoppers – where they do the regular visit and report back instead of how your restaurant is doing, also how your competitor is doing. Competitors can be divided to: Direct Competitors, Indirect Competitors, Replacement Competitors. More about Competitive Analysis will be discussed in future articles.

2- Choose a Niche Market: the biggest mistake any restaurant/business could do is assume they can target ‘everyone’ – here is a little secret, there is no product on earth that is suitable or attractive for everyone! Always find a niche. The smaller the niche, the more identified your product strategy could be. You will be able to understand your customer better, serve them better, market to them better, and after all, make profit from them better.

3- Develop a Unique Product: After Identifying the NICE Market, you should be able to find a SMALL gap and try to fill it by creating something unique, after looking at the Market overall environment and the Competition scene. NEVER ever follow the MASS and do what your competitor is doing UNLESS you know

you can do it better, have a privilege over them, or able to crack a more feasible business model serving the same product which makes you more attractive and profitable.

4- Put the RIGHT Pricing: after identifying your NICHE Market, learning how your competitors are playing this game, designing your product and understanding your cost, PUT THE RIGHT PRICING. But the right pricing is NOT always CHEAPER than others. Be Careful. Sometimes lower prices are as intimidating as higher prices. Why would anyone sell a steak for $30 while a competitor is selling it for $70 unless there were something wrong with the meat? Nonetheless, your pricing strategy identifies your positioning from start to end. Does Starbucks sell its coffee at Market Price or a premium? Again, knowing the nice, knowing their product is unique, building a strong brand through different tactics (marketing, design, brand recognition campaigns, understanding consumers, etc)

5- Location, Location, Location: your restaurant Location Makes it or Breaks it. Simply Put. If your product concept, target market, and pricing strategy do not fit the location in hand, DO NOT TAKE IT. No person has enough magical powers to attract customers to a location that does not fits their behavior or the concept of the place. If your concept is a fast-food, cost effective product, you need to be at a high foot-traffic no matter at what cost. A Small Starbucks branch in Hangzhou is located in a PREMIUM Spot – at an intersection of main streets, rolling towards the lake (West Lake is the most prominent spot in town if not in all China), is at a Metro Stop, Bus Stop, and is accessible by millions. During Chinese National Holiday (The Golden Week in October), that small store generated the HIGHEST REVENUE in ALL OF CHINA for that WEEK. The highest REVENUE. Even though there are other 10 Starbucks branches by the Lake. But this one is in the Middle of intersections, when people get on and off a Metro, on and off a Bus, on and off a taxi, or just walk towards the lake (on average there was 1 Million visitors to the lake PER DAY during that week)

6- Say “I’ll do Marketing later” and dig your own brand’s grave: Marketing should start BEFORE a brand launch. How?Building a strategy and plan is timely, and sometimes needs fine tuning as you grow your concept. And, if your marketing strategy is not aligned with your business concept and strategy from the beginning then you will have a lot of problems after starting. Marketing is not just promotion. It’s building the product hand in hand with the operations (after all Marketing people understand the customers more, have an eye for branding, know how to present things, and need to have a solid product to be able to promote) yet, they are not magicians! If product or concept are not well developed there is not marketing strategy or tactic that could make your brand a success. Marketing starts before your product starts. Imagine building and designing a car without building a Fuel Tank.

7- Hire the RIGHT Talents: in any business, the most valuable asset is the human asset. And in restaurant business (service industry), it is THE ONLY ASSET. You could have the greatest space, the most beautiful and clean kitchen, the highest quality ingredients, the most prominent location with the most expensive rent, but if you don’t have the right CHEF to run the show, the right manager to handle customers complaints and requests, and the best servers to assure a smooth operation, your restaurant will fall apart. This might sometimes mean investing into team hiring, training, retaining, but that will also guarantee your restaurant success. Imagine one night your restaurant is busy, Chef is miserable or frustrated, and one night he decides to drop everything and quit. How will you handle customer orders?

8- Prepare, Plan, Persevere: failing to plan is planning to fail. You need to be ready of SOPs (Stand Operating Procedures), Manuals, Proper Recipes, Costing Sheets, all paperwork you need internally to be able to identify workflow and process. Most Important is RECIPES. If you don’t have the accurate recipe, you will not know what suppliers you need to make deals with, you will not be able to bargain with them, you will not be able to deliver consistency to your customers. And STICK to those recipes.

9- Launch, and Launch BIG: the most important aspect of any business, is the KICKOFF. If you don’t start right and big, you will not launch. Just like Launching a Rocket. Make NOISE, SMOKE, BURN FIRE, DO IT BIG. Following your marketing strategy and positioning of course. Stick to your identity but not the plan. Always be flexible to adjust as you see the market dynamics, but do not deviate from the strategy and identity.

10- Marketing, Ongoing – or you will go into a Coma and Die off eventually: Marketing is like Putting fuel into a car. You cannot fuel up a car once and expect it to run forever, nor can you not fuel a car and expect it to run. If you have the nicest Ferrari but do not plan to fill it up with the right fuel, at the right times, and the right quantities and quality, your car will be a piece of worthless junk. Same applies to any brand.


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