I think it is important to recognize Restaurants themselves, whether they be a fast food, independent, mom and pop, big chain type or even 5 star, all bring in millions of people every day across our nation. Their business is simply to serve and sell us as many items from their food and drink menus in an atmosphere where we can relax and enjoy. It is true though that many of these restaurants have worked hard to develop their own signature recipes, techniques and themes to set themselves apart. They spend millions on advertising their uniqueness to keep bringing customers back for more. The restaurant business is a huge business and very competitive.
1. Never start without the big three. No restaurant succeeds without a great chef, a great location, and a great concept. They all work together. Your location should fit your concept. Your chef, or “talent,” must fit your concept, otherwise you’ll constantly deal with the most common word in the restaurant business: Drama.
Some entrepreneurs say, “Well, location doesn’t matter because I’m going to create a destination restaurant.” In my experience, people say that when they have a bad location. It’s hard to become a destination if you don’t start with a great location.
Accessibility is everything. The more accessible you can make your restaurant, both in terms of location and in a broader sense, the greater your chances of success. Look at the most successful restaurants: They’re the most accessible in terms of location, brand, and price point. Fast casual restaurants are booming because they’re incredibly accessible on all levels.
No single food-service operation has universal appeal. This is a fact that many newer entrepreneurs have trouble accepting, but the reality is that you will never capture 100 percent of the market. When you try to please everyone, you end up pleasing no one. So focus on the 5 or 10 percent of the market that you can get, and forget about the rest.
2. Always overestimate your capital needs. Plan on having 10 to 15 months of working capital from the start. You’ll be surprised by how quickly the expenditures add up and how much time it takes for a new place to grab hold and get legs/regular customers.
Many new restaurants see a major downswing in business after the opening’s initial excitement. That’s when capital is critical. When I started Uchi I brought clientele with me, but even so there was a gap after the first few months. We had to wait to see if the restaurant would really catch on.
A lot of restaurant owners start out with cash in reserve and start blowing it because they think the honeymoon phase will last forever. That’s why most restaurants go out of business. Never let initial success go to your head. Success is only determined years later.
3. Learn to love teaching. I often bring in people from different places, including interns from culinary schools. Raul Kui, a chef currently competing on Top Chef in Texas, and he is a great example. Raul came in eight years ago and asked to work for free. He’s worked through every station and now is the Executive Chef at Uchiko.
I don’t work in the kitchen much anymore but I do get to help teach people like Raul. That’s incredibly rewarding.
Doing something new is inspiring. Helping to shape the menu is inspiring. Everyone loves our new dishes–the front of the house, the wait staff… once people love to come to work, you’re money.
4. Never be cheap where guests are concerned. The most important money you will spend is money that adds value to the guest.
I definitely made mistakes early on, especially when I tried to go cheap on certain things like equipment, valets, and even desserts. That was short sighted, because everything that touches a guest is important.
Determine a percentage of your revenue to put into improvements that affect the guest and constantly enhance their experience. At Uchi we don’t spend money on advertising or marketing but we run a very high level of comps. We give away gift cards and send a lot of complimentary dishes to tables.
Guests love when a dish comes out and the server says, “The chef wanted you to try this,” because that creates a real connection and makes the experience personal.
Make sure you spend as much money as possible on the guest experience. Spend money on the people already in your restaurant, because that’s the best way to generate genuinely positive word of mouth.
5. Focus on organization and systems of operation. Failing to put systems in place is one of the biggest mistakes an independent restaurant owner makes. I have an amazing partner, Daryl Kunik, and that was more of his realm.
Many restaurant owners don’t want to come off as corporate; to them, the “C” in the word “corporate” is like the Scarlet Letter. To embrace systems would be like selling out and becoming a chain.
I feel the opposite. There’s a reason chain restaurants thrive: Every one of them started as an individual restaurant. Each had a great chef, a great concept, and a great location, and they developed systems that enabled them to build guest demand, hold on to key people, and make money. Otherwise it would have been impossible to open two locations, much less 200.
Organization doesn’t kill the flow of creativity. Putting outstanding systems in place gives you the freedom to be creative.
6. Be ready to evolve, especially if you’re a chef. Many businesses are started by a craftsperson with an idea for a product. Rarely does that idea become anything unless that person partners with someone with a complementary ability, like, “You carve wooden bananas and I can sell them for you.” That’s when an idea becomes a business. I have great ideas, but without someone like Daryl, Uchi would have never succeeded.
Now as a restaurateur my focus is almost solely on people and communication. It was hard for me to say, okay, while I’ll always be a chef, I’m not going to be in my kitchen all the time. I’m going to teach and delegate instead. Once I embraced that I was able to do so much more. That was my tipping point.
7. Spend money on Marketing. If you think that you can just open your doors and people will flood your doors, then you might want to think again. Internet Marketing is by far your best form of advertising these days….USE IT.
How big is the restaurant industry in the U.S.?
According to the National Restaurant Association, it is estimated the industry to reach $604 billion dollars in sales for 2011. That is $1.7 billion on a typical day. There are 960,000 locations nationwide that employee approximately 12.8 million people and get this, of the dollars spent on food in the U.S., 49% is shared with the restaurant industry. I don’t know about you, but that is some serious cabbage.