So You Want To Be A Restaurateur? – Part 1

Small Business

Jan 16,2017

Restaurants have been around for decades upon decades. Despite this, many restaurants struggle to stay alive because they do not understand the best practices of the industry. I, myself, am an aspiring restaurateur, so to prepare for this dream of mine, I have created a list of what I think are best practices for running a successful restaurant. In this series of articles, I will be sharing and expanding on this list, so stayed tuned!

Part 1: Market Research

No matter what business you are starting, market research needs to be the first thing you do. Why? It doesn’t matter how good your food is – if you open up shop in an area with no customers for your restaurant, then all is for naught. Here are some key things to look for when deciding on what kind of restaurant you want to open and where you want to open it.

1. Market saturation. How many restaurants are in the area? How many of each kind of restaurants are in the area? If an area is already flooded with food establishments, you will have a lower chance of bringing in new customers. You want your business to be unique to the area it’s in. You wouldn’t want to open a gyro shop in the same shopping center as another, pre-established greek restaurant.

2. Potential customer populace. Being unique to an area is great for your business, but be cautious: this could be because the populace is not prone to dining out. In surveying your market, you should be looking for a customer populace that often goes out for their food. Your product should also be fresh to a market (either not previously available to said market, or a better take on an existing product). In introducing a new product make sure you can target a populace that enjoys new things: college students, young adults and younger families are examples that will likely enjoy trying out new restaurants to their area. Areas with an older, more conservative crowd may be set in what they like and are less willing to take a chance on a new type of food.

Here is an example of establishments that did good and bad market research in almost the same area. When I was in college, there were 4 pizza joints on the same block (we’ll refer to them as pizza shops A thru D). They all sold the same thing: pizza, wings and hoagies; all with similar quality. To make things worse, as I was graduating, another pizza place was opening not even a block away (pizza shop E). So 5 restaurants, serving the same product with little difference in the quality, within a one block radius of each other. This market is obviously overly saturated. The only hope for these businesses to succeed is to somehow steal the customers of the other pizza shops.

Now, on the other side of campus, only 6 blocks away from the group of pizza shops A thru E, another pizza shop opened up (pizza shop F) and is very successful to this day. Why? This establishment saw that there was a customer populace: college students that enjoy good, cheap food. They also knew that college students would rather convenience over quality, for the most part. So a pizza/wings/hoagie from shop F that was one block from your apartment, or an additional 6 blocks away to get similar quality food from shops A – E? For you average college student, the answer is easy.

Stay tuned for next week’s article as I elaborate on my second piece of advice for being a restaurateur: passion for the industry.

Disclaimer: I am not a professional business man in the restaurant market or the like, I am simply a man with experience in working with restaurants as well as a passion for food and this industry. Formal education isn’t everything, though. My background in the restaurant market comes from first hand experience, intense observation and self education.

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