The Food & Beverage Business
Helping Entrepreneurs Succeed....
“It is not because things are difficult that we do not dare, it is because we do not dare that things are difficult.” – Seneca
Starting up a restaurant takes tremendous effort, patience, and strength – both physical and mental. It requires detailed planning and a focused effort, while constantly networking with the agencies involved. This chapter introduces the most important of these requirements, which will be dealt with at length later.
Details of various work objectives and areas need to be outlined by the promoters at the very onset: the type of organisation, its principal objectives, the concept, market analysis & penetration, capital outlay, financial projections and the tentative operational structure. Remember that time and money are both prime considerations. Once you put up the money, the sooner you get the restaurant started, the better. However, starting without being ready is a sure formula for failure. You need to push for completion without ignoring the smallest detail. For this reason, it really helps to know exactly what you want, and how to go about it. Of course, market changes will still require constant improvisation of the original plan, and this flexibility must be a part of your planning.
There are going to be implications on personal areas of life including work hours, health, family as well as financial and psychological considerations. Sleepless nights, obnoxious customers, legal hassles and financial problems are teething troubles everyone goes through, and some of these are a recurring feature. You will need to factor all these into your planning.
Broadly, the areas you need to look into include:
You need to consider your ability to raise the required capital either yourself, through loans or other investors. The outlay may be in terms of down payment, instalments, reserves or working capital. Be sure not to start on a project where the expenses might turn to be beyond your capacity. Many ventures begun without an adequate detailing of the financial schedule end up being aborted or sold out for equity.
It is crucial for an entrepreneur to first define the kind of resources required to deliver the brand promise to the customer in terms of men, materials, machines, money and most importantly, the time frame within which such resources could be deployed. Which of these activities you would handle yourself and which ones you could delegate or outsource, and to what extent must be clearly outlined.
A new location involves considerations such as venue, visibility and accessibility, the presence of competitors, the size of premises required, licensing hurdles, parking availability and neighbourhood relationships.
It may be wiser to take up an existing restaurant which has the required licenses and permissions. Some neighbourhoods may be opposed to the idea of a restaurant in their locality on account of the probable public nuisance. The disadvantage of such a place is the difficulty of changing the public perception attached to the earlier operation.
This has to be detailed so as to accurately position and price the product, which is critical to the success of the restaurant. Publicity and promotional plans, advertising etc. also need to be defined.
The ambience of the place basically determines the kind of clientele the restaurant will attract. It is therefore advisable to invest in a good architect cum designer who can create a space with a theme.
A large number of licenses need to be procured including: food vending license, health department clearance, building permissions, fire brigade clearance, company registration, trade mark (logo) application, ESIS, insurance, structural slab certificate, police clearance, garbage clearance, music playing license, excise licenses etc.
For telephone lines, consider exercising the user friendly option of easy-to-remember numbers and consecutive numbers in the event of multiple telephone lines. Depending on the nature of restaurant you have in mind, a web presence may also be a viable or even necessary way to reach out to your target consumers.
A stand-alone restaurant does not enjoy the same infrastructural facilities that an in-house restaurant has available. You need to accommodate the maximum number of covers in your dining area (without overcrowding your guests). However the importance of the “back of the house” facilities should be kept in mind. The kitchen (pre-preparation and preparation), storage area (cold, dry & liquor stores), staff facilities (dining area, lockers, toilets), pot-wash and office space are after all the backbone of the operation.
Space apportioning in a restaurant has numerous rules of thumb that are debatable and would be relevant based on:
For example, for dine-in regional-cuisine restaurants, some rules of thumb are as follows:
Obviously exceptions to the rule would be based on space constraints and the need for maximum utilization of high street space for revenue generation. Hiring nearby premises at a lower rate for auxiliary facilities that are not necessarily required on-site (such as an office) will address this issue.
It is often necessary to identify and retain the services of professional agencies including: accountant, architect cum interior designer, civil engineer, kitchen layout consultant, licensing agents, attorney, recruitment consultant, security services, PR & event management firm etc.
Water, electricity, gas, exhaust, air-conditioning and computer systems are critical to the operation, and a balance between quality and expense needs to be maintained.
Identify a nearby bank with suitable facilities. Your principal investment and cash / credit-card receipts should pass through your main capital account. The manager may be provided with a weekly or bi-weekly “float” for minor daily expenses. A petty cash account can be set up for these transactions. Signatories for bank accounts should be decided based on reliability and availability.
The selection of equipment may be based on specific requirements, initial cost, supplier reliability, space constraints, after sales service, equipment alterability etc. Cost effectiveness by way of lifespan / depreciation, as well as fuel consumption – e.g. gas v/s. electricity also have to be considered.
Most of the above systems are best controlled through an effective and comprehensive software program rather than loads of paperwork. A manual backup must also be provided.
Becoming a member of an association can have its advantages. At this point they can provide support in areas such as liaising with government and other bodies, updates on new policies, recruitment, hotel & restaurant listings, and numerous other areas of market information. Areas that are currently being worked on are the development of various databanks including collections of market research, industry specific seminars etc.
Managing restaurant operations is mainly common sense. It is best to stick to the basics. Setting standard operating procedures while allowing a good degree of flexibility will go a long way in helping you achieve your goals.