Tips for budding restaurant entrepreneurs

by John Jones | May 26, 2022

Entrepreneurs would be forgiven for hesitating before opening a new restaurant in the UK, given the unpredictability wrought by the world events of the last couple of years. The Covid pandemic hit the sector hard, causing a range of effects which shifted the dynamic in the sector, from the closure of large chains to changes in service models and squeeze on labour. So is opening a restaurant in 2022 a bad idea? Not at all. Despite the challenges we've seen, restaurants are bouncing back with a slew of new openings which are giving the F&B space a real boost. 

In this week's blog, we are sharing some thoughts from those innovative restaurateurs who have taken the plunge and started something new. 

Choose your niche carefully

The success of other businesses in a particular niche is often seen as the green light for start-ups to adopt the same tactics and take a slice of the action. It is actually pretty sound reasoning, as long as the market is not too crowded. Simply doing the same thing in an already crowded market place - where there are only so many customers to go around – will just dilute the trade-base, unless the new business's offer is very distinctive or it is willing to use extremely aggressive tactics to win customers from established competitors.

It is quite a simple equation, really: when thinking of starting, say, a French restaurant in a street full of French restaurants, the entrepreneur needs to ask themselves “why would customers come to us?”.

The answer to that would be in making points of difference – that is, a tangible uniqueness that makes the new opening stand out above the others. This can be achieved by focussing on any number of areas, from the internal ambience, to the menus, ingredients or pricing to name just a few. 

If a market really is saturated, then there comes a point where it is far more sensible to do something completely different rather than do the same as everyone else and prey for a miracle. So, in a street already full of French restaurants, perhaps it is time for a different theme?

Get your paperwork sorted

Restaurant entrepreneurs are an innovative lot, but it is vitally important that such enthusiasm doesn't mean forgetting to obtain the correct paperwork and licences. The best concepts in the world cannot come to fruition without them, so the task of investigating what's required, filling in the paperwork, sending it off and getting approval is very much a stand-alone project and should never be an after-thought.

Requirements will vary between jurisdictions, but generally are there to safeguard the public. In the UK, budding restaurateurs will need to attend to:

  • registering the business for food operations;
  • gaining permission from the local authority for the premises to be used for food, if it will be handling meat, fish, egg and/or dairy products;
  • a premises licence to permit the serving of alcohol;
  • a personal licence for the sale of alcohol
  • public entertainment/music and TV licences;
  • a pavement licence, if you'll have tables outside;
  • insurance, including public liability and employee liability.

Don't forget that although food hygiene/safety certificates are not a legal requirement, a restaurant – sooner or later – will be inspected by the authorities and a food hygiene safety certificate issued. It is a legal requirement that restaurants are able to prove their staff have been properly trained in all food safety issues, so attending to this early will pay dividends when the inspectors call. With all ducks in a row, you'll be on target for a five star rating.

Money, money, money

Some start-up entrepreneurs will be in the fortunate position of having enough cash on hand to begin and sustain their business, but this isn't a universally common situation. To get a business from the conceptual stage to reality, it is going to need funds. Here are some possible routes:

  • Business bank loans
  • Crowd funding
  • Funding from family members
  • Public start-up funds and grants
  • High net worth individuals
  • Private investment groups

As you would expect, all of these routes will require the production of a robust business plan which explains why the business idea is a good one, how it will operate, its profit and sales forecasts and – crucially – why the investor should gibe their money to the venture and what they will get out of it, and when. 

Forgive us for stating the obvious, but the numbers in the business plan need to be sound and able to withstand scrutiny; likewise, whoever presents them should know these numbers inside out. Those seeking funding will frequently be required to make a “pitch”, so this should be well rehearsed and polished, together with a nicely presented pitch document and/or slide deck. 

Concept and branding

A sound concept is essential if the business is to succeed. It need not be complicated, but nonetheless having a clear and stated concept is a firm foundation to success. The concept is more about what the new business is all about fundamentally, and how it is unique or different, so one example might be a fast food outlet focussing on oriental dishes at a great price. That's a concept. Easy, right?

Yes, but a concept needs to be turned into a recognisable brand. This is where things can get a little murky and it is easy for restaurants to be baffled by what branding actually means. What it doesn't mean is logos – but we will come onto that shortly.

Put simply, your brand is the embodiment of everything you stand for, from your beliefs to your claims and what you want to be known for being, in the customers' minds eyes. It is what defines your business. Perhaps an example we can use is Favouritetable: we're the best value, full-function restaurant management system on the market. That's our brand. 

Once the brand is agreed, only then should restaurateurs turn to creating their brand identity, which is how the brand is translated into visuals. Now we're onto logos, colours, graphics, typefaces and everything in-between. If done right, the brand identity will act as a trigger for the business's brand itself to be brought to the fore. 

There are a number of companies which do this well: a yellow “golden arches” logo immediately tells the individual about the brand they are experiencing. In this case we're thinking of particularly well-know American-style fast-food business, whose brand identity immediately tells the customer which brand they are viewing, with zero ambiguity.

Get the technology balance right

Anyone opening a new food outlet is going to need to consider technology. It comes in so many shapes and sizes, but in this context we're referring to the booking and management systems. There's nothing wrong in using traditional pen and paper, but - really – there's no excuse for not having the right tech in a new business. 

Firstly, there is the obvious benefit of starting with a blank sheet of paper (excuse the pun), with no requirement to adopt an existing system. The technology landscape is the entrepreneur's oyster here. The second reason is that, quite simply, modern diners expect you to have a certain amount of tech and if you don't, you may not get their custom (and they will go to a competitor which offers the technology comforts they seek). 

There is also a very good third reason for putting in technology, and that's its likelihood to be cost-positive. That is, the right software will either save you money in the long run, or make you extra money which you wouldn't get without it.

Restaurant technology has come a very long way in recent years, as its creators have now had decades to refine their products such that they are indispensable. But although software may not been seen as quite the miracle it once was, it isn't a commodity quite yet, either. There are differences between the various products, what they are designed to do and how they deliver results to businesses.

What should start-up restaurant owners look for when evaluating technology? Take a look at at this previous blog for our thoughts.

Wrapping up

Where there is challenge, there will always be opportunity. We've seen this in the restaurant sector recently, with innovative entrepreneurs spotting gaps in the market to bring fresh concepts and brands to hungry and thirsty consumers. 

The UK restaurant sector is on the up, thanks in part to start-ups being created by imaginative people who have seen a great future ahead, and put their sound ideas into practice once they've done the groundwork described here.

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