Startup restaurant business plan

					Startup restaurant business plan




There are dozens of statistics from various sources about the failure rate of restaurants.
The only thing they agree on is that the vast majority never survive. Some say the failure
rate is as high as ninety percent and some as low as seventy percent. Either number is
staggering for the entrepreneur who is trying to get their dreams off the ground floor.

There seems to be three key elements to increasing your chances of survival.

   1. Creating a business plan that provides a cash flow analysis and projects your
      needs.
   2. Creating a marketing plan as part of your business plan that addresses more than
      just advertising.
   3. Matching your location with food and demographic target.

A study of failed restaurants will find that all closed because one of these steps wasn't
done or even considered as part of the planning process. Many had the idea that if they
just produce good food, the masses will come. The facts show very few restaurant
failures are due to bad food.

Your business plan is where everything starts. This should be a working document that
changes as your ideas, relevant facts and conditions change as you go along. If you know
someday you are going to take the plunge into the restaurant business, start your plan
now. Pay particular attention to capital requirements. A great number of good restaurants
fail because they just ran out of cash. Get an accountant or do diligent research to learn
how to make projections of cash needs.

As part of your business plan, a marketing plan should be included. One common mistake
is the thought that marketing is synonymous with advertising. Advertising is just a small
part of marketing. If you think you can compete in the restaurant business with a few
newspaper ads, you will lose that battle to the chains who have vast regional advertising
budgets that probably exceeds your entire start up costs. Understanding the complete
definition of marketing is essential to making inroads into the consumer's restaurant
choices.

Your location is even more critical today than it was when the old trite phrase location,
location, location was coined many years ago. Gas prices and time is at the forefront of
the consumer's mind when making any choices for restaurants and many other services.
You not only have to be convenient to your guests, but you have to match your food
concept to the demographic. Putting a down home barbecue joint in a young trendy urban
location where the emphasis is on health foods and exercise is probably a kiss of death.
Increase your odds and find a better location.
Are there exceptions to these three critical steps? Certainly. There are also exceptions to
the loss ratio for Las Vegas visitors who, on average, lose 97% of the time!

There are restaurants who stumble onto the scene and become successful without doing
all of the steps above. However, of the almost 25,000 restaurants that start in the next five
years, you could probably put all the exceptions into one small strip center. Don't gamble
on your future; just plan your future properly.


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