Running a restaurant – top three operational tips
CBG Law specialise in providing practical legal advice to restaurateurs and hospitality operators looking to grow their businesses. We pride ourselves on building long term relationships with our clients, and ensure that the lease of your premises supports your growth. However, getting the keys is just one step on the long road to establishing a successful restaurant.
We asked restaurant consultant Rob Wade for his top three operational tips that budding restaurateurs need to consider when setting up:
“There are a multitude of challenges facing a new restaurateur, which is why it’s always wise to seek independent advice as early as possible. Here are three fundamentals that are critically important to get right from the outset.
1. Develop your concept.
In the early stages, it’s vital to allow sufficient time (and money) to develop your concept fully.
Decisions made at this early stage have a huge impact on everything from your CAPEX requirements to operational decisions, and fundamentally – whether anyone will actually want to visit your restaurant. So nothing should be left to chance.
Menu engineering is a skilled and time-consuming process. The creativity to design appealing dishes is just the starting point. The menu also needs to fit trends (or create one) for the current market, be affordable for your target customers and profitable for you.
This is before you have considered the various physical limitations of your premises, and the size and skill level of the staff you’ll be able to afford.
Many operators expect these operational considerations to come further down the line, but they are in fact critical to your initial concept.
Getting the foundations right from the start will determine whether you succeed or fail in the long term.
2. Minimize your startup costs
“It’s now or never”, said the building contractor to the restaurateur.
It’s sensible to want everything to be perfect from the start, but it’s also extremely expensive. Naturally the various interested parties will tell you that it will be cheaper in the long run to just go for the hygienic plastic cladding on the kitchen walls, or that you’d be mad not to buy x-brand of wine glass, or choose the oak parquet flooring.
Before making a big financial decision I ask all my clients to consider: what is my projected net profit per customer? Therefore, how many customers will we need to serve to pay for this luxury?
The relative merits of a self-cleaning computer-controlled oven can look very different once you realise you need to serve 3,500 customers to pay it off.
From the team who’ll be working in the kitchen and dining room, to contractors and equipment suppliers, they all have a vested interest in directing you towards the most expensive products.
If you’re not entirely confident in making the most appropriate choices for your operation, it’s important to seek independent advice.
3. Know what you owe
I personally know of two restaurants operating in London that completely omitted VAT from their financial projections. One actually opened before realising their mistake and had to face the fact that they would be losing one sixth of their revenue, but their costs would remain the same.
For overseas operators and first time entrepreneurs, it’s all too easy to be caught out like this. You simply don’t know what you don’t know, and it doesn’t stop at VAT.
Business rates for certain locations are now so far outside the realms of common sense that most of us would agree with the assessment of one prospective restaurateur from Eastern Europe when he simply said, “this cannot be so”.
But alas it can.
From employers’ NI, to credit card charges, to cover for staff holidays, there is an exhaustive list of significant expenses that may not occur to first time operators.
Taking professional advice at the appropriate time will be dramatically less expensive than making a significant error in your financial projections.”
If you are looking at starting up a restaurant or are an established operator looking for a strategic review of your business you can email Rob Wade at firstname.lastname@example.org. If you would like to discuss your property requirements then please call Alex Hutchings on 0207 462 6961 or email email@example.com to arrange an initial meeting.