The restaurant industry has a reputation for a high mortality rate. The statistic is misleading because the failure number is skewed by 1st time want-to-be restaurateurs newly starting a restaurant. The 1st time start-ups without a franchise or professional consultant behind them typically fail.
Let’s call them amateurs and professionals. The professionals have the hands-on experience to know exactly what to do and how to do it. The amateurs fail because they don’t know what they don’t know.
The professionals know that there is a proper sequence of events to follow when planning to open a restaurant. This initial sequence of events is represented by the “4 R’s.”
The “1st R” stands for the Right Concept. All planning begins and ends with the right concept. The restaurant design and ambiance are derived from the concept. The menu and price points are tied to the concept and the market the restaurant is targeting. Once the restaurant has developed a solid and cohesive concept the “2nd R” follows.
The “2nd R” stands for the Right Location. An “amateur” may not understand that the location must fit the concept. A concept that works in one set of demographics may not work in a different set of demographics. A concept that is designed for a white collar demographic will not work in a blue collar demographic. A concept that will rely upon lunch and dinner business must be in an area with a high density of office or retail for lunch and surrounded by a high density of residential for dinner.
The “3rd R” stands for the Right Lease. A restaurant’s bottom line will depend on three primary costs; product cost, labor cost and rent. Ideally, labor and product cost should combine for not more than 55 – 60%, and rent no more than 10% of gross sales. Therefore, your sales projections must be realistic when negotiating “the right lease.”
The “4th R” stands for the Right Systems. It can be said that “Management runs the systems and the systems run the restaurant.” The professional knows what operational and control systems are needed and how to implement them.
Read in greater detail about our process and services and how we help restaurateurs with all four.
W&W Restaurant Consulting Group