Professional guidance for any start-up restaurateur to make his business a success is equally important as it is for the staff he is going to keep. Factors such as perfect business sense, availability of necessary finances, and location-based concepts should be given priority over self-indulgent ideas.
I am often asked why the attrition rate in the hospitality industry is high and why stand-alones launch with promise but close with a whimper. The answer mostly lies in the restaurateur and his first-time mistakes that lead to the downfall. While some mistakes arise out of a prejudice, others are genuine and come from a pure lack of experience and exposure. Although lessons are well learnt, sometimes too much money or time has been lost for the restaurateur to pick up the pieces and start again.
Here are some strategies that start-up restaurateurs can adopt in order to assure a bright future for their business!
One of the few mistakes start-ups make is that rather than carrying out a concept study or having a financial plan in place, they go by their personal likes and preferences. They actually should not shoot blind! Just the other day we had a young man who personally hates kathi rolls and was commenting that one such place in Bangalore has multiple units and has received a sizeable equity funding. So while the business model seems spot on, he wonders why people dig the product. We also get youngsters who have lived the high life and now want to set up a night-spot to continue with the good times. With first-time restaurateurs, it’s they themselves who drive their passion, not the fact that the product is being made for a certain clientele. While it remains crucial that the owner/entrepreneur is connected with his place and understands the dynamics, that cannot be the driving point.
A restaurant is not one’s extended living room, so we should keep the two apart. Just because you have a degree from a European university doesn’t make you an expert on the cuisine of the country you were based in, or its commercial applicability for a restaurant in Delhi or Mumbai. And just because you loved a restaurant concept in the US, it may not work in India. I often hear the anecdote that while studying for their MBA degree in the US, most Indian restaurateurs chanced upon a chipotle store, which offered beans closest to our precious rajma, thereby inspiring them to open the same once they are back home. Except that mummy makes the same at home everyday, killing the unique factor that was enjoyed when thousands of miles away.
At the other end of the spectrum are people who open generic places based on the presumption that top-quality service and food will make them stand apart. In short, people open a place without a USP – good food and service is not a USP but a presumption when a customer walks in and he requires that extra edge in ambience, experience or cuisine to give him an enjoyable outing, to ensure his repeated visits.
Driven by self-indulgence, the pitfalls are many. Failing to financially plan is amongst the first few to be undercapitalised. Underestimating start-up costs will clearly lead to an early demise. It’s as straightforward as that! It is necessary to have a budget and a working business plan with some strong cash reserves to see you through the initial gestation period of the restaurant. You’re not going to have guests queuing up outside the restaurant from day one, excited about you and the uniqueness you have on offer. So there must be financial backing to take you through that initial phase too.
Choose the Right Location
Don’t follow the crowd when it comes to choosing a location, instead pick something that complements the concept as well the corresponding business plan. Following a mob mentality in picking real estate will only spell doom – and doomsday is for those where either the location is not well suited to the concept or it is at too high a price making operational viability impossible.
Invest in Correct Areas
Investment in the wrong areas not only gets incorrect results but also lends doom in multiple possible ways. In fact, a very unrealistic approach towards investment – high emphasis on expenditure for interiors, and not enough allocated for infrastructure and back-end operations – leads to the downfall of start-ups even before they start running. Usually people, especially in pretentious belts of the country, get in with the wrong notion that because the ‘look’ matters, it needs more money and time vis-à-vis core structural and back-end requirements.
While there’s no denying that it is the décor and F&B that will floor, the quality of infrastructure holds the place together and at the start, it requires more time, attention and definitely more investment. People also have fixed notions of how they’d like their dream place to look like; however, essentials such as air-conditioning planning and service facilities need to be integrated into this dream picture and professional assistance are most required at this stage to ensure smooth running of services.
Another similar error is too little emphasis on training and quality manpower recruitment. A common refrain start-ups make is that “I will hire more people when business starts picking up.” When business arrives, the time lag between imparting training and delivering quality service is minimal, therefore compromising overall quality.
Your family members are not gourmands or chefs who will be cooking up the storm in the kitchen. “My wife/mother/sister is a fabulous cook and does phenomenal desserts/continental/Marwari cuisine; hence, I should open a restaurant based on the same cuisine concept” is heard ever so often when a new client walks into our office, and we cruelly put aside this notion for a more professional take on restauranting. Remember that while ‘she’ may be brilliant as a home baker, converting the same recipe to a commercially viable product consistently reproduced for customers in demanding quantities may not be her calling. You require professionals – chefs and managers – to run operations and no home grown cook, quite literally, can replace that professional input required.
Don’t Appease People
The other act of appeasement is to have an extensive menu that pleases all kinds of audiences and palates. It implies that you end up with a large inventory, which increases costs, you don’t have a specialisation that adds to the recall factor and in essence, you lack focus and please none. Let’s not appease people – either the ones at home or those potential guests. Instead, work in sync with a strategy and business plan, and allow logic, not emotion, to swing you in the right direction.
Marketing is Critical
Once you are up and about and have managed to weave through start-up mistakes or simply avoid them, that’s only half the task done. The remainder incorporates marketing and managing the restaurant. Brandon O’Dell, a hospitality consultant in America, has a catchphrase – no matter how great your food is, if no one knows, it won’t sell. ‘Word of mouth’ is an interest component of a marketing strategy, but you cannot depend on it for its entirety. Therefore, hard sales, marketing and public relations are the cornerstones to apt visibility. Each one complements the other and remains ineffective if any in the triangle goes missing.
Other Technical Points
There are few smaller but essential technical points that are also required to be looked into to stop yourself from becoming an erroneous start-up restaurateur. Don’t negotiate your purchase contracts with your suppliers – be it grocery, alcohol or even the credit card company. Any and all vendors must be negotiated with on a continuing basis since the market comprises of supply, demand and cost variations. While it’s great to interact with the customer and be seen and involved on the shop floor, equally critical is managing the cash flow, keeping a close eye on the PNL and making strategic marketing and management decisions for smooth running of the business. It’s important to let the operating professionals operate the floor, while the owners operate the business.
With start-ups, the nervous moments are greater and out of sheer ignorance, the possibility to make glaring errors too. Most errors are prejudice driven, so it’s best to be informed and get the requisite knowledge. Happy restauranting!