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Successful Startup 101

How To Decide What Kind of Restaurant To Open

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We’ve all heard the statistics about how high a percentage of new restaurants fail. A critical decision before opening a restaurant business is to choose a restaurant concept. A close study of your intended market, existing competition, and the profitability of different types of restaurants all go into the mix. Here are tips on how to decide what kind of restaurant to open.

Budget

Fine dining restaurants and steakhouses cost more to set up than food trucks and taquerias. Think about how much capital it will take to outfit your restaurant, with a fund leftover to get you through the first several months as you build your business and loyal clientele.

Competition

Any good business plan examines the market for the concept, and assesses the risks from existing competition. A high-traffic, urban area may be able to absorb a few coffee shops and cafés in a block, but adding another diner in a small town that already has two or three may is an idea that may not fly. Deciding what kind of restaurant to open must consider how the concept will set itself apart from other existing food service businesses.

Customers

Who do you expect to serve in your restaurant? A fastcasual lunch joint may attract busy professionals with little time to linger, while a café offering free Wi-Fi will see customers parked with their laptops for hours. The demographics of your potential patrons help refine your concept: families with small children need a different menu and experience than professionals taking clients out to dinner.

Your location also defines your potential customer base. It takes time to build a brand that becomes a “destination” restaurant that tourists put on their “must-go” lists in certain cities. A suburban area where most restaurants are in or near malls attracts a more diverse crowd, and an urban location may cater to young professionals.

Cuisine

Specificity and simplicity are key to getting the message of the cuisine you have selected across to potential customers. Can you describe your cuisine in a sentence? Moreover, do you like the kind of food you hope to offer? Creating your menu is a labor of love, but it’s also an important marketing decision. Your restaurant can fill a unique niche in your market, but it will only succeed if customers can quickly understand your food and recognize what sets it apart from other local options.

Profitability

Some restaurant concepts are simply more profitable than others. According to Small Business Trends, the most profitable restaurants include food trucks, diners, pizzerias, and pasta places, among others. Of course, start up and operational costs directly affect profitability, so do the math about how much you think you can reasonably bring in against the cost of operation.

A ghost kitchen/delivery only concept doesn’t require you to invest in wait staff and table space, whereas a full service restaurant includes both, plus all the human resource functions of managing front of house (FOH) and back of house (BOH) staff.

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