Investing in the hospitality industry can be a great way to boost your existing portfolio or kick-start a new career. Yet as with any investment, there’s some degree of risk involved in the ever-evolving restaurant business. Before jumping in, be sure you keep these factors in mind.
Know your market
New restaurants have an unnervingly high failure rate, but you can get around it by pinning down the target demographic. Who will be visiting the restaurant or franchise? What will they be expecting? Analyse neighbourhood demographics to understand who your customer is and what they need. Education, income, and age will all factor into this. A neighbourhood popular with young families will call for a very different type of eatery than a district popular with the lunchtime financial crowd.
Calculate wholesale costs
Create a budget – and then go through it again. To calculate the cost of food, you’ll want to think about wholesale costs, the portion sizes you’ll be serving, and the volume of waste produced. Kitchen equipment should also be factored into these costs. Look for products made from sustainable materials that will last a long time, like Euroceppi’s professional cutting boards or stainless steel fixtures.
Be aware of ongoing expenses
In addition to the initial outlay, it’s also important to realise that running a restaurant can be an uphill battle. You’ll need to stock your kitchen with equipment to get started, but you’ll also need to pay for food every day. Customers could cause damages, your usual food vendor could raise their prices, or storage areas may flood. Think about food costs, the condition of existing equipment, and the future repair expenses.
Find a winning concept
This ties into the first factor of knowing your demographic. A successful restaurant does more than just serve amazing food – its décor creates a distinct ambience where customers will want to return time and time again. The concept also involves the type of food that you serve. Generally speaking, you should whittle this down to a certain type of cuisine rather than trying to be all things to all people. Restaurants with overly long and complicated menus tend to not do very well, unless, you’re operating a classic diner concept.
These are just a few things to keep in mind as you’re getting started. By planning your concept, thinking about your audience, and looking ahead to future costs, you can invest more successfully.