• How-to

Restaurant owners rate fairly high on the popularity charts of social networks and partygoers. Most people who enjoy good food have, at some point, thought of starting a restaurant of their own. And those who do undoubtedly have much passion for such a venture. Passion alone, however, does not guarantee a successful business model. The new ‘restaurateur’ would need to look beyond that at a few more key factors.

CONCEPTUALIZE: Identify a concept or market segment for the restaurant. Classify yourself either by cuisine, design theme or price point. It would be wise to have at least two options in mind. These will be necessary in ascertaining the correct location for your venture.

WORK ON A BUSINESS PLAN: Prepare a business plan with realistic revenue projections and expenses, keeping the concept or market segment in mind. Factor in ahead for exigencies and delays. It would be prudent to use the assistance of a financial consultant, in case you wish to solicit funding from a bank or other financial institution. In case of loans or borrowed funds, understand the impact of the interest cost on profitability.

FUND IT RIGHT: Prepare a tentative budget for capital expenses. Use the business plan to ascertain the correct investment levels. Plan the source and availability of funds, especially if they aren’t from your direct kitty. Do account for a working capital to cover the first quarter’s operational expenses, as that is the typical gestation period that a restaurant requires.
Remember, delays or blockages in fund flow lead to increased costs.

LOCATION! LOCATION! LOCATION!: The three most important factors for the success of a restaurant project are:
• The location should be capable of being a destination
in itself.
• The space must be of the correct size for the concept envisaged, and with no legal encumbrances.
• It must be at the right price to ensure sustainability.

In case of rented premises, ensure a minimum five-year lease period with extension options. That way, you have sufficient time to recover your investment cost and earn profits.

HIRE A HOSPITALITY CONSULTANCY AGENCY: You could involve these consultants right from the conceptualizing stage to ensure expert opinion from the get go; or bring them in prior to finalizing a location. Consultants could help you fine tune your concept and business plan and ensure it translates from concept through to commissioning—including interior design, facility planning, recruitment, menu planning and training. With their help, you can develop a well-designed, value-for-money project that is completed within a reasonable timeline.

DISCOVER OTHER RESTAURANTS: Now that you have taken the plunge, indulge in some foodie R&D. Start by checking out all the new restaurants and popular, classic joints, too. This way, you would get to experience what keeps bringing the customers in as well as stay updated about the latest happenings in the market.

Restaurants are successful for a variety of reasons; try to analyze why certain restaurants are doing better than others. History holds that this sector is largely ‘recession-proof’. With real estate available at reasonable costs as well, this seems to be a good time.

SONIA MOHINDRA is the Director of Under One Roof Hotel Consultants,
a Delhi-based hospitality consultancy agency.

©Entrepreneur September 2009

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food, restaurant, restaurateur, smetv, Sonia Mohindra, start