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Food Cost VS Prime Cost | A Must Know for Every Food Business Owner

Cost of operating any food business, weather it’s a franchise food business or running on the shoulders of a solo food entrepreneur, vary widely depending on where your business is established, how much you spend on raw materials, and whether you shop at a wholesale business or an independent retailer. Some items are cheaper in bulk, while others are pricier per unit. As a result, it all basically comes down to a few questions that cross every food business owner’s mind: What is Food Cost or What is Prime Cost of my food business?

With this article, we will clarify all of your concerns about Prime Cost and Food Cost in relation to any restaurant type or food business, such as a fine dining restaurant, a quick service restaurant (QSR), a bakery, a pizzeria or an ice cream parlour. Let’s first dive into prime cost.

What is Prime Cost?

You’ve probably heard the term prime cost. If you own, manage, or operate as a chef in a restaurant or other food-related business, prime cost is arguably the most critical component to keep track of, and you must understand what prime cost is.

Food and labour costs are directly intertwined to prime cost. This phrase is commonly used in almost every industry that is involved in the producing business. The formula for calculating prime cost is as follows:

(TOTAL COST OF GOODS SOLD + TOTAL LABOUR COST) / TOTAL SALES = PRIME COST

You’ll need to refer to your restaurant food costs, part of which is provided by your restaurant management system to obtain the total cost of goods sold, and you’ll need to refer to labour costs to get the total labour cost.

So, why is prime cost so important? Because it’s possible to have a high food cost and low cost of goods sold. On the other hand, a low cost of goods sold and a high labour cost are both feasible.

However, we definitely want it to be as low as possible. In principle, the more you manufacture in-house, the cheaper your cost of goods sold should be. However, because production requires labour, the higher the labour cost, the higher the cost of goods sold. If you buy any raw materials, such as bread or chips, that have already been produced, your costs of goods sold will be slightly higher since purchasing that stuff costs more, but your labour costs should be slightly lower.

The key is that your prime cost should be less than 60% of total sales. People talk about 60% as a magic figure all the time, but if things like insurance, operating costs, rent, and everything else have gone up, it shouldn’t impact the prime cost. To stay profitable, your prime cost must be less than 60%.

There are a few exceptions to this rule, one of which being operating a food business in an area where your food establishment is expected to stay open for extended hours due to the other services it supports. Those are the few situations where you may have a prime cost of above 60% and still operate a profitable business, but in most cases, if your prime cost is over 60%, you’re not as profitable, or not profitable at all. Your aim is to reduce your prime cost to 60% or less.

What is Food Cost?

In this part, we’ll learn how to calculate food cost and why they’re important in any food businesses.

With this article, you’ll not only discover why learning food cost is important, but you’ll also learn all of the food cost formulas and calculations that you require to run a profitable food business.

Essentially, the price of food decides your profitability. A right restaurant management software might surely help, but it is still difficult for you to manage and operate a highly profitable restaurant or any food business if you don’t know how much the items on your menu cost and what your food cost is at the end of each month. It’s critical to understand where you need to make modifications and changes in order to stay profitable.

It establishes a standard for food industry owners. Also, because a reduced food cost equates to better earnings, it’s something you should keep track of on a regular basis. It enables you to price your menu items correctly.

It’s surprising to learn that the majority of restaurant owners, managers, and chefs have no idea how much each item on their menu cost to prepare. You may use this information to optimize your menu, a process known as menu engineering.

It’s incredible how much earnings a food business can generate by doing nothing more than rearranging items around on a menu and perhaps adding a box on some menu items. However, you won’t be able to do so unless you know the precise pricing of each item on your food menu.

Furthermore, most individuals make the mistake of equating restaurant food cost to how much they spend on food over a period of time. This is yet another common myth or misunderstanding. People would simply state that my food expense is the amount of money I spent on food in the previous month. However, this is not the case.

If that’s how you figure out how much food costs, you’ll get a lot of false numbers. Then, what food cost really is? In your food business, such as a Fine Dining Restaurant, Quick Service Restaurant (QSR), Ice Cream Shop, Pizzeria, Bakery, and others, there are only two sorts of food costs.

Plate cost

Plate cost is simple to understand, and everyone in your food establishment should be aware of how much each plate or other item costs. The plate cost is calculated by dividing the cost of preparing a plate by the cost of selling it. The following formula may be used to figure it out:

TOTAL COST / SALES PRICE = TOTAL PLATE COST

Period cost

This expense is a little more complicated, but if you operate a food business, you must understand it. The following approach may be used to calculate it:

(BEGINNING INVENTORY + PURCHASES – ENDING INVENTORY) / TOTAL FOOD SALES = FOOD COST PERCENTAGE

With the help of this calculation, you can truly evaluate if there’s an issue or where we need to change prices with the use of this detailed data split down into specific categories. We can also determine whether a food business is profitable or needs improvement.

  • Now, there are two things you should keep in mind while utilizing the COGS formula.
  • 1. Make sure you’re comparing purchases and inventories from the right categories to sales from the right categories. If you are attempting to figure out how much liquor costs, for example, you need to make sure you’re utilizing liquor purchases, liquor inventories, and liquor sales rather than overall sales.
  • 2. Check that you’re comparing the right inventory and purchases to the right sales period.

Conclusion

Below are the list of all formulas that have been elaborated in the article:

TYPEFORMULA
PRIME COST FORMULA(TOTAL COST OF GOODS SOLD + TOTAL LABOUR COST) / TOTAL SALES = PRIME COST
FOOD PERIOD COST(BEGINNING INVENTORY + PURCHASES – ENDING INVENTORY) / TOTAL FOOD SALES = FOOD COST PERCENTAGE
PER PLATE FOOD COSTTOTAL COST / SALES PRICE = TOTAL PLATE COST

Calculating prime cost and food cost have their different aspects. Prime cost deals with labour cost on the other hand food cost doesn’t, because when you purchase already produced items directly, you eliminate the labour cost. Although, there are differences but they both are very important to understand for every food business owner. It will help you scale your food business along with aligning your food operations and conquering any issues that you might be facing related to your food business.

6 Challenges of Starting Fine Dining Restaurant in 2022

One of the most affected establishments during the COVID-19 pandemic is restaurants. Because of some business restrictions, they were forced to shift to off-premises channels and focus on food deliveries. Even certain services are made online, such as catering to customer orders and preferences and accepting payments at fine dine restaurants.

According to a report by the National Restaurant Association, it would be a year or more before restaurant business conditions return to normal. Moreover, 51% of customers admit they aren’t eating at restaurants as often as they like now compared to pre-pandemic. These uncommon circumstances require innovative technologies to fight covid-19. With these facts and statistics, the question lies: what are the challenges for restaurant owners?

How to start a restaurant business is a thought that comes to mind when you’re looking to start a fine dine restaurant and keep your business going this year, scan through these biggest challenges facing restaurant industry 2022. Before everything make sure you have the best restaurant management system to back you up.

1. Going Digital

With local business restrictions ongoing and more people turning digital for their needs, establishments must strive to increase their online presence. When starting a fine dining restaurant, make sure you have an active and accessible website displaying all your products and services. You should also be visible on top social media sites like Facebook and Instagram.

Some businesses do affiliate marketing where another person or affiliate will promote and sell your products for a wider reach. Influencer collaborations can be possible, but make sure you select the most suited creators. Lastly, restaurant owners should maintain good online reviews whether on third-party sites or on their website and social media pages.

Going digital doesn’t only mean your business is visible and accessible online after starting restaurant business. It should also have an effective digital marketing strategy to reach the right people and provide a seamless customer experience.

2. Keeping Up with Health and Sanitation Requirements

The COVID-19 pandemic has led people to be more aware of health and sanitation. With this, restaurant businesses are also expected to abide by government-imposed health and sanitation requirements and certain restrictions. 

For example, a restaurant can’t operate without proper ventilation and disinfectants. There should also be regular cleaning and inspection of kitchen areas, dining areas, and restrooms. Moreover, employees are required to maintain good personal hygiene, such as frequent hand-washing, changing uniforms after every shift, and wearing proper headgears and face masks. 

Moreover, you can opt for a restaurant management system, a franchise management solution or a simple point of sale software ( Restaurant POS SOFTWARE) like Billberry that provides you the feature of having a QR Code based menu to enable contactless food ordering system. Take the opportunity to entice your customers by providing them a safer dining experience.

3. Emphasizing on Takeout and Delivery

Familiar with Swiggy, Zomato Order, Uber Eats, and Foodpanda? These are all food delivery services that are continuing to rise in 2022. As mentioned above, customers nowadays prefer a contactless delivery than dine-in physically at restaurant establishments. Sure, the actual dining experience would be lovely, but COVID-19 has changed the scheme. 

Hence, it’s essential for restaurants to shift their services to takeout and delivery. Aside from being present on food delivery apps, you must also have an active hotline so customers can contact you anytime. You may also assign your staff to manage all social media and website inquiries and orders. The best franchise software could help aligning such operations.

With this, you’ll be more likely to engage with your customers on all platforms. Doing so will increase your sales and revenue and will impose a positive impression on your customers. 

4. Meeting New Customer Demands, Preferences, and Expectations

Consumers aren’t only expecting fine dining restaurant businesses to be available online, but they’re also seeking variety and new types of food choices. This customer behavior is mostly influenced by social media—what with all the innovative and exotic dishes introduced on Instagram, YouTube, or Pinterest. Using the best CRM tools can help you understand your customers better, which you can integrate to your restaurant management tools. 

Food bloggers have also influenced the tastes and preferences of customers. For example, most teenagers fancy South Korea’s samgyeopsal. Meanwhile, millennials look for different coffee or milk tea flavors. The older generations also prefer healthy dishes, such as foods with organic, vegan, or gluten-free options. 

If you want your restaurant business to stand out, you must explore new and creative dishes. Make them as exotic as you can while promoting health and wellness. Also make sure that your restaurant billing software allows you to add add-ons and variations according to customer preferences to your menu items. You may focus on a particular cuisine depending on your target market, or it can be a mixture of signature dishes across different continents to add more variety to your menu. 

5. Generating Enough Revenue

One of the top challenges in opening a restaurant is generating enough revenue. With this, restaurant owners should ensure that there’s accurate and profitable menu planning and pricing and that there should be balancing costs of providing delivery with profitability. Inventories should also be managed well to prevent spoilages and product depletions. 

Most importantly, restaurant businesses should stick with an efficient digital marketing strategy. Determine your target market well and promote your products and services on the right platforms. Adjusting to increasing food costs can also be helpful to manage your overall finances and make sure you get good sales and revenue. 

6. Recruiting, Training, and Retaining Employees

Restaurant businesses may be going digital, but employees are still valuable to the company’s overall success. Hence, you should provide proper training to your employees and help improve their customer service by investing in the best restaurant management software. Defining “best” isn’t what’s the most popular or most expensive, but what matches your needs best. With this, your restaurant operations will be automated and more convenient. 

Investing in your employees can be a risk, but when done right, you can recruit and retain the best ones. A well-trained team matched with the right tools and software can improve your restaurant workflow and will take your business to the next level. 

Facing the Challenges and Opportunities in the Restaurant Industry

There’s no one-size-fits-all solution to problems. However, by looking forward to 2022 and staying ahead of operational challenges, your fine dine restaurant business can still be successful and profitable by the end of the year and in the coming years. Just stay updated with the best tips and trends and pin your restaurant on the brand new map of business and economy.

Top 13 Restaurant Tips for The Year 2022

If you’ve been wanting to open a restaurant for a long time, it is time to sit down and make a strategy for the restaurant business. To assist you in creating a successful restaurant business model, we’ve compiled a list of 13 tips to ensure you have everything you need to launch your restaurant business. Before everything, we recommend you to get a restaurant management system for having a smooth start. Now, let’s move forward.
We have split the list into two categories.

1. Physical Aspects
2. Virtual Aspects

 

Physical Aspects

1. Pleasing Restaurant Entrance

A restaurant entrance design is the first thing that comes to your customers’ notice while entering the restaurant. It is important to provide a soothing, appealing, and welcoming experience that creates a pleasing aura for the visitors. According to current restaurant business trends, your restaurant’s name or logo must be properly visible and creative enough to stay in your customers’ memory for a long period of time. You can look for restaurant entrance ideas on the internet to stay ahead of the competition. Also, make sure that the entrance perfectly blends with the theme of your restaurant. Even if it requires restaurant renovation, go for it.

2. Unique Restaurant Logo

A restaurant logo helps you create a unique image for your customers and to make them remember your service and food. Image visiting several different restaurants having no name or logo. It will be difficult for you to remember which restaurant served you the best Matar Paneer and which one served you the best Tandoori Chicken. Your logo or brand name plays a huge part in creating a memory in your customer’s head. Your restaurant business structure must consider providing customers with quality service and tasty food is surely going to make you retain your customers for long.

Attracting new customers and turning them into loyal ones is the major restaurant business requirement to become a successful restaurant business. Food business is considered among the most competitive businesses in the market therefore in this continuously evolving and highly competing market it is important to create something unique and exciting at the same time.

Creating a logo that is unique, professional, and memorable is the key. Hiring highly experienced designers to get better restaurant logo ideas is advised to walk a step ahead of your competitors. A solid restaurant logo design and a well-thought-out branding plan may catapult your restaurant business to new heights.

3. Highly Experienced Chef

Along with the best restaurant management software, restaurant chefs with top-notch experience and skills play a vital part in the success of a restaurant business. Serving your customers tasty and satisfying food increases customers’ interest and loyalty side by side. Your restaurant business management should consider the following characteristics while hiring a chef for your restaurant business.

Characteristics of a Skillful Chef

a. Able to Mix and Match Cooking Skills and Knowledge

A professional and experienced chef knows how to imply tested techniques to create the best dishes. Knowing wide number of recipes is appreciated but it is not going to work as long as the chef doesn’t know how to apply them to create mouthwatering dishes for your customers. Therefore, he must be skilled enough to mix and match his cooking knowledge and obtain the optimum results that satisfies the customers to the core.

A restaurant billing software that enables customers to add variations to their favourite dishes also increases customer retention and provides flexibility to the chef of creating new and exciting dishes.  The POS software also helps you with menu engineering to maximize your restaurant’s profits.

b. Enthusiasm of Trying New Things

He should be enthusiastic enough to get out of his comfort zone and try new recipes that are appreciated by the customers rather than sticking to the same defined dishes that are being prepared for a long time. A chef’s daily tasks and routine provides him endless amount of innovative alternative that shouldn’t be overlooked.

c. Working Under Pressure

In the most chaotic environment that a busy restaurant offers, keeping yourself cool is a vital ability. 
What matters is that the chef has measures in place to keep himself focused and calm. While recruiting as an owner, you must ask about how the prospect handles pressure at work to determine if he would be a suitable fit for the challenging role. A skilled chef also knows how to manage other kitchen staff and get along with them because a proficient team saves time and makes it easy to achieve desired results.  

d. Being Passionate

Passion always plays an important role in even the most ordinary tasks. For a chef to be successful, he must be passionate about the profession. Being a chef necessitates a great deal of dedication and hard work. It’s crucial to keep up with the trends by learning new techniques and recipes.

e. Dealing With Criticism

People are going to give their opinions every time and it is not necessary that everyone would provide a positive remark. Even the greatest chefs have faced a lot of criticism but they have used it to hone their skills instead of letting it put them apart. You can’t ignore what others have to say; rather, choose to learn out of it and improve upon it in the future.

f. Willing to Prepare the Best Every time

An experienced chef never misses an opportunity to impress their customers by providing them with the best possible dishes every time they cook. A professional chef takes care of everything, from selecting the finest ingredients to employing the most cutting-edge techniques.

4. Choosing a Proper Color Scheme

A proper color scheme at a restaurant creates a pleasant atmosphere for the customers. Restaurant interior colors with warmer-tone obtained higher satisfaction scores, according to a study on interior colors. It is critical to examine how you want your guests to feel when they dine at your restaurant. The vital ingredients other than the color scheme include setting up perfect music and lighting that enhances customers’ experience and brings a positive effect for your business.

5. Appropriate Lighting

Most restaurants are filled with vibrant colors and bright lighting. Because higher color temperature lighting generates a brighter white light, making everything appear more enticing to the customer’s eye. A recent study discovered that people who ate their meals in brighter lighting ate more food and had a better eating experience. Dimmer restaurant lighting, on the other hand, might produce a more peaceful and serene atmosphere. Finding a happy medium in restaurant lighting can be a major challenge because colors can boost or depress a customer’s interest. Another interesting study on appetite for food found that women’s appetites tended to be lower than men’s when the food was illuminated with blue and green lights. It should be a selection that is made after careful consideration.

6. Play Soothing Music

The restaurant industry has evolved dramatically throughout the years. In this day and age, using a quality restaurant music system is a must because the majority of people who go to a restaurant expect to hear soothing music as they enjoy their meal. Restaurant music that makes customers feel hurried and rushed is never advised, but if your business requires a high turnover to maintain profits, faster-paced music can help you out because studies reveal that people eat faster when they are listening to faster-paced music. The effect you desire on your visitors should influence the tempo of your restaurant music.

7. Right Blend of Tables

I’m sure you’ve had at least one unpleasant dining experience at a restaurant with inadequate tables and uncomfortable chairs. Restaurant furniture layout is vital since every customer wants to sit comfortably while eating their favorite cuisine. As a result, we felt compelled to emphasize the importance of considering a restaurant’s furniture arrangement.

a. Furniture Quality

Purchasing quality restaurant tables and other furniture can increase your restaurant business expenses but always remember that a decent furniture setup is an investment that will pay off in the long run. Avoid using furniture that quickly loses its color or is difficult to clean. The ease with which a piece of furniture can be wiped down or cleaned is a sign of its quality.

b. Furniture Shape and Style

Many restaurants offer two-person tables, which are ideal for couple dining. These tiny tables save space, limit restaurant business costs, and are ideal for adding one or more extensions to accommodate larger gatherings, whereas round tables take up more space but also stimulate conversation among people enhancing the dining experience. 

8. Restroom Maintenance

Customers expect a whole dining experience, including pristine dishes and sanitary facilities. According to studies, more than 80% of customers would avoid eating at a restaurant with a filthy restroom. In public restrooms, cleaning with soaps and detergents without the use of disinfectants can spread bacteria and viruses throughout the facility. Customers frequently assume the cleanliness of the restaurants’ restroom for the cleanliness of the entire restaurant facility. Restaurants that invest in restroom cleanliness will see an abiding return on their investment by improving customer satisfaction.

9. Ventilation System

Maintaining optimum restaurant ventilation is critical for safe food preparation and storage, visitors’ comfort, and the health of employees. Restaurants can be challenging places to work since they are frequently packed with excess smoke, moisture, and heat. Surface contamination of Coronavirus (COVID-19) is also reduced by proper ventilation because virus particles are removed from the air before they can settle on surfaces. Other proper ventilation benefits can be:

Restaurant Ventilation Benefits

a. Keeping It Cool

Restaurant kitchens are hot due to the frequent use of stoves and other cooking equipment. By eliminating heat and pulling in a steady supply of cool air, a proper ventilation system helps provide cooling and lowers the overall kitchen temperature.

b. Improved Air Quality

While cooking, hazardous gases such as carbon monoxide can be produced. A ventilation system can eliminate dangerous gases and improve overall air quality, allowing people to work in a more comfortable atmosphere.

c. Eliminates Odors

Customers may be turned off by the smell of raw materials, ingredients, and prepared food. A properly functioning ventilation system eliminates odors and aids in the creation of a pleasant environment for both customers and employees.

10. Understanding Targeted Customers

Begin by studying your customers for a short period and compiling a methodical customer database. Take notes on how people utilize your services and collect feedback to improve customer experience. Offer your customers a complimentary drink in exchange for completing a quick survey. While observing, make sure you don’t create an uneasy atmosphere for your customers.

Virtual Aspects

11. Creating Your Own Website

Taking your restaurant business online and having a solid web presence is a must in these modern times. Your website can act as a very successful marketing tool providing a variety of advantages. Listed below are a few benefits of having your own website for the restaurant business.

Benefits of Having Your Own Website For Restaurant Business

a. Brand Awareness

The statistics reveal that e-commerce is gaining traction across the globe, with customers making a shift to ordering almost everything online. Having your own website can significantly increase your brand awareness. It also helps you expand your reach to a wider audience.

b. Building Trust

New customers are interested in learning more about your restaurant’s history, specialties, and other information. People can discover more about your company by visiting your website from the comfort of their homes.

c. Easy Contact and Support

A website allows clients to easily contact you, place orders online, and receive immediate service.

d. Online Selling

Create a virtual store as an alternative to the storefront to provide your loyal customers with comfort and ease. It is also a great opportunity to increase your sales since your audience got much wider. 

e. Share Latest Offers and News

You may keep your website up to date whenever there are any new offerings or changes in your restaurant’s operations. Customers enjoy it when you provide them with timely information.

f. Understanding Your Customers

Your website helps you gather information about your customers’ tastes and preferences which you can later use to provide them with their exact desires and need.

g. Blog Posting

Capture people’s attention by sharing relevant and entertaining material surrounding your business on a frequent basis. You can explore and cover a wide range of topics to ensure that you appear in your clients’ feeds on a regular basis.

h. More Options to Connect

Providing customers with more options is always appreciated. Customers have greater freedom and interaction with your business when they have multiple ways to connect, which is extremely vital in today’s world.

12. Promoting On Social Media Platforms

Social media has grown like crazy in the past few years. Everybody has a cellphone in their hand having at least 3 social media applications on their device that take up most of their time throughout a day. With time social media has gotten it’s grip on the commercial sector too. People have figured out that it can be a great tool for marketing their product or service considering a large amount of increase in the number of people on social media platforms every day. Social media marketing activities are proved to have a positive influence on customer loyalty and become influential to the point where almost every business is planning around it in order to maximize their gains through it.

13. Use The Right POS System

With the surge in restaurant business opportunities lately, restaurants require POS software that can assist in overcoming obstacles mostly because they confront distinct operational issues than other related businesses. Billberry POS system is also a software for inventory management helping employees perform their tasks and responsibilities efficiently, so that they can deliver a finer experience to customers, resulting in more sales. A restaurant POS is specifically developed to assist in the effective operation of the business. In case you decide to own a franchise from a well established brand then you would require the best franchise software to manage all your operations.

Conclusion

The steps stated above will assist you in successfully running your restaurant. Keep an eye on your employees’ well-being and give them with required training. It will aid in the expansion of your company over time. Also, try seeing your restaurant through the eyes of a customer. This will provide you with a fresh perspective and help you better understand your restaurant business.

How Useful ‘Loyalty Reward Program’ To Bring More Customers To Your Restaurants Business?

 

If you are thinking to launch a “Loyalty Reward Program” to revive your dying food business (Restaurants, Coffee Shop, Pizza Stores, Burger Shops, Sweet Shops, Ice Cream Parlours, etc), and still there are crazy questions are remained un-answered such as:

  • Do you really think introducing “Loyalty Reward Programs” will bring more customers at your door steps?
  • Do you really think that people cares for your reward points rather their safety in this pandemic situation?
  • Do you really think that Big Brands only survive due to their loyalty reward point systems?
  • Which strategy is more successful for implementing a “Loyalty Reward Systems” with my existing business?

The most sarcastic answer is –“It depends…!”. But let’s explore this uncertainty of this answer to understand how you can make your reward point successful by having the best restaurant management system alongside.

First basic rule on any marketing strategy is to determine size of your audience as it will make you aware that it doesn’t matter you run any reward program for your single restaurant with your restaurant management software if your population of town/area is too small, it is going to fail. Instead, give them direct discount on less selling products, make combos, run different offers with the help of a restaurant billing software at regular intervals.

Second rule says that if you complicate the things, customers will go away instead of coming to your restaurant. If you design reward point (For Example, Buy Big Get Small Return) such that your customers feel cheated than it will decrease your footfall.

Third key point is consistency of loyalty reward program where if you are changing so many rules for your reward point system then every time your staff needs to explain it to customers which can create trouble with trust of customers with your brand. So visualize a long term rules from inception of reward system and wait for the success.

Fourth point is to give some personalization to customers. Everyone loves to get personal gift, don’t they! If your loyalty system is well defined with effective communication (SMS, Email, etc) with the help of the best franchise software like Billberry then it will surely give you growth in repeat customers.

Let’s summarize few good points which make your loyalty reward point system a chance of success:

  • Keep reward point as simple as possible so that customers can understand it better
  • Provide clear communication, diverse and creative offers
  • Make sure you remain consistent with your loyalty reward point system
  • Apply adaptive approach to reward system as no fix strategy will win you repeat customers

We also appreciate if you can write down your suggestions to us if we have missed anything. We wish everyone a speedy recovery to your business & this new loyalty & reward system can bring more profit to you.

Restaurant Business 101 – Must Read For Start-Ups

The dynamic lifestyle and shifting demographics drive the restaurant industry. More and more people simply cannot find the time to cook, and yet they like nothing more than a cooked meal. It is a trend that is growing year by year consistently without any signs of stopping.

However, the restaurant business is one of the most ruthless ones. There is a huge market, a massive opportunity, but success is far from guaranteed. Each year, more than 9000 independent restaurants close their doors permanently. Moreover, CORONA pandemic has hit this industry very hard. Many experts assume that everything is going back to new normal where you will see new ways this business is going to be operational with much safety and profits.

So, how to make it in the restaurant business?
Elements like reliable restaurant management software that offer a robust point of sale software might help with the success of your business. However, if you run a franchise food business then the most basic one is having the best franchise software like Billberry.

Here are a few basic principles for opening and running a successful restaurant business.

Choose Your Niche

The first decision should be about the type of restaurant. There are many similarities between the various types of restaurants, but at the same time, there are many differences. Differences in terms of how to run it, the things it takes to be successful, the culture that you want to implement in it and, how to reach your primary group of customers.

The choice is between a fast-food restaurant, a classic American diner, deli for busy lunch-goers, a midscale family-friendly restaurant, an upscale restaurant, or something in between. Whatever it is, you need to have a clear vision of what you want it to be and how to run it.

Write a Business Plan

Once you are certain about the type of restaurant you want to open and how you will manage it, you need to put all on paper. That means creating a credible business plan on which you will map out everything long before you buy the first fork.

The business plan should include a clear explanation of your concept, your market described in full, menu, pricing, financial information such as the startup capital, the sources of your startup capital, expense forecast, marketing plan, long and short term income projections, employee hiring and training, and challenges you are likely to face daily. Some folks even include an exit plan in their business plan. Also consider including a robust restaurant billing software to your restaurant business plan.

Funding Your Business

The amount of money you need can depend on many factors such as the type of the restaurant, the facility, buying equipment (used or new), inventory, money for marketing, and operating capital until your business starts generating cash.

Here are a few ideas on how to raise some seed money that will help you take your idea from the floor:

  • Your Resources: Go through all of your assets and see if there is something with value that you can sell. Many people own assets without realizing their worth. The asset can be equity in real estate, some old saving account you have forgotten about, collection of stuff, vehicle, or something else that holds some value. Whatever it is, you may use it to sell it and get cash, or use it as collateral to get a loan.
  • Friends and Family: Go to your friends and family, explain to them what you want to accomplish, present your business plan, and assure them that you are fully committed to succeed. You never know who might be interested in investing.
  • Government Grants: Many local, state and federal programs support new businesses. Go through each one of them and see if you are eligible to get a government grant.

Get All Required Licenses

There are a few legal things to consider when opening a restaurant. First of all, you need to be licensed from the local controlling jurisdiction. Next, you will need to get a liquor license if you plan to serve alcohol at your restaurant.

Sometimes you need to check with the city if there is any zoning issue that might be on your way of opening a restaurant. Check the zoning regulations for your location and your building.

Safety Regulations

Running a restaurant means complying with a set of state and federal regulations. If the restaurant fails to meet some or all of those regulations, it can be fined or even closed. Fire safety and sanitation are considered as the most critical ones. Furthermore, you need to provide a safe environment in which the employers can do their duties, and the guests can dine.

There are other safety regulations, but most regulatory agencies will work with any new operator to help them meet the needed requirements. To that end, each state has its general information office that can help you get in touch with all the regulators.

Final Words

In the end, if you are dedicated, got a solid business plan, got your licenses in order, and people that believe in you – you don’t have to worry much. Your only concern should be the tastiness of your dishes and keeping your guests coming back and wanting more. Most importantly it will remain a profitable business in the end as long as people with stomach are on earth; this business is never going to be shut permanently.

If you like this Restaurant Tips 101, please spread the work about our industry leading Restaurant Management System.