You Are What They Eat

It's the Food, Got Money? & Follow the Rules

Service, ambience, management--it's all important, but most restaurants are known by their menus. Create a menu that is memorable and appropriate to your concept and to your market. Frasier's menu includes items from similar establishments as well as unique dishes. "Every restaurant should have signature items," Ellison says.

Setting prices can be a mathematical challenge. To calculate prices, consider your food costs, labor (for preparation and serving), overhead and profit. Survey other restaurants to get a sense of what price levels the market will support. If a dish isn't both delicious and profitable, take it off the menu.

Got Money?
A thorough plan should show how much money you'll need to open your restaurant--building, furniture, fixtures, equipment, inventory, liquor license and working capital. With that figure in mind, look at your financial resources. If you don't have or can't raise enough, scale the number back.

Redler says raising the money wasn't as difficult as he thought it would be. The key is to demonstrate to investors that you have a solid plan and the experience to implement it. Also, you must be willing to significantly risk your own funds. When Redler opened his first Timberline, he contributed $24,000 of his own money and walked away from a high-paying corporate position. Because he was willing to risk so much, his backers felt confident taking a chance with him.

Follow the Rules
Though we don't think of food service as a heavily regulated industry as we do medical services or public utilities, the reality is that many aspects of your operation are strictly regulated and subject to inspection. Fail to meet regulations, and you could be subject to fines or get shut down by authorities. And if violations involve tainted food, you could be responsible for illness and even death. Issues such as sanitation and fire safety are critical. You must provide a safe environment in which your employees can work and your guests can dine, follow the laws of your state on sales of alcohol and tobacco products, and handle tax issues, including sales, beverage, payroll and more.

Most regulatory agencies will work with new operators to let them know what they must do to meet the necessary legal requirements. Your state's general information office can direct you to all the agencies you'll need to be concerned with.

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This article was originally published in the February 2003 print edition of Entrepreneur with the headline: You Are What They Eat.

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