The Restaurant Group Blog

Why You Should Have a Feasibility Study Before You Start a New Restaurant – Reducing Risk

Feasibility Study

According to Restaurant Startup & Growth magazine, close to 25% of restaurants fail in their first year of operation. One way to mitigate the risk of restaurant ownership is to conduct a feasibility study before the business opens. A feasibility study examines an idea, identifies potential issues, and attempts to determine if you should proceed with the project or abandon it.

A carefully thought out business plan paired with a subsequent feasibility study will increase the likelihood of success. The key elements of a typical study are below.

Location analysis

A location can make or break a business, especially a restaurant. A proper site analysis includes potential issues and solutions, demographic information, current and potential competition, advertising options, etc. Even detailed statistics like traffic data (foot, road, and public transportation) are used.

Labor analysis

A business owner relies on staff to keep the operation running smoothly. A combination of demographics data and a favorable location increases the probability of attracting the right employment candidates for your business needs. And hiring the right person the first time reduces turnover and training costs, while freeing up the owner’s time to focus on strategic planning instead of the daily restaurant operations.

Cash flow projections

Cash flow projections are an important element of any business’ feasibility study, as without adequate income the operation can quickly succumb to debt and fail. Evaluating potential roadblocks and ways to overcome them before the business is open will greatly reduce the amount of stress on the business owner.

No business owner wants to fail, and careful planning ahead of time can reduce that probability. A quality feasibility study is a complicated task, requiring expertise, precision, and experience. You might not have the time required to complete it, so outsourcing this job to the experts is a wise choice.

 

Efficient Designs and Why You Need Them

Restaurant Design

In the restaurant industry, things must carefully be planned out. A well designed kitchen, bar, and floor plan is key to your success as an establishment. When we talk about designs, one might think about the visual appearance. That’s all good and well but that is not the sole factor you need to focus on. Looking good isn’t enough.

Layout

Whether you are renovating an established eatery or opening a new business, you should remain conscious of how things are setup. How much space do you have? What do you need to fit in it? Where can it go? Is your layout up to code? Can your layout provide you with the flexibility needed? These are all questions that you need to ask your self.

Brand and Concept

What should customers think when they come to eat in your restaurant? How should they feel when they sit at your bar? Do the designs of your space convey that? Does it compliment the finer points of your restaurant? Your aesthetics should convey the type of restaurant that you are and your customers should feel comfortable in them.

Efficiency and Economy

Your restaurant should be equipped to serve its customers in the way that they expect. Do your employees have the space they need to work in a way that reflects well upon your restaurant? Is your equipment cost-effective? Are you reducing costs where you can? Is your restaurant energy-efficient?

TRG Restaurant Consulting

TRG has the project services and restaurant consultants needed to help provide you with the productive results that you want. Our services include but are not limited to:

  • Architectural and interior design plan integration
  • Food-service layout and design
  • Professional installations
  • Project management
  • Mechanical requirements
  • Custom mill-work
  • Custom bars
  • Standard kitchen ventilation and extraction
  • Carbon filter systems and odor control
  • Make-up air systems and replenishment

For more information visit us.

 

Food Waste: Problem to profit through menu design

Menu Design

There are plenty of studies that will tell you that anywhere between 30 and 40 percent of the overall food supply in the U.S. ends up in landfills. According to a 2014 study, restaurant sector respondents reported approximately 84 percent of food waste was literally thrown away.

The impact on profit

The report estimates that almost 16 percent of all food waste is generated by the restaurant industry. On average, survey respondents generated 33 pounds of food waste per thousand dollars of company revenue. When you put that into dollars and cents, it adds up to a great deal of lost profit.

The restaurant industry is highly competitive and remaining profitable is the key to existence in this overcrowded marketplace. Food waste can be one of the largest hits to your bottom-line so menu design is an important consideration in determining how much food waste your business will generate.

Investigating the sources of waste

If your business is losing a considerable amount of revenue due to food waste, a restaurant consultant can offer insight into your main problem areas and help you close the gap on profit and loss. They can assist you in improving efficiency and reducing waste in areas such as purchasing, product handling, preparation and storage. Additionally, your production and services areas should be factored in as well.

Restaurant consultants recommend breaking up food waste into two categories, you will be able to see the full picture of where your food waste lies. First, consider the food you waste before it is served to the customer and secondly, consider the food that is left after consumption.

Before consumption waste

If you are wasting food before it gets to the customer, there are several matters you need to investigate. The first one is, are you purchasing too much? You are not saving money buying in bulk if you throw away products that have expired or gone bad. Begin by monitoring the items you are throwing away. Review your invoices and orders and define what you are buying too much of and analyze the vendors you are using.

Another possibility could be the way you are storing your food. Monitor your storage areas by going through your inventory and figuring out the best way for all food to stay fresh and unspoiled. Moreover, examine your food preparation methods and set up. If your prep station is not set up effectively you may be throwing food out due to prep errors.

After consumption waste

Auditing your post-consumption waste can tell you a great deal as well. For example, are people eating the whole portion? If not, reducing the plating size is an obvious choice. Also, things to take into consideration is food presentation including the wasted cardboard, styrofoam and plastic that is being used. This waste also needs to be managed to improve your profitability.

Menu design

After you have assessed your waste, you should reassess your menu design. A restaurant consultant can guide you through the process based on your waste assessment. If you need to either recreate your menu or business model from scratch or make tweaks to it, having a professional direct the process can end up increasing your profitability.

Whether you are a fast casual or full-service restaurant, changing up your menu is the key opportunity to minimize food waste. Deciding what you are serving, storing, preparing and packaging will impact your bottom line and your food waste carbon footprint.

The key to ending food waste is to reduce, reuse and recycle! Learn more about how menu design can help your restaurant reduce food waste on our TRG consulting service pages.

How to Increase Profits with an Operational Analysis 

Operational analysis for restaurants

Restaurant Operational Analysis for Restaurants

 

Let’s face it, the statistics for restaurant failure are not all that encouraging. Various studies indicate that only 10 to 12 percent of restaurants will survive their first five years. Regardless of how you slice and dice the numbers, the restaurant business is a strong and growing part of the economy. According to IBISWorld, industry revenue will grow an annualized 2.5% to $97.8 billion between 2013 and 2018.

Capturing a piece of the market

The reality is that only restaurants that achieve operational excellence will be able to grab a piece of the business market, and conducting an operational assessment will show you where you are losing revenue, as well as the procedures and practices that are hurting your profitability.

Running a profitable restaurant requires operational efficiency. Every aspect of your business from location and services to suppliers, involves constant oversight and an operational analysis. As a restaurateur, there are critical aspects to consider. Whether you are a startup or an established business, you need to begin with defining your goals and then evaluating your strengths and weaknesses.

Know your market

A SWOT analysis helps you determine the strengths, weaknesses, opportunities and threats to your business. Most entrepreneurs conduct these frequently to stay competitive in the marketplace. Here is an example of what a restaurant SWOT analysis would look like:

SWOT

Creating long and short-term goals

Restaurant trends, technology and target audiences are changing at a rapid pace. Regardless if you are a startup or an established restaurant, you need to routinely access your business plan by defining long and short-term goals.

An operational analysis provides the restauranteur with an overview of menu choices, location, hours of operation, operational costs, technology and your entire staff performance from front-of-house to back-of-house. This assessment provides a snapshot of where your business stands now and where you will be in the next years. You will be able to proactively and immediately begin to eliminate inefficient practices and expand upon the areas of productivity and revenue generation. 

Location Evaluation

Where your restaurant is situated is probably the most important factor of your business. Does your target audience live or work in the neighborhood? Are you in a high-volume area? Is there a great deal of competition in the vicinity? Can your customers park? Is your space large enough? As the old real estate saying goes, ‘location, location, location’! Diners rarely have time to wait for parking or drive far from their neighborhood. Additionally, being among other restaurants is not the big problem, it’s where the competition is located that can be an issue. Along with location, your hours of operation could be a factor. Can you open early to catch those commuters or can you stay open late for the college students who want to eat later? Choosing a location is often the first step in opening your restaurant, so know the area well.

Review your menu options

Whether your restaurant serves fine dining cuisine or fast casual dining, your menu is one of the driving factors of your success. Knowing your customer’s preferences will help increase traffic to your restaurant and decrease food waste.

Assessing the costs

Monitoring the bottom line on a regular basis is essential to your profitability. Are you buying your supplies from a vendor with high discounts or low prices? Are you getting value using the ingredients that comprise your menu? Is your staffing balanced for low and high-peak hours of operation? Is your rent too high? Finding the things that can reduce your overhead and improve productivity will enable growth and increase revenue.

Front-of-House and Back-of-House Staffing

Your staff can make or break you. In the restaurant business, good customer service is critical to your operation. Ensure your employees not only know what you expect but retraining them constantly and teaching by example is important. Mishaps occur, just remember it is how your staff handles them that will make the difference between a repeat customer and a bad review on Yelp.

An operational analysis is the only thing standing between the restaurant owner and profitability. Learn more about how an operational analysis works by taking a look at our  TRG operational analysis TRG operational analysis service page.

Panera, Chipotle and Starbucks Investment in Customer Demand

With new technology and capabilities being released on a daily basis, the consumer’s demand for the next new and exciting product or service is higher than ever. There is no exception when it comes to restaurants either. The top contenders in the restaurant industry have to stay on their toes and be ready to implement changes into their menus, services, etc. at a moment’s notice. Here are some innovative approaches and services from industry leaders that are changing the restaurant game:

5 Tips To Lower Your Restaurant Food and Beverage Costs

Food and Beverage CostsThis is one of the most frequently asked questions from restaurant owners and operators;

“How can I lower my food and beverage costs?”

In this article we will provide 5 effective steps you can take towards lowering your food and beverage costs. This outline encompasses the basic steps needed to get you on the right path to a more profitable business.  You will also find we have provided a very useful Menu Analysis Template to your use. You may download it for free in section 5 below.

Will An Operational Analysis Help Your Restaurant?

operational analysis

What is an Operational Analysis and how does it work?

In this article we’ll answer these questions and explore the benefits of an operational analysis.

Regardless of what industry your business serves, it never hurts to have a knowledgeable third party look at every aspect of your operations to identify potential areas of improvement. If you are a restaurant owner who is struggling, an in-depth study from a restaurant consultant can save your livelihood and help you rebound.

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