The Importance of Conducting a Feasibility Study for Your Restaurant
Opening a restaurant is a passion project for many. Crafting their own menu, creating a space where people can share meals and strengthen bonds, and having a place to call one’s own are, after all, compelling motivators.
However, if you’re an aspiring restauranteur, you shouldn’t skip some crucial preliminary steps. One of the most essential activities is conducting a feasibility study.
According to CNBC, three out of five restaurants close before the end of their first year. You can improve your odds with a feasibility study. Join TRG, the best restaurant consultants, as we share what it is and why you need one.
What Is a Feasibility Study?
A feasibility study helps you assess the viability and profitability of a proposed hospitality venture. It relies on market statistics and research to provide a holistic view of the potential pitfalls, demographic shifts, and the competitive landscape.
With data-backed insights, a Restaurant Consulting firm like TRG helps you steer your business in the right direction.
Benefits of Investing in a Feasibility Study
Even large franchises backed by celebrities have been known to fail. Some examples are CEC Entertainment, Garden Fresh, and Vapiano which filed for bankruptcy during COVID-19.
A restaurant feasibility study ensures you don’t suffer the same fate. It helps you:
Finalize a Concept
Even if a concept is trending, you can’t guarantee profitability.
For instance, virtual restaurants, also known as ghost kitchens, can have a far-reaching effect in areas where Uber Eats and DoorDash services are available. But since they don’t have a brick-and-mortar outlet, they can miss out on a big chunk of revenue. An estimated 70% of diners say it’s important for their food to come from a publicly accessible, physical location.
A feasibility study can help you avoid issues like this because it forces you to look into customer behavior and preferences. It can provide valuable guidance as you make major decisions like the format of your restaurant.
Determining Your Location
Location plays a critical role in determining a venture’s long-term performance and profitability. The analysis required by your study examines the natural and manmade barriers affecting the area, its proximity to major transportation hubs, and the type of guests your establishment will attract.
Making your restaurant accessible to people with diverse abilities could further maximize your chances of success.
Minimize Risks
From growing food costs and hiring the right employees to obtaining the necessary permits, managing a restaurant can be tricky.
A feasibility analysis from TRG, a Restaurant Startup Consultant, tells you about the challenges and obstacles you have to tackle. This helps you develop a proactive damage control strategy for a successful launch.
For example, an ineffective kitchen design can have disastrous effects on your team’s efficiency. Knowing what’s at stake, you will focus on creating a well-organized space that enables operational success.
Secure Funding
The cost of opening a restaurant can range from anywhere between $175,500 to over $2 million. Factor in operational and marketing expenses, and you’ll quickly realize how much cash your business needs.
A feasibility study challenges you to come up with a rock-solid business plan with revenue forecasts that can help you appeal to investors and secure funding. Crowdfunding is also one of many options.
The Restaurant Group Can Help You Bring Your Vision to Life
Opening your own restaurant takes a lot of money, time, and effort. Maximize your chances of success with a restaurant business plan and a feasibility study. The Restaurant Group will help you come up with a cost/benefit analysis and comprehensive insights to guide your decision-making.
Learn more about what we can do for you by exploring our website.
