Most smart entrepreneurs consider a lot of ideas. Almost everybody at some point seems to consider opening a restaurant.
Maybe we think that because we like eating in restaurants, we'd be good at running them. (The same way some people think that just because they were once students, they could become excellent teachers.)
And yet--the restaurant industry is one of the toughest out there: 60 percent of new restaurants fail in the first year; 80 percent don't live to see their fifth birthday.
Enter OpenTable, the online restaurant reservations company. They've teamed up with industry veteran Alison Arth, founder of hospitality consulting firm Salt & Roe, to produce a free ebook: How to Open a Restaurant: the Modern Restauranteur's Guide to Starting & Growing a Restaurant Business.
Here are some of Arth's key points. (The 135-page ebook launches today; you can get the whole book here for free.)
1. Have a plan.
"No matter how much thought you've put into your concept or how many trusted colleagues have assured you of its greatness, you absolutely must write a business plan," Arth writes.
Even if you never take a penny in outside funding, a written business plan provides a roadmap. (Although be assured: your plan will change many, many times.)
2. Temper your funding.
Consider both the amount of money you raise, and its quality. Don't desperately sign on with investors who will make your life miserable (but do stick to a minimum level of funding for anyone who wants to be involved).
Also, don't skimp on the professional advice. Financial and legal considerations are complicated, and there are many ways to set yourself up for failure if you don't get them right. (One funding option: OpenTable is sponsoring a contest for aspiring restaurateurs with a grand prize that they say is worth $38,000.)
3. Location and facilities.
Your address and physical space are two of the most important attributes of any new restaurant, and they're not easily changed. Find a location near where your ideal customers live and work (rather than trying to get them to come to you), and try to sign a long-term lease--one that runs at least 10 years.
That said, "don't fall in love with a space," Arth writes--to the point where you wind up mortgaging your success.
4. Invest in core branding.
In many businesses, it's a waste of time and money to focus on things like branding and logo before you've launched. That might not be the case in the restaurant industry, Arth says, because you'll be selling the feel of your restaurant to investors, potential customers, and others long before you open the doors.
"The idea of paying [a branding expert] when you may not have even secured a single cent in funding probably sounds very unattractive," she writes, "but it could mean the difference between getting 30 minutes of an investor's time and getting passed over."
5. Staffing & training
Hire managers first; hourly employees later. And be sure to devote enough time to pre-launch training.
6. Menus and equipment.
Sure, you want happy employees--but build a menu around what customers want to eat; not just what the chef wants to cook.
"This doesn't mean that you need to dumb down your concept," she writes, "but it does mean that you should always be considerate of accessibility. Balance is key."
Since the book is a product of OpenTable, you probably won't be surprised that the book has a chapter suggesting the use of OpenTable's services. Since my personal experience in the restaurant industry is limited to a single summer working as a banquet waiter more than a few years ago, I can't judge here.
However, Arth's bigger points make sense, focusing on things like internal management systems, maintaining a web presence, and how to handle online reviews.
(Obviously the book itself goes into much greater detail. You can get the whole 135-page volume here for free.)