restaurant industry

7 things you need to know before diving into the restaurant industry

By Jacob Mancini

Thinking about getting into the restaurant business? Before taking the plunge into the bustling world of hospitality, it’s crucial to pause and reflect on your motivations. The restaurant industry offers a tantalizing blend of creativity, entrepreneurship, and community engagement, but success requires careful planning and strategic execution. However, the barriers to entry are not as high as some might perceive. Aspiring restaurateurs need to consider several key factors before embarking on this fun and rewarding journey. Here are seven essential tips to ponder, speak to your advisors about, and consider before opening the doors to your restaurant:

Define your why

Ask yourself why you want to enter the restaurant industry. Is it a passion for culinary arts, or the dream of owning a thriving business? Do you actually have a realistic understanding of the restaurant experience – not just front of house, but back of house as well? Understanding your motivations will guide your decision-making process and sustain your drive during challenging times, which will inevitably arise. You have to love and enjoy this work because it’s a grind, and one that is not for the faint of heart.

Technology as a game changer

Gone are the days of manual labour and cumbersome administrative tasks. With the advent of advanced software solutions, restaurant owners can (and should continue to) streamline operations, optimize labour, and automate business administration. By leveraging technology, one can effectively control costs while maximizing efficiency. When you are considering opening a restaurant, you need to take into consideration the role technology will play in your business.

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Moreover, within the restaurant industry, we’ve seen a lot of benefits from the integration of AI and robotics. For some, it’s brought the elevated dining experience to new heights; for others, these innovations support the workforce by freeing up time and tasks that can further drive convenience or deliver a more elevated experiential factor. Imagine a restaurant where robots assist in food preparation, allowing human staff to focus on delivering exceptional service and personalized experiences to patrons. The future of running a restaurant is not only fascinating, but it’s attainable if you correctly leverage and lean into technology.

Loyalty programs: shifting from discounts to rewards

Customer retention is built on a foundation of two elements: who is your target audience, and what are you offering them beyond food and service? In today’s competitive landscape, loyalty programs have emerged as a powerful tool for customer retention and many established restaurateurs are shifting to think about more than just discounts. Unlike traditional discounting strategies, loyalty programs offer a more sustainable approach because they reward frequent patrons. By offering a sense of exclusivity and incentivizing repeat visits, restaurants can build a faithful customer base while maintaining profitability.

Strategic layout

When conceptualizing a restaurant, I always tell our clients that size really does matter. With this in mind, it’s important to opt for a space that aligns with your concept and target demographic. While large venues might seem attractive, they can often come with wasted space that incurs unnecessary expenses and impacts the ambiance. When thinking of your look and feel, it’s important to be realistic – carefully consider the layout flow and how that will cater to the overall experience of your guests. The reality is that restaurateurs can create an environment that enhances the dining experience, whether patrons opt for in-house dining, pick-up, or delivery. Thoughtful planning will help contribute to a seamless and enjoyable client experience.

Balancing experience and convenience

A key consideration for restaurant owners is striking the right balance between offering an experiential or convenience-focused dining experience. Experiential dining goes beyond mere consumption; it’s about creating memorable moments that resonate with customers. Whether it’s live music, themed events, or interactive elements, the goal is to provide more than just a meal – think about immersive and multi-dimensional ways to relax and have fun.

On the other hand, convenience-focused establishments prioritize efficiency and accessibility. Leveraging technology, AI, or digital tools such as mobile ordering, loyalty programs, and self-service kiosks caters to the needs of busy, on-the-go patrons – a growing customer segment that owners must consider.

Operational excellence

At the heart of every successful restaurant lies a robust operational model. From financial projections to menu engineering, anyone exploring an entrance to the restaurant industry should take time to work with a team, including your financial partner, to consider every aspect of what the operations entail. Create a meticulous plan and execute it expertly. At the end of the day, running a restaurant is an exercise in consistency and always looking ahead. You’ll learn quickly that you need to nail the basics, including food, rent, and staffing. If you’ve dialed in your model, the things you can’t control (like market volatility) are less likely to affect your performance. Remember to keep the promises you make to customers front and centre and commit, then you’ll be on your way to achieving high levels of satisfaction, loyalty and recognition among your competitors.

Choosing your path

Ultimately, restaurateurs must pick a lane and stay within it. Decide whether you are creating a unique experience or providing efficient convenience, and stay true to your vision. Attempting to cater to both ends of the spectrum will risk diluting the brand’s identity and alienating customers. Take time to understand your target market and align your offerings accordingly so you can carve out a distinct niche that will ensure that you will become and remain competitive within the culinary landscape.

Before making the leap into restaurant ownership, it’s important to take a moment to reflect on your goals, assess the landscape, and strategize your approach – preferably with someone who understands all aspects of the business, including financials. While the barriers aren’t impossible to clear, careful planning and execution will be essential for long-term success. Consider these tips, embrace the opportunities in front of you, and embark on a rewarding journey in the vibrant world of hospitality.

As Assistant Vice President, Restaurant & Brewery Finance, at CWB Franchise Finance, Jacob Mancini oversees all aspects of the restaurant lending business, which provides financing for branded restaurant chains on both a corporate and franchisee level. Jacob specializes in portfolio and business development for both national and regional chains.