Starting your own business is the desire or dream of many working stiffs, and entering the F&B industry is one of the easiest choices by considered by many. But does the many have what it takes to be a successful and profit churning restaurateur? Annually many enter in to this sexy industry which combines together science and art to produce creations that enticed our senses through the manipulation of flavours and sight, but as many as up to 50% to 60% are forced to leave this industry with their tails between their legs suffering huge losses within the first three years of operations. The failure rate is about 26% for the first year itself. Even experience and establish chefs are not spared this tragic ending if they are not well prepared and do not have what it takes to fully participate in the daily managing and marketing of their restaurants. Does your restaurant want to be part of these statistics or is your restaurant equipped to face the challenges to stay afloat or make a lucrative profit margin?
To become a restaurant owner is not difficult; one would just need to have the answers to the following simple but yet hard questions:
1. What are your current and future plans for your career or business?
2. What is the reason for establishing a restaurant?
3. What kind of food do you have knowledge and passion in?
4. What is the trend or market demand in your target area?
5. How much capital do you have for start-up?
6. How much funds can be pooled for daily operational expenses? My suggestion would be a minimum of six months.
7. What business or corporate structure should be chosen?
8. Who and how many competitors are in the area?
9. Determine what is the most suitable size of the restaurant?
10. How much is your involvement in the daily operations?
Entering into the restaurant industry is easy; it is the daily managerial and marketing activities that will actually be the challenged to become a successful restaurateur. On the operational front, as an owner you must be ready to participate in every level of managing the restaurant be it in the kitchen or dining floor up to the ‘selling’ of your products to servicing your customers. It is all hands on!
As Restaurant and Marketing consultants, we recently encounter a restaurant in a prominent mall in Penang that abruptly closed down due to long term mismanagement and inexperience that left it bleeding profusely since the beginning of its operations. From our initial encounter with the restaurant and its owner we already set its life span for between 6 months to 1 year the most. The reason was simple:
· Right concept poor execution,
· Inconsistent and poor quality of food served,
· Lack service initiative by the service crew,
· High level of wastage that ultimately eat into the margins,
· Lack of right experienced management to lead the operations and oversee the kitchen activities,
· Slow adaptation to environmental changes,
· Inefficient Marketing Strategy and Management,
· Inefficient control of budget and expenses.
Therefore to succeed in creating and operating your own successful restaurant, you need to have the right concept, proper execution, good management and leadership direction, cost efficient control methods, sound targeted marketing strategy and tactics, and most of all adaptable to changes. Thus, to have the following focus in place before operation of the restaurant begins would provide a higher probability of survival of your restaurant:
Ø Let the staff know what your expectations.
Ø Develop a good marketing strategy and tactics according to your budget, capacity and target market. to get the word out to more potential customers about your restaurant
Ø Make sure a system is ready to provide customer satisfaction in terms of food and service.
Ø Work hard to meet your budget limitation and revenue goals.
Ø Consider using a restaurant consultant and marketing consultants, if sales are continually down.
I guess after the big players like McDonalds, Starbucks, Coffee Bean and the emergence of local ‘hero’ franchises like Old Town, The Manhattan Fish Market, Pappa Rich, etc, many want to be business owners are turning towards buying franchise license. It is one of the easiest ways to own a business and not having to deal with the inexperienced, the hassle of formulating the initial business model and concept and branding issues. But before deciding on buying a franchise license, it would be worth the money to take a look at the ups and downs of becoming a franchisee.
What do one gets for becoming a franchisee?
- Becoming one’s own boss to a certain extend although one is lacking in capital or business operation experience.
- Acquire a ready establish business model, thus would be able to operate as a mature business and with advises from the franchisor. Faster returns (in many cases) as compared to a newly start-up business.
- Gain other businesses efforts, expertises, know-how, procedures, training, collective buying power, and advertising.
- Established Brand recognition brought over the Franchise, thus eliminate this hurdle by developing an image in the marketplace.
What do one forgoes for signing the franchise agreement?
- One must work, operate and act according to the franchisors terms and conditions. Therefore loosing the will, control and capacity to do as you want or need to do to develop your own market. It is a no go for someone who dislikes working for an employer.
- One would have give up a portion of its profits in return for the benefits gain from buying the franchise licence. In addition to initial franchise fee, there is also a percentage of monthly gross that is put back to the parent company.
- Forced to purchase goods from appointed suppliers or parent company, which may prohibit you from getting the best prices.
After considering the above benefits and disadvantages of buying a franchise licence and you have decided to go ahead with franchising as your mode of entry to becoming a business owner. Then, you would need to consider the type of franchise that is most suitable to your interest and character.
- Do not be misled by promise of high income, potential growth and popularity. Consider the possibility of interest, enjoyment and knowledge of a particular product or service. This would induce one to stay longer with the business or franchise.
- Should research on the existing and possible competition from within and without the industry or market.
- Another must consider would be the stage the franchise business is at in the product or market cycle. Whether it is at the growing, maturing, saturated or declining stage.
- History of support provision by the franchisor that would be the essential building blocks for personal growth and also business viability.
Any decision made on whether to buy a franchise licence or start your business should be base on your own research, planning, strategising, projections and capacity in terms of knowledge, experience and capital.
Next article we would be looking into the how to create your own franchise and its requirements. And for more information on the article posts or publish, do not hesitate to contact us at firstname.lastname@example.org.
Am i a zebra or a horse?
What is Marketing or Strategic Marketing and what is Branding? Are they the same? These are some of the questions that many are still not sure of the answer or have confused these two concept to be one. Therefore, we would have to begin from the very basics to answer these questions.
What is Marketing to me? Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably. Therefore, it forms a social and managerial process which individuals or businesses finds an unsatisfied need or want, creates a product or service and supplies it in the most efficient manner and price to provide value to the consumer or buyer and earn a premium or profit in the process. In short, the Marketing process places customer or consumer satisfaction in the focal point of all business activities.
Some of the important elements in the Marketing philosophy or concept are as follows:
- Marketing focuses on the satisfaction of customer needs, wants and requirements.
- The philosophy of marketing needs to be owned by everyone from within the organisation.
- Future needs of the market have to be identified and anticipated.
And what is Branding or what is a brand? A brand is a name, term, sign, symbol, design or value, or a combination of them intended to identify the goods and services or businesses that differentiate one from another. Therefore, it is understandably that branding is about getting the potential customers to notice you as the most suitable solution provider to their needs and wants. Thus, the objectives of branding or a brand should be:
- To delivers the message clearly.
- To confirm your credibility.
- To capture the emotions of your target prospects.
- To encourage or motivates potential buyers to act to your benefit.
- To create and strengthen loyalty or emotional attachment.
- To generate value to the brand.
Therefore, to succeed in branding your business or products, one must first understand the needs and wants of your target audience or market and create something that can satisfy and give value to the target market.
To summarise, Marketing is the social and managerial process of satisfying customer needs and wants, and branding is the process of persuading your target audience to choose you from the others.