KwanG Venture Blog

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!

Case Example:

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.