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7 Common Restaurant Startup Mistakes

7 Common Restaurant Startup Mistakes

Restaurant start-up  has many moving parts. If early problems aren’t addressed, they could affect the start-up process and negatively impact your restaurant’s long-term success.

Hopefully learning from the steps below will allow you to avoid these potentially door closing restaurant start-up mistakes.

7. Lack of A Clear Vision and Purpose

New operators that have not defined or can’t communicate their vision or purpose, will find it difficult to create the kind of climate that supports teamwork and dedication to excellence during the startup phase of any new restaurant.

Forming a business plan and creating positive atmosphere from day 1 will go a long way in structuring a solid company culture.

6. Believing You’ll Start Making Money On Opening Day

The odds are stacked against this happening. Even the best run chain restaurants, whom open restaurants for a living, factor into their startup budgets an allowance for funding operating deficits for up to 2 to 3 months after the restaurant opens. It usually takes time to build sales volume to an adequate level.

Having an experienced real estate professional implement a time period of rent abatement during lease negotiations is a good way to mitigate this problem.

5. Lack of Documented Systems and Procedures

Restaurant operations involve the ongoing repetition of hundreds and even thousands of tasks by many individuals and groups of individuals. Organization and consistent execution are key to creating a successful restaurant.

Franchised restaurants start out with detailed recipes, checklists and procedures to do everything from prepping the lettuce, to cleaning the restrooms to closing out the cashier. In new independent restaurants, it’s often making it up as you go.

The longer the restaurant operates without a documented way of doing business, the longer the restaurant stays stuck in the often difficult and unorganized do-what-it-takes startup phase. Establishing program standardization is key to success.

4. Not Timing the Grand Opening

There are few things worse than being slammed with more business that you can possibly handle on day one. With so many restaurants, the public’s first impression can easily be their last. Soft, quiet openings are the way to go. Get your act together before you tell the world.

Also, look at the timing of when you are opening your new restaurant and the ebbs and flows of the local population. Working with a project management team that keeps on schedule and that will identify any potential speed bumps that might set you back is imperative. For instance, opening your restaurant in the springtime in a ski town after the resorts have closed is probably not the smartest move.

3. Accepting A Secondary Location To Save On Rent

Location can be vital to restaurant visibility and attracting customers, so you want to make sure that you are in a location that is highly visible and accessible to your target market. A good location can catch the eye of a hungry potential customer and bring in extra business outside of what your marketing provides. Don’t settle for the second choice location that’s slightly off the beaten path because it often results in spending all that and more on advertising in an attempt to get noticed and bring in more business.

Partnering with a knowledgeable tenant advisory real estate company will help you avoid this potential pitfall.

2. Underestimating capital needs

There are many new restaurants with excellent prospects for success that simply run out of money. It’s common for first time owners in particular, to leave out or inadequately project all the startup costs involved in opening the restaurant. Construction overruns, change orders, delays, permits, liquor licenses, building inspections, etc. are often missed completely or grossly under-budgeted.

Even if you’ve done it before, it is important to establish a working relationship with an experienced project management team early on to identify all startup costs and timelines.

1. Not functioning as an Owner

Often times, due to necessity during the startup phase, the owner functions like just another employee and ends up bussing tables, cooking in the kitchen, doing the books, or trying to manage the design, build-out and and dozens of vendors and contractors during the startup of a new location.

Managing the business includes activities like monitoring cash flow, analyzing the P&L, deciding about next month’s marketing activities, evaluating what’s working on the menu and other “strategic” functions to position the restaurant for future success.

Having the right partners in place to take tasks off the owner’s plate will free up time and allow the owner to do what they do best. Run their restaurant business.

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