You’re ready to take the dive and open a restaurant. You have the capital and even a space in mind to rent or buy. The one thing you don’t have? Experience. Surely, there’s still a way to make your restaurant dreams come true, right? But how?
Here’s how to run a restaurant without experience:
- Make sure your business plan is original but not overly risky
- Have at least five months of working capital ready
- Use the business experience you already have, even if it seems unrelated
- Hire experts to fill in the gaps
- Keep at it, as there will be difficult times ahead
In this article, we’ll elaborate on each of these must-follow tips so you’ll be poised for success. By the time you’re done reading, you’ll have an actionable plan you can utilize as you get ready to open your first restaurant.
Have No Experience but Want to Open a Restaurant? Keep These Expert Tips in Mind!
Create an Original Business Plan, but Play It Relatively Safe
Before your dreams of a restaurant can get off the ground, you must have a plan. You also have to narrow things down if you had only been spit-balling before this point.
Let’s start with the most basic question: what location did you have in mind for your restaurant? You might have been considering several places, in which case, it’s time to pick one or two solid candidates.
Look at the other businesses on that block as well as several blocks over. How many of them are restaurants? If several are restaurants, what kind of food do they serve? Which is your most popular restaurant in town? What’s their menu like?
What kind of clientele do the restaurants attract in your area? Is it mostly older folks in their senior years, younger adults, or families? If you don’t have concrete answers to any of these questions, you need to do some neighborhood research to glean the information before you go any further.
This data serves as the backbone for your restaurant concept. If you’ve wanted to open a restaurant for years now, we’re sure you have at least a few concepts, right? Some of them might be ultra-specific while others are more general.
Originality matters when it comes to your restaurant plan. You don’t want to do the same thing everyone else in your town is doing or has done because that will fail to make a splash. Yet you have to ensure also that your restaurant idea isn’t so niche that it appeals to only a small sector of the market.
The information you gathered will inform your decision. Playing it relatively safe with your restaurant concept is a smarter idea than going out on a limb with a big, brave, bold idea, at least for your first restaurant.
We’re sure we don’t have to tell you this, but the restaurant industry is incredibly cutthroat. When you add to it the ongoing coronavirus pandemic, matters get even worse. Forbes, in a 2021 report, say that across the United States, the pandemic and resultant economic consequences have led to the closure of 17 percent of the country’s restaurants.
Even outside of the pandemic, restaurant industry publication FSR Magazine reports that most restaurants–somewhere in the ballpark of 60 percent–don’t stay open for a year. Even if you get through year one and onto year two and so on, 80 percent of establishments don’t survive beyond the five-year mark.
This information isn’t meant to scare you or dissuade you from pursuing your goals of opening a restaurant. You need to have the full picture though or you could funnel thousands of dollars (and often even hundreds of thousands of dollars) into a venture that’s destined to fail.
Have Extended Working Capital
As we mentioned in the intro, it’s not funding that you’re lacking, just restaurant experience. That being the case, you should have no problem pulling together an appropriate amount of working capital.
Since this will be your first foray into owning and running a food business, allow us to explain working capital to you. Working capital is the amount of money you have available to put into your restaurant at any given time. You can calculate working capital very simply. Take your current assets and subtract them from your liabilities and voila, that’s your working capital.
Included within working capital can be financials like cash, trade receivables, and inventories. The cash conversion cycle or working capital cycle is the period of taking your assets and converting them into revenue. You don’t want to go too long without a return on your investment, as then your restaurant is in the red, not the green.
What amount of working capital should you have available to put into your new restaurant? Restaurant management software company Upserve states that you could spend $95,000 to $2 million to open your own restaurant.
Restaurant Engine, using results from a Restaurant Owner.com survey, says that for each seat in your restaurant, you might spend $3,046 on startup costs. How many seats your establishment has varies depending on the type, with fast-food restaurants containing 11 to 14 seats, banquet restaurants 10 to 11 seats, and table service establishments 15 to 18 seats on average.
On the lower end of that spectrum then, your restaurant startup costs could be $30,460. You could also spend as much as $54,828 if your restaurant has 18 seats by using Restaurant Engine’s numbers as the basis.
Keep in mind those are just the fees for opening your restaurant, so you’ve only scratched the surface. You also have to pay for the following:
- Ordering food and ingredients (ongoing)
- Hiring staff
- Paying staff (ongoing)
- Redecorating the restaurant
- Printing menus
- Restaurant management software (ongoing)
- Liquor licenses and other licenses (ongoing)
- Restaurant insurance (ongoing)
- Website and social media pages (ongoing)
- Marketing (ongoing)
One month’s worth of working capital is not going to be enough to cover all these expenses, not by a longshot. Instead, you need working capital that can last you five to six months.
This extended cash line can ensure you have the capital to pay for the above expenses as you get started. If your restaurant’s revenue is only a trickle in those early days, the padding you have from your working capital–whatever is left of it by the time the above expenses are factored in–will keep you afloat.
Use Your Prior Business Experience
Although you’ve never worked in the restaurant industry before, you do have business experience of some sort. You might try to downplay this at first because you feel like, since you’re new to this industry, you don’t have a lot to contribute. Our expert advice? Use whatever experience in your acumen that could be relevant to running a restaurant.
Perhaps your background is in business management. This can be very useful for the future of your establishment. You’ll be able to watch the flow of how your restaurant operates with an eagle eye, identifying any bottlenecks and opening these up before they become significant issues.
Are you a sales or financial whiz? Your experience could be even more paramount to the success of your restaurant. You might think of small things that the rest of your staff would not have, such as installing low-flow faucets or LED lightbulbs in your restaurant to make it more energy-efficient and thus less expensive.
You can also review how much money your restaurant is putting into software or ingredients to determine if you’re overspending and where. Since cashflow is the lifeblood of your restaurant, you need to ensure it doesn’t dry up. Otherwise, it’s game over.
Your sales acumen will make you a valuable asset when it comes time to produce monthly reports on your restaurant’s progress. As time goes on and you acquire more historical data, you can use this to produce predictive analyses. Based on your past data, you’ll have a much clearer idea of how much money your restaurant can earn, how many customers will come in, how much money you’ll spend on payroll, and what other related costs might look like.
Perhaps before you got into the restaurant industry, you were a marketing or public relations pro. Your experience will be especially called upon when it comes time to promote your restaurant. You’ll know which social media platforms to target according to the demographics of your customers. You’ll also be able to create multichannel marketing campaigns that utilize billboards, radio and TV ads, online ads, and perhaps even mail ads.
You may have such a strong background in marketing or PR that you don’t need to hire that many reps to spread the word about your restaurant. This only conserves your working capital, which is always a good thing.
Even if you worked in customer service in an unrelated industry, don’t discount your experience. Being able to understand and accommodate for the needs of customers is one of the most valuable skills anyone can have, especially in the restaurant industry.
You’ll know exactly how to handle it when your customers inevitably have a complaint about the quality of food or the length of service. You’ll also be able to act as a mentor to your hired staff, teaching them the dos and don’ts of managing customers and increasing morale when needed.
If your job experience is outside of even the realms we discussed in this section, that’s okay too. By taking a bit of time to think about it, there’s surely a way you can cherry-pick the skills on your resume and apply them to your new role as a restaurant owner.
Hire Experts to Fill in Experience Gaps
You’ve heard the quote that “no man is an island,” right? If not, acquaint yourself with it now, as you must remember that line going forward.
Even if you’re the restaurant owner and general manager, running the establishment is not a one-(wo)man operation. Trying to manage your restaurant this way will undoubtedly lead to its premature shutdown. There already exist enough factors that can cause your restaurant’s failure as it is. You don’t want to accidentally self-sabotage yourself!
We talked in the last section about using your experience to your benefit, but you have to be honest with yourself too. If you don’t know much about the financial side of running a restaurant, then hire someone who does. If you can’t cook, then you need chefs.
Here is a rundown of restaurant roles that you will likely have vacancies for
- Dishwashers: These people work in the kitchen to clean the seemingly endless load of dirty dishes that accumulate as customers dine at your restaurant. It’s recommended that you hire two to three dishwashers.
- Cashiers: Not every restaurant requires a cashier, as it depends on the restaurant style. If yours is a drive-through establishment, then yes, you must have a cashier. That’s also true if customers can pay at the front desk.
- Baristas: If your restaurant is a café or has a bakery, a team of baristas is a necessity. These staff members will spend their time prepping coffee as your customers like it. Depending on the size of your establishment, you may require two to four baristas all working full-time.
- Barbacks: Is your restaurant so reliant on your baristas that they could use a hand? Barbacks are assistants who can do the jobs that baristas necessarily can’t because they’re too busy attending to other customers. However many baristas you have, you’d need at least half that number of barbacks.
- Bartenders: Although many people think of bartenders as those who prepare only alcoholic beverages, bartenders can make non-alcoholic drinks as well. Should your restaurant serve any fancy drinks outside of fountain beverages, you should plan to hire some bartenders.
- Hosts and hostesses: The moment a customer walks into your restaurant, they’ll be greeted by a host or hostess. This person is responsible for creating a customer’s first impression and establishing the mood that will continue throughout the customer’s time at your establishment.
- Bussers: A busser cleans the tables between customer visits so they’re ready for the next group. Other tasks that bussers tackle include filling drink cups, serving water or bread, and putting fresh utensils on the table.
- Runners: For bigger restaurants or those with a healthy flow of customers, hiring a runner or several makes sense. The duty of a runner is to take meals that come out piping hot from the kitchen and then serve them. Runners help waiters and waitresses so everyone is less overwhelmed.
- Waiters/waitresses: Also known as servers, the waitstaff is arguably your most crucial staff members. They speak with the customers, take their orders, often serve the food, produce the bill, and process it. You need a team of friendly, quick-footed, and knowledgeable waiters and waitresses at your restaurant, at least one for every three tables.
- Sommelier: If you’re an upscale establishment with a long wine list, hiring at least one sommelier is within your best interest. They can recommend wines to pair with any dish on your menu, enhancing the dining experience for your customers.
- Prep cooks: Another role in a posher restaurant is that of prep cook. These cooks spend their time in the kitchen, expertly crafting the high-quality dishes your restaurant will become known for.
- Short-order cooks: For smaller restaurants, you’d use a short-order cook instead of a prep cook. A short-order cook can whip up less complex dishes such as burgers, sandwiches, salads, or breakfast and brunch foods.
- Fast-food cooks: Fast-food restaurants have no need for prep cooks or short-order cooks. Instead, you need fast-food cooks. This staff knows the formula for preparing fresh burgers, golden fries, and desserts.
- Line cooks: Large restaurants require a team of line cooks, anywhere from a few to a dozen depending on the size of your establishment. Line cooks help chefs with their jobs so the cooking process goes smoother.
- Food and beverage manager: A second role for a big restaurant is that of food and beverage manager. This person oversees your compliance with health codes and requirements while also overseeing your inventory.
- Kitchen manager: The kitchen manager can help you select your cooking team if not outright do it themselves. If someone needs to be fired from the kitchen, it would be this manager’s responsibility to do so. Otherwise, they may help with inventory management too.
- Pastry chefs: Some restaurants can benefit from a small team of pastry chefs, especially if your restaurant is brunch/breakfast-themed, café-oriented, or if you have a fancy menu. Pastry chefs can make your dessert menu anything but ordinary, preparing dishes your customers will rave about.
- Executive chef: The main chef in the house is your executive chef. They can work with you to create a menu that will have your customer’s taste buds tantalized. If there’s any staff member you want to put a lot of time and attention into hiring, it’s an executive chef. Make sure they’re paid well so they’ll stick around!
- Sous chef: Underneath an executive chef is the sous chef, who work as the executive chef’s assistants. That may require the sous chef overseeing the kitchen if the executive chef needs to take a day off.
- Assistant manager: If you’re the general restaurant manager, you may want to consider hiring an assistant. They can take over for tasks when you’re too busy, including crafting the menu, making decisions, training staff, and filling out restaurant-related paperwork.
Be Willing to Stick with Your Restaurant for the Long Haul
You’ve got your restaurant concept, your staff, and lots of working capital. It would be wonderful if adding up those ingredients got you a surefire result each time, but that’s simply not how the restaurant industry works.
The early days may be fraught with difficulty especially. You’re pouring in a lot of money but seeing only a trickle of people come into the restaurant. That will hopefully change, as your restaurant’s survival depends on it. Even once the anxiety of empty seats passes, the phases of running the restaurant become more harried.
Now you’re busier than ever. You won’t be able to oversee as much of the process as you once did because you’re being pulled in many different directions. This is where you’ll rely on your hired staff most of all. If you hired trustworthy, quality people, that’s not such a big deal.
Owning a restaurant is not easy, and we would be remiss to make you think it is. You can become established, have a bunch of regulars and years of experience under your belt, yet things can still go wrong. You must be willing to update your menu and sometimes even your restaurant concept as the years go by, changing and evolving as customer demands and tastes do.
If you keep this in mind and you’re willing to put your all into your restaurant, then yours could just be one of the few that survives.
Having restaurant experience is helpful, as you understand the rigors of what goes on in the dining room, in the kitchen, and elsewhere behind the scenes. Even if you lack this experience, that doesn’t mean you have to postpone your dreams of owning a restaurant. You just need staff that understand what they’re doing inside and out. Oh, and it helps to have the capital to hire that staff.
Best of luck with your restaurant!