Everybody’s Business: Planning important in restaurant field

By Sandra Taylor-Sawyer

Why would anyone want to open a restaurant? Ask any person who owns, has owned, or has worked in a restaurant; most will tell you it’s not a good idea to start another one.

Then why is one of the most popular new business ideas seen by Small Business Development Centers nationwide a restaurant startup?

From a purely statistical standpoint, crunch the numbers, and across America the refrain is the same: Eating out is the new eating in. Time-strapped people are abandoning the family kitchen in droves even with wages stagnant.

American restaurants bring in more than $500 billion in sales according to the National Restaurant Association. The U.S. has approximately 925,000 restaurants, and at least 8,000 are added each year.

However, the failure rate for restaurant startups is higher than other startups, which makes finding financing more difficult.

There are a lot of great reasons for starting a restaurant and these may include better recipes, service, location, or the ability to offer a cuisine not currently available in the area. Whatever the reason, the single most important step is to begin with a good business plan.

While it may seem that there are many obstacles to success in the restaurant business, there is no challenge that cannot be overcome through proper planning and understanding the rules of the game.

Delicious food and great service are preceded by fire and food safety regulations.Restaurants are a source of environmental concerns as well. Key elements in a restaurant business plan will address subjects like commercial-grade refrigeration equipment, fire suppression systems, vent hoods, and grease traps.

In addition, the business plan will include a close look at the cash cycle — the flow of cash through a business. Cash comes in by investment from owners and creditors. From here the production of goods and/or services are made; employees are paid; buildings, equipment, materials, and supplies are purchased. Once the goods and services are sold, cash is received. Finally, the monies flow out to pay taxes and debts, return money to owners, and to continue the business activity.

A business plan can identify when shortfalls will happen and what steps are needed to implement adjustments.