The 5 questions you should ask before starting a food shop business.

Posted May 29, 2020

It is the dream of many people to open a restaurant/cafe of their own. However, despite the enthusiasm of entrepreneurs, most of them ended up in failure and bankruptcy. Why is that?

In fact, the coffee shop you dream of won’t have people coming to your door. Just because you open it in a crowded place doesn’t mean you will succeed. If you don’t figure out the gap between “market demand” and “ideal in mind”, you will easily stumble on the way to open a store.

Instead of spending a lot of money to open a dream store in accordance with the inner impulse, the better advice is to clarify the following five basic issues, think clearly before implementing, and reduce the possibility of failure:

1,Why do I want to open a restaurant? What kind of restaurant would you like to open?

These two questions can help you confirm your determination and original intention to open a store. Only when the original intention is established can the direction of restaurant operation be determined, and the strategy selection of capital, personnel, menu, location, and decoration be influenced. You can either start a food kiosk in a mall or open a retail shop for in-line stores.

If the original intention of opening a restaurant is to create a comfortable and happy dining environment, the following strategic considerations must focus on this central theme. Is it to run a family canteen? Or do you want to create a lively and exuberant American restaurant? Although they are in line with the original intention, their preparation direction is totally different, depending on how the entrepreneurs make decisions and implement them.

Caf é & meal Muji: a Muji restaurant extending brand value

Caf é & meal Muji, the Muji restaurant, strictly selects local and seasonal ingredients, mainly adopts the cooking method of preserving the original taste of food, and adopts self-service instead of tableside service to convey the brand value of “natural life” and “not paying attention to the essence” to customers.

For MUJI products, the purpose of setting up the restaurant is not to promote tableware, tables and chairs, but to pass on the “original intention” to consumers through the “food” channel, so as to create more potential customers of MUJI products. (extended reading: why does Muji open a restaurant? The real reason, you may have guessed wrong…)

2, What products do I want to sell? How to sell it?

After establishing the original intention of opening a restaurant and drawing the basic blueprint of the restaurant, the next thing is to decide the main product.

For the novices who start a restaurant, they start with the products they are good at and interested in, and have a high probability of success. In addition, we should also recognize the current market trends, such as: what kind of products can attract customers? What kind of service is what customers really need?

Understand your own expertise and ability, make a prudent decision after integrating market information, and avoid the idea of “selling brunch seems to be very popular now, then I’ll open a business!”! “After all, in a fast-moving market, just following the trend can’t survive for a long time; it’s just to find out the special products that others haven’t made, the new services that others haven’t provided, and the customers that others haven’t actively developed.

Cama Cafe : only takeaways

He Binglin, chairman of CAMA cafe, a famous chain coffee chain, pointed out in an interview with capability magazine that he had set a clear product positioning from the beginning: “make it now, make it cheap, and specialize in the outside”. Since the target customers are office workers, they will work and rest with customers even during business hours, which is set from 7:30 a.m. to 8 p.m.

Coffee items and pricing have also been fully considered. There are no more than 20 beverage items and no food to be sold, so as to avoid the company’s development being interfered with by too many products. Considering the high price in the existing market, CAMA mainly focuses on parity, and the average price of drinks falls between 40 yuan and 70 yuan. Because of its high level of efficiency, the operation mode almost has no internal seats and mainly takes the external seat. In addition, CAMA’s delivery service is limited to 10 minutes to ensure the temperature and quality of the coffee.

Originally, a small coffee shop has developed into a well-known brand with nearly 100 franchised and franchised stores by successfully clarifying its product positioning and selling methods.

3, Who is the target customers I want to focus on?

There are hundreds of customers in the world. A small shop can’t be closed all at once. If you try to satisfy everyone, be careful, and lose focus, and nothing will happen!

At this time, “market segmentation” must be done in advance. Market segmentation is to divide consumers into different groups, and then adjust business strategies by analyzing the individual needs of sub groups.

Before opening a restaurant, consider carefully “what kind of guests would like to come to my restaurant? What’s the motivation of the guests? Only in this way can we choose the right location, interior decoration, meal pricing and adopt the corresponding service mode.

Wangpin group operated by multiple brands

Wangpin group, which has a variety of brands, will provide appropriate services for its customers according to the restaurants with different positions. For example, Wang pin steak advertises nobility, and stipulates that service colleagues must bow 15 degrees; while Tao plank house takes the Japanese route, it must salute 30 degrees. The young and lively sirloin steak doesn’t need to bow, just show a warm smile.

Wang pin’s way of success lies in that every brand sticks to its own position. If there is a vacancy in the market, a new brand will be established to meet the new customer base. (extended reading: [full analysis of wangpin group’s case] separate the style and build brand recognition)

4,How much can I afford? How much profit do you want?

No matter what kind of business, you have to earn “profits” in order to continue to operate. Running restaurants is no exception. It is one of the important tasks for managers to find out the profitable business model and adjust it according to the situation of stores.

First of all, we must make clear the “cost” and “revenue” in order to calculate the monthly profit. The book “money making figures of restaurants” turns cost and revenue into two formulas for reference:

Cost = food + labor + rent, not more than 70% of turnover

The three items of material cost, personnel cost and rent are collectively referred to as “FLR cost”, which is a unique indicator of the catering industry. If FLR cost is less than or equal to 70% and target profit is 10%, the remaining funds must be controlled within 20%. Among the 20% of the funds, the sub goals can be further set, such as: the cost of water, electricity and gas should be controlled within 5%.

In terms of rent (R), although there is a big difference between the shops in the prime location vs. lane and lane, they may have different advantages and attract customers of different classes. Materials (f) and personnel (L) are determined by the type of food and beverage: the cost of materials in fast food stores and cafeterias may be higher than that of personnel. The more high-level catering industry needs to provide services, the higher the cost of personnel is.

Because the possible expenses of different catering industries are different, we only need to grasp the general principles and modify the business model that suits us.

Revenue = number of customers x average consumption amount of customers

From this formula, there are six ways to increase revenue:

How to add new customers? – make good use of marketing and publicity.
How to keep regular customers? – how to make the customers visit again, how to prevent the loss of regular customers.
How to improve repeat visit rate ?- how to improve the probability of repeat visits?
How to increase the introduction of word-of-mouth? – advocating the recommendation of customers on behalf of others to help build up word-of-mouth.
How to increase the number of orders? – how to design the dishes so that the guests can order more?
How to improve the average unit price of dishes? – how to develop high additional quality meals/design packages and improve the average unit price.

In view of the above six development strategies, combined with appropriate space design: to improve the turnover rate with good dynamic and smooth service, we can initially establish the exclusive business model of the restaurant and find out the profit and loss balance point.

Xinye catering group starting from how much money to make

The “counting backwards” profit model, although it may bring pressure in the early stage, is a good way to urge entrepreneurs.

Li Hongjun, executive director and general manager of Xinye catering group, once mentioned in an interview that restaurant operators should “first determine how many times of the invested capital they will earn back in a certain period of time, and then calculate the turnover that should be achieved each month, as the basis for how many seats to arrange and how much price to set when opening a restaurant”.

In addition, hidden costs such as depreciation and amortization of equipment and the boss’s own salary must be taken out so as not to “look like” making money, but there is no profit at all in the end.

5,The store has opened! How can marketing make everyone want to come?

“Marketing” is not only the most important publicity at the beginning of the opening but also an investment that requires long-term investment.

In the past, the operation of the traditional catering industry only focused on the consumption experience in the store; however, the competition in the modern catering industry has often started from the online: how to make a reputation and attract attention before customers enter the restaurant? The use of digital power for marketing promotion has become a powerful chip for small stores to fight for large-scale well-known restaurants.

There are many kinds of marketing tools in the Internet Era:

Manage Facebook fan page, make good use of instant message reply, and customer punch in function.
Google map’s Restaurant Address Registration, 360 stores indoor panoramic Preview.
Image marketing and food photo promotion of Instagram.
Cooperation among major online food websites.

As long as the shop can make good use of the above social networking tools, it can also strive for fame with a small cost. you can also visit Ant Display and find more economical restaurant furniture.