Several restaurant professionals who were in Dubai for the Global Restaurant Investment Forum have warned that the restaurant business isn’t as easy as it seems. Many aspiring restaurateurs overlook important factors in the process of setting up, which eventually results in failing businesses. Read on and learn what to pay careful attention to before you leap into the restaurant business.
1. It’s everyone’s business – The first and foremost thing about the restaurant business is that it is extremely transparent. From menu prices to restaurant staff, there are no secrets in this business. Everything is open and everyone knows each others’ business.
“The key insight to opening your own restaurant is to appreciate that the restaurant business is the most open of all,” says Nicholas Lander, author of The Art of the Restaurateur and restaurant critic for the Financial Times in London, UK. “There are no secrets. Everyone knows every restaurant’s selling prices because they are on the menu and it is extremely easy to find out most purchase prices [online].”
2. Staff – Being able to find and then hang on to good restaurant staff is not as easy as it sounds, especially in Dubai where people are so transient. It is difficult to retain staff when there are so many good job opportunities available in the market. It is also wise to ensure your labour costs do not go beyond 30% of your overall costs.
“Because the restaurant business here is so incestuous, I recommend that restaurants fly in fresh talent from outside the country,” says Duncan Fraser-Smith, managing director of the The Cutting Edge Agency and CEO of Global Hospitality Limited. Smith, who has 23 years experience in the restaurant business and most recently launched Clé Dubai with Michelin starred chef Greg Malouf, calls for restaurateurs to take advantage of the UAE laws, which make it easy to get fresh talent from anywhere in the world and to put an end to a culture of poaching staff from within the market.
3. Location – This seems to have become a bit of a contentious issue now-a-days, but most restaurant consultants feel that the right location is still one of the pillars of setting up restaurants. Moneywise ensure your rent does not cross more than 12% of the total overall costs.
Nada Alameddine, the regional director of sales and marketing for hospitality consultancy Hodema, maintains that location is still the most vital factor in setting up a restaurant. “It is still location, location, location” she says. “People will always go to places that are accessible and which offer more of an experience than others that don’t.”
But author Nicholas Lander, says it is no longer a golden rule. “With social media and google maps, location is not as important as it used to be. People can now find places, which earlier were a nightmare to get to simply because it was so complicated.”
4. Deliver what you say – The phrase, ‘what you see is what you get’ has never been more appropriate. Lander says, “You have to match what’s inside your front door to what’s outside it.” And what he means by that is the concept, the food, the décor, the experience – all have to be aligned. There shouldn’t be any rude surprises for the customer.
Alameddine seconds Lander in this saying, “there must be a good blend between the design and interior décor, the food, the price and even the location; everything should add up. The customer should get what he or she expects.”
5. Always plan for contingencies – According to Smith, “nothing will ever go according to plan” in this business and when one is carrying out their feasibility study, this factor must be amply provided for. From license delays to supply chain nightmares, everyday will be a new challenge.
6. Secure your supply chain – In Dubai most products in restaurants are imported so to secure this supply chain is extremely important. Often you will see delays and sometimes even a shortage. This is something that needs to be streamlined at the very start or it could result in the business failing miserably. Your food and beverage costs must not go beyond 25% of your total overall costs.
Smith warns, “You have to make sure you have a guaranteed supply chain when you start up your restaurant business or you will fail.”
7. Take emotion out – You must believe in your concept and take any emotion out of the business. Do not make any emotional decisions over any aspect of your planning. Keep it strictly business.
“Investors will come up with a concept, go through the whole setting up process and then they get cold feet and want to change the whole idea because they ‘feel’ it won’t work” says Smith. “This is an absolute no-no. You have to take emotion out of the business and not cloud your professional judgement with feelings,” he adds.
8. Licenses – A seemingly obvious part of the business – licenses – is underestimated more often than you think.
“It can take anywhere from a month to four months to get various licenses in place,” says Smith, “so it’s best if you put in your applications for these as soon as you can, rather than wait for the last minute because it is not a quick and easy process.”
9. Economics – Another no-brainer that often seems to elude many aspiring restaurateurs is the simple economics of supply and demand.
Alamaddine points out that another golden rule is to stick to what trends are in demand and what is the relevant supply. Speaking in relation to Dubai, she says, “Dubai is well exposed and very international. So setting up here needs that little extra uniqueness and it would be wise to look at what other franchises already exist here.” She added that local cuisines are growing in demand, untapped foreign cuisines like Peruvian food and coffee shops.
10. Stubbornness – The restaurant business needs the patience of a spider and the stubbornness of a bull. Lander says that it is one of the hardest businesses to run smoothly and often one just wants to give up and this is where one has to be determined and almost stubborn in order to taste the fruit of success.
