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The Restaurant business: Tempting the taste buds

Few industries have escaped the belt tightening effects of the recession and the restaurant industry is no exception. From Dawn Sweeney’s vantage point, the outlook is improving.
 Carlee McCullough

Few industries have escaped the belt tightening effects of the recession and the restaurant industry is no exception.  From Dawn Sweeney’s vantage point, the outlook is improving. She is the president and CEO of the National Restaurant Association.

“As the cornerstone of communities across the United States, restaurants will continue to be an essential part of our daily lives,” says Sweeney.

This month, our focus is on the restaurant business. And while the restaurant business can be brutal and time consuming, it can also be a very rewarding and lucrative venture.

A lack of planning and undercapitalization doom many restaurants to failure in year one. But with projected sales of almost $600 billion and over 900,000 food service operations, there is still room for additional restaurants to enter the marketplace.

Business plan

As we have noted many times before, a solid business plan for any business venture is a must and the same goes for a restaurant, particularly if outside financing is required.  But even if financing isn’t needed, the business plan is your roadmap to success.


Whether you create your own concept or buy into an established franchise, remember that the concept should be one that encourages repeat business. A concept informs a potential customer of what to expect upon arrival.

Restaurants are typically classified as either quick service, midscale or upscale.  Quick service (fast food) tends to offer a limited range of food options.  Midscale restaurants are considered a good family value in a casual environment.  Upscale venues tend to be more formal with a focus on adult clientele and charge a higher price for higher quality in a more formal environment.


The restaurant layout is driven by the concept and should be appealing to the eye.  Whatever the size of your location, make sure the environment is comfortable and workable. The kitchen and prep space should accommodate your staff and storage comfortably and the dining area, if any, should place customers at ease.  Remember, repeat business is critical to the success of any venture. Studies have shown that approximately 50 percent of patrons arrive in pairs, 30 percent arrive alone or in threesomes, and approximately 20 percent arrive in fours.


A restaurant’s name may relate to the theme, type of food offered, the location, family name or a play on words.  Make the name easy enough to remember, pronounce and spell. However, remember if your name is Wendy, be careful about starting a quick serve restaurant called Wendy’s.  This may be trademark infringement and could potentially result in litigation before you even get started.


The creation of a menu is more complex than just what food you can prepare well.  Factors to consider include: the cost of the ingredients, the demand from customers, the preparation time, and the profitability of the item. Your menu should consist of items that encourage repeat business. The design of your menu is equally as important as the food.

The menu should be appealing to the eye and capable of easily being read.  Nationally ethnic restaurants are growing in popularity. Whether it be Chinese, Thai, Italian, Indian, soul food, or Caribbean, ethnic food and fusions are becoming increasingly in demand in metropolitan cities.

Target market

Initially, focus is key. Knowing and understanding your target market is important because it narrows your focus. No restaurant appeals to everyone. It is impossible to capture all of the market. By identifying your target market, whether it be young adults, families or business people, you can begin to craft your message and target all marketing efforts to those particular groups.


Location! Location! Location!  This is a major factor toward a successful restaurant venture.  Factors to consider include: visibility, foot traffic, population base, accessibility, and parking. Lacking either one of these items could be disastrous for any restaurant project.  Take the time to research anticipated real estate development in the area. Also find out if there are any restrictive ordinances such as liquor license requirements, which may be critical if you intend to serve alcohol.


Outside of the food served, service is the next item that can kill your business.  You can have great food, but if the service is awful, customers will not return.  Build adequate training and team building into your business plan from the very beginning and it will become a part of your standard practice.

NEXT WEEK: A few of Memphis’ finest share how it should be done.

(Please send your questions to Carlee McCullough, Esq., Contract Compliance Officer, City of Memphis-Office of Contract Compliance, 125 N. Main St., Suite 546, Memphis, TN 38103 or e-mail: This email address is being protected from spambots. You need JavaScript enabled to view it. .)

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