Being an entrepreneur is never easy. Any kind of entrepreneur. One of the things that help today’s entrepreneurs is the availability and accessibility to technology that enables them to create products or services that have a clear differentiation. The differentiation allows them to get traction slightly easier and also to create entry barriers.
When it comes to the food and restaurant industry, scope for differentiation is quite minimal. Food is a commodity, whether you like it or not. If you don’t have a clear passion for food that drives you to do extensive research to find out gaps in the market or client pain points, you will never find a niche that you can exploit. With that in mind, we bring to you some of the vital challenges facing entrepreneurs in this industry today.
Location location location
We can never stress enough how important location is to a restaurant business. And you would know a good location from its price. A great location warrants higher demand, and subsequently a higher price point. It is basic economics. If you are not buried in wealth, chances are that you need to do vast research to land upon a bargain.
It is never just about the product and/or service
The great thing about any business is that it is predictable for the most of it. You provide a superior product, better service or varying combinations of both, and you are guaranteed success. When it comes to restaurants, unfortunately that is not the case. Beyong offering good food and quality service, you have to be wary of seemingly inconsequential things such as the street in front of you, passenger traffic, decorations and so on.
Financing opportunities are quintessential for any business, especially for one as capital intensive as restaurants. Due to their inherent risk, obtaining public loans or private capital to start a restaurant is going to be difficult. You need a comprehensive business plan, connections and vast market research, on top of your own individual experience, to prove your ability to establish a sustainable business.
It is frustrating that this business is extremely seasonal. Passenger traffic can vary not just by time of the year, but also within a single day. As a result, labor becomes an issue. You need to strike the perfect balance between full-time and part-time staff. Furthermore, you need to consider also healthcare insurance costs for all staff, regardless of their contract type. It requires an effective data management system and capable analysts to determine with accuracy seasonality in demand.
This post is not meant to be discouraging, but to strike caution into the hearts of aspiring entrepreneurs. As long as you are determined and willing to get your hands dirty, we do believe that it is possible to achieve success in your endeavor. Talk to as many successful restaurant owners as possible and learn the mistakes they made, so that you can avoid them.