To be a restaurant, bar, pub, club or …….
That is the question!
Most people thinking about opening something in hospitality will have this in mind already. They will have a concept and envisage themselves there. But before you take the plunge, let’s go through the pros and cons of each. If you have these in mind then you are more likely to succeed. Please bear in mind that these are general categories and a lot of venues are a combination of these categories.
I am generalising here, but on average you do not make as much money from food, as drinks. In fact most dishes make very little money once you have taken all the costs out. But a food led business does give you scope to add other things. Pre-dinner drinks, wines with meals, side orders and desserts, all increase the spends of people and therefore your revenue. Generally most restaurant customers tend to behave (not always) more controlled, as alcohol is drunk while food is consumed. Licensing is also easier (not a given) to get with a food led place as it is deemed a more ‘neighbourhood friendly’ environment.
Take away shops.
These venues rely on high turnover of quick meals to make money. There is less staff as you have no need for a big team (chefs are often the sales people) and you need less floor space as people are not sitting down to eat. These venues tend to be long hours and due to the fact that it is a quantity led business, most places will be family owned and operated to lower costs. This is not always the case and if your idea is to expand it is important to think about how this can occur without increasing overheads to an nonviable level. This is completely do-able, but often needs a change in the thought process of the owner.
Turnover again is important. To make money in this type of venue make sure you train your staff on up-selling, being as subtle as possible. To make ok food you need a good chef, which is hard to find. To have customers coming for just your food you need a great chef. To compete with the top restaurants and win awards you need an amazing chef, well known, becoming a celebrity style chef and to build up a reputation. This takes time. After all Gordon Ramsey didn’t say today I’ll open a Michelin star restaurant, and become a TV chef. No, he worked his way up the ranks. So either buy the famed or set in for the long hall.
Pop-up, Market and Festival Food Stalls
This is such a big topic to cover, that we will actually revisit it in it’s own blog. This is becoming more and more popular at the moment. It is a great way to try different ideas out before committing too much money to an enterprise. It is like the back packing of the industry. Everything needs to be relatively portable and although the product is very important, most of the time the personality of the owner/supplier is the thing that will draw customers in. It is an easier business to set up, but it is a harder business to expand, although some have made that jump well, they are few and far between.
Now days, cafe’s don’t just sell coffee. The closest you get to a dedicated coffee seller are the coffee carts/cars/trucks that are dotted around, predominately near a tube station or major transport hub. A café needs to be a small, casual restaurant/eatery that specializes in coffee and tea. This is due to the fact that you can not sell enough coffee to pay for staff, rent and rates (let alone the coffee), so café’s have needed to diversify. There are some things to be very aware of here. You must know your customers and the local demographics to know what level of coffee service is required.
Some coffees can take up to 4 minutes to make (some longer), if done properly. And although there are some people who are willing to wait that long, most people (currently) want something faster. As cafes also make money on quantity, think about the fact that even if a coffee takes 3 minutes to make, most machines only have the capacity to make 2 cups at once so technically that would meant that you could make 40 coffee’s an hour maximum. If this is what you want to go for, make sure your range is diverse enough that you can make money on other items, if people do not want to wait. However people who do want high quality coffee will often pay more for it, which increases revenue and decreases the quantity factor (a little).
It is true that most of the time the profit margin on drinks is far higher than that of food. However opening a drinks led venue also means adding in a lot of other factors including, entertainment, security and drunk people. Not that I advocate getting people drunk, as a manager, you are both morally and legally responsible for the people within your venue and making sure that they drink within their limits. But try as you might, some customers will find a way and then you will have to deal with those situations in a way that does not impact others.
Often customers go to pubs and feel like it is not actually going out. The products are sold at low cost, and the costs are kept to a minimum. If you have a pub in a highly residential area with low rent and rates, then you may make a little profit, especially if it is an independent and not part of a brewery. The art to having a busy pub in a social area is making sure you price it right. The prices need to be a little lower than your neighbours, but make you appear the cheaper, ‘local’ option. A lot of pubs currently offer ‘microwave’ food, so that they can quickly and easily provide food to adhere to their licensing requirements.
However the ones that are standing out from the crowd are the ones that have a chef (or a cook) on board and provides good ‘home cooked’ to in some cases ‘gourmet pub’ food. I would recommend taking a step away from the microwave, it is worth the cost. Brewery ‘Chain’ Pubs are good as they have a lot of structure in place, but that comes with less freedom as you are essentially almost leasing a franchise.
People go to bars for entertainment, remember to add the cost of this in to any forecasting. If you decide on a good all round bar, then the food will have to be of an acceptable level with a small selection of meals and shared platters. The drinks list will be a mix of everything from Pints to Classic Cocktails. But remember you will never be able to please everyone, so go with the majority, unless you want to be known as a speciality bar. Also people expect DJ’s or live music on the party nights, Friday and Saturday, sometimes they expect it even earlier in the week too, depending on your style. If you don’t have the draw card of entertainment, customers may just go to the pub, which in some cases also has entertainment. The hard part of this type of venue is keeping the interest and balancing a reasonable level of service and products with what people deem to be reasonable prices. But predominately it is a party atmosphere and therefore quite a fun environment to work in.
This type of venue has become an art form in the past couple of years. The level of Mixology (that is the art of mixing drinks into a cocktail format) has soared to new heights and gone to places you can not even imagine. Using dry ice, making your own spirits and cocktail flare are just a few things that it encompasses. If you know nothing more about cocktails than drinking, find an expert or don’t do it. You will not be able to compete with the cocktail bars around. This does not mean that you should not have cocktails in your ‘bar’. But do not advertise yourself as a cocktail bar, as people are hunting out new cocktail bar venues to see the latest trends in the industry and just do not want to disappoint your customers. Having said that, if you have an expert in your venue, then watching and tasting some of the creations can be amazing.
These work on volume and late night DJ’s. You can make a lot of money from clubs, with paid entrance. But you need to know that you can draw the crowds. A lot of clubs will work with promoters, which we will cover in another blog later. You also need very good security, that you can trust and to be strict on having no drugs on site. Some will slip through, people can be very clever when they want to be. But if you are known to have a lax policy the likelihood is that you will get closed down by the police, pretty quickly. It is illegal and from a business point of view people on drugs don’t drink as much generally, so it is in everyone’s best interests to not allow it. The other thing to be aware of is that things can flair up in a club very quickly, so it is very important that your security and managers are alert not just on the door, but also inside the venue.
There are so many options for opening a venue, and the current trend is to mix and match things, which can give more potential to your venue if done correctly. But if you are new to the industry, start slowly and don’t take on to much but leave the potential to try other things later. In the mean time, check out some of the different types of venues in the area you are thinking of opening. Not only will this give you an insight into the area, but it may give you an idea or two.