Every year hundreds of thousands of restaurants open with great expectations, and every year almost as many close down. The successful restaurateur is a combination of entrepreneur, entertainer, and magician. Your success in owning a restaurant will come as a direct result of solid business practices and your ability to entertain and satisfy your customers.

Introduction xv
Part I: Evaluating Your Dream 1
1 Before You Start 5
1. The restaurateur as entrepreneur and entertainer 5
2. The menu 6
3. Trends 6
4. Types of restaurants 7
4.1 The gourmet- or fine-dining room 7
4.2 The family, mid-size, casual restaurant 8
4.3 The quick-service or fast-food restaurant 8
4.4 Social and contract caterers 9
2 The Structure of Your Business 11
1. The sole proprietorship 11
1.1 Advantages 11
1.2 Disadvantages 12
2. The partnership 12
2.1 Advantages 12
2.2 Disadvantages 13
3. The corporation 14
3.1 Advantages 14
3.2 Disadvantages 15
4. Franchising 15
5. Building your team 17
Contents
vii
3 The Business Plan: Feasibility Study 19
1. The business plan: An overview 19
2. The feasibility study 21
2.1 Target area analysis 23
2.2 Population profile 23
2.3 Economic profile 24
2.4 Competition analysis 25
2.5 Industry and tourism profile 27
2.6 Cultural, recreational, and sporting events 27
2.7 The real estate marketplace 27
3. Pre-opening marketing strategy 29
4 The Financial Plan 31
1. The capital budget 32
1.1 Hard costs 32
1.2 Soft costs 35
2. Investment plan 37
3. Financial statements 38
3.1 The income statement 38
3.2 The break-even analysis 43
3.3 The balance sheet 44
3.4 The cash-flow analysis 44
4. Resources 45
Part II: Start-Up 47
5 Start-Up Practicalities 51
1. Naming your restaurant 51
1.1 Your own tastes 51
1.2 Marketing implications 51
1.3 Copyright 52
2. Registering your business 52
2.1 In the United States 52
2.2 In Canada 53
3. Trademarks 53
viii Start & run a restaurant business
Contents ix
4. Obtaining licenses and permits 53
5. Insurance 54
6 Choosing Your Restaurant's Location 57
1. Finding the fit 57
2. Downtown versus suburban 58
2.1 Suburban 58
2.2 Downtown/City 59
3. Freestanding versus mall location 59
4. Zoning 60
5. Leasing versus purchasing 60
7 Design and Renovation 65
1. Building your dream 65
2. What designers can do for you 66
3. Design 66
4. Décor 67
5. Designing without a designer 68
6. A word about renovation 69
8 Equipment and Furnishings 71
1. Equipment 71
1.1 Sourcing equipment 72
1.2 New versus used equipment 72
1.3 Buy versus lease equipment 73
1.4 Kitchen equipment 73
1.5 Front-of-the-house equipment 74
2. Furnishings 75
2.1 Tables 75
2.2 Chairs 75
2.3 Other furnishings 78
2.4 Kitchen/bar small wares 78
2.5 Dinnerware (china, flatware, glassware, linen) 79
9 Your Employees 85
1. Job analysis, job description, and job specifications 85
2. Recruitment 86
3. Selection 88
4. Orientation and training 91
5. Policy and procedure manuals 91
6. Reward and discipline 95
7. Performance appraisals 95
8. Pay scales 96
9. Management communications 96
9.1 Log books and incident and accident reports 96
9.2 Managers' meetings 100
Part III: Managing Your Operation 103
10 Your Menu 107
1. Types of menus 107
2. Menu pricing 108
3. Menu design and development 109
4. Developing a wine list 112
4.1 Wine pricing 113
4.2 Designing your wine list 113
4.3 Resource guide 115
11 The Art of Service 117
1. Keeping customers satisfied 117
2. Service styles 118
3. Front-of-the-house considerations 119
4. Dealing with difficult customers 120
12 Marketing 123
1. Ongoing marketing strategies 124
1.1 Advertising 124
1.2 Sales 126
1.3 Merchandising 126
1.4 Public relations 127
1.5 Promotions 127
2. Professionals, and what they have to offer 128
2.1 Sourcing the pros 129
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3. Building your marketing base 130
3.1 A loyal customer is free advertising 130
3.2 The role of service in marketing 132
4. Increasing sales by using the five "Ps" of marketing 132
4.1 Product 133
4.2 Place 133
4.3 People 133
4.4 Price 133
4.5 Promotions 133
5. The restaurant critic: Friend or foe? 134
6. Web opportunities 134
13 Cost Control 137
1. Keep control systems simple 137
2. Standard recipes 140
3. Standard purchase specifications 143
4. Supplier selection 143
5. Purchasing 144
6. Par stocks 146
7. Receiving 146
8. Storage 147
9. Perpetual inventories 148
10. Issuing 151
11. Service area control 151
12. Cash control 153
12.1 Cashing out 153
12.2 Daily sales reconciliation 154
12.3 Floats 154
13. Till procedures 157
13.1 Pulling the till 157
13.2 Spotters 158
13.3 Skims 158
13.4 Counterfeit money 158
14 Bars and Pubs 159
1. Responsible service of alcohol 160
2. Handling difficult situations 160
3. Bar service and products 162
3.1 Bar service 162
3.2 Bar products 162
4. Bar equipment and small wares 164
4.1 Bar equipment 164
4.2 Small wares 165
4.3 Disposable goods 166
4.4 Bar condiments and juices 166
4.5 Garnishes 166
5. Glassware 166
6. Control Systems 167
6.1 Mechanical controls 168
7. Entertainment 169
8. Advertising and Promotion 170
8.1 Advertising 170
8.2 Promotional strategies 171
8.3 Public relations 173
Conclusion 177
Bibliography 179
Checklists
1 Business plan checklist 22
2 Market feasibility study checklist 28
3 POS system 76
4 Hiring/interview checklist 90
5 Orientation procedures 92
6 Floor training checklist 93
7 Analyze your readiness to start and run 175
your restaurant or bar
xii Start & run a restaurant business
Samples
1 Construction budget cost summary 34
2 Equipment list (Generic) 36
3 Income statement 39
4 Kitchen small wares 80
5 Job description 87
6 Job specifications 88
7 Job ad 89
8 Performance appraisal 97
9 Meeting agenda 101
10 Standard recipe 141
11 Food cost form 142
12 Purchase order 145
13 Inventory 149
14 Perpetual inventory/bin card 150
15 Server cash-out sheet 155
16 Bartender's summary 156
Worksheet
1 Competition analysis 26