Contrary to popular belief, most new restaurants in the US are not shut down within the first year. According to Forbes, there are only 17% of those that are, and that number is lower than the one for the whole market for services (19%). So, if you want to open your own restaurant in the US, just keep on going after your dream. Our guideline for restaurateurs will help you with that.
Niche and Concept
The cuisine of the restaurant
Research in recent years shows that Americans prefer fast food, meat, exotics, and sweets, but try to pay more attention to a healthy diet at the same time. Therefore, an ideal option for the US is the fast food kitchen, where there is a lot of meat and a little salad with fruits and vegetables. The Yelp 2020 Top 100 Restaurants confirms it.
The concept of the restaurant
It includes the general idea (healthy food, pizza parlor, retro, cyberpunk, seafood), the format of the restaurant (cafe, food truck, cloud kitchen), the type of service (casual, restaurant bar, high cuisine), and design (colors, interior, lighting, atmosphere). The choice should be made based on the cuisine and the target audience.
Here are some promising restaurant niches in the US:
- Indian cuisine with an emphasis on spicy Kerala dishes.
- Conscious restaurants (eco-products and eco-packaging).
- Stress relief dishes (ingredients that promote relaxation/stress relief and the formation of stress tolerance).
- Restaurants for grandparents (classical dishes prepared without fuss in the atmosphere of the last century.)
- Japanese and Taiwanese sweet food and desserts.
- Vegan variations of fast food.
- Interactive diners.
The location of the restaurant is one of the most important factors determining what type of customer you will attract. For example, a restaurant in a mall will attract families, teenagers, and older couples, while the one in the center of a business district will be attractive for local business employees and single people aged 20 to 50 years. In addition to that, the location also affects customers’ eating habits and a presence of competitors.
How to find and evaluate the potential of a location for opening a restaurant:
- Preferences of the local population. The easiest way is to use Google Trends and AdWords to analyze search queries in a specific city or state. You can also check out restaurant reviews and ratings on OpenTable, Yelp, or TripAdvisor. You can also assess how satisfied residents are with the local restaurants with, for example, Trulia neighborhood maps. Various surveys and studies can also be helpful.
- Direct and indirect competitors. You can find out which restaurants are open in a given area with Google Maps, Apple Maps, Google My Business, LinkedIn, Facebook, Yelp, OpenTable, Yellow Pages, and Yahoo! Local. You need to look for establishments that work in the selected niche and are targeting your core audience.
- Ingredient suppliers. There is usually no problem with suppliers in large cities, while you cannot always find some fresh ingredients (meat and fish species, vegetables, fruits, greens) at small ones. You need to know in advance what the local suppliers are selling. You can find suppliers on Google My Business, LinkedIn, Facebook, and other profile websites.
- Restaurant business rules. It’s about zoning laws and regulations for the restaurant business in a state, county, and city. Generally they can be found on municipal websites or industry resources. Here are, for example, the rules for opening a restaurant and the zoning law in New York. Finding such sites is quite easy with Google’s web search engine.
Naming, branding, and menu
A simple name is enough, it should be easy to pronounce and somehow related to the cuisine, concept, or the owner of the restaurant. If you think otherwise, just think about Subway, McDonald’s, Dunkin Donut’s, Buffalo Wild Wings, and other networks.
Creation of a visual identity for the restaurant from the outdoor sign to the trade name design. The best way to do that is to hire professionals who understand what attracts or repels visitors. You can find details in a Forbes article Create Branding To Drive Restaurant Sales And Growth.
Its development is partly a creative work and partly a pure science. A creative work because the design must be combined with the overall concept of the establishment, the interior, the company colors and even with the clothes of waiters. A science because it’s already been established beyond doubt that too much choice leads to choice paralysis, the $ sign reduces the average bill, “luscious” descriptions of dishes increase sales by 27%, and difficult to read fonts increase wine sales.
Interior and exterior design
This part is also better to be entrusted to professionals, because you need to know a lot to be able to develop an effective and at the same time enjoyable design of the restaurant. Starting with how much space is allocated for one visitor (19.9 square feet) and ending with what volume the music should be so that customers order more drinks (88-91 dB). You can learn more about this in a wonderful series of articles by Fohlio: color, fragrance, lighting, acoustics, and architecture.
Internet Presence of the Restaurant
Nine out of ten people look up a restaurant online before choosing a particular establishment. They are interested in the restaurant’s website (57%) and reviews of the restaurant on online listings (37%). Listings are websites with information about local businesses with their business profile, contacts, address, work schedule, etc. When you open your restaurant, the first thing to do is to register on such sites.
In the United States the sites are:
- Yelp, Zomato, TripAdvisor, OpenTable, and other review sites.
- Expedia, Yellow Pages, Yahoo! Local, HubSpot, BBB, and other business listings.
- Apple Maps, Bing Maps, Google Maps, and Google My Business.
- LinkedIn Company Directory.
In addition to that, you also need to create pages on social networks. First of all it should be Facebook and Instagram because 30% of users look for restaurants on those sites, while only 1% turns to Twitter or YouTube. The pages should be active (2-3 posts a week), and they should be made based on the following data:
- 75% of customers say they have chosen a restaurant based on pictures of the food. In addition to that, according to AdWeek, those posts get 20% more likes, 90% more favorites, and 150% more retweets.
- 60% of Facebook users said they would subscribe to a restaurant page if there are special offers, promotions, and discounts.
- 70% of the visitors say they are more likely to recommend a company that responds quickly to their feedback on social networks.
Getting a review or a comment is quite easy. Usually every eighth client does that, but if asked, there will be 7 out of 10. However, a small number of people will require a discount, a loyalty card or cash.
More than 60% of Americans use a food delivery service at least once a week, 37% — more than twice. The average check for online orders is 23% higher. The users usually use Grubhub, Uber Eats, Eat24, EatStreet, Grubhub or other popular services to arrange food delivery for the first time, but later on they tend to use a website or a restaurant app because that way they do not have to pay up to 30% commission fee for delivery and transactions.
These numbers tell two things:
- First of all, if you open a restaurant in the US, you definitely need integration with food delivery service because it increases your profits.
- And secondly, it’s better to have your own online medium for ordering.
There are three ways to integrate an online food delivery service: development from the ground up, sign up to a large aggregator, and SaaS. It takes 12 to 50 thousand dollars and not less than 6 months to develop from the ground up. A signing up to an online aggregator, such as Grubhub or EatStreet, can be done almost immediately, but it is expensive – starting up from $1,600 a month, but keep in mind that 25% of the people complain that they live in places where those large services do not operate.
SaaS are ready-to-run cloud solutions that just need to be configured and run. Installation and configuration is usually done by a service provider, the backend, support, and maintenance are also performed by a developer. In addition to that, unlike aggregators SaaS will work where you need it, and if you choose the right product, there will be no commission charges.
Here is our review of the most successful services:
|Web Wisconsin||$99 per month||None|
|OrderLord||Starting at $99 per month||None|
|Onfleet||Starting at $149 per month||$0.13 if the limit of 1,000 orders per month is exceeded|
|Trackin||$99 per month||0.55% for transaction, $0.30 for all-inclusive delivery|
|Flipdish||A one-time payment of $439 or $1,333||0.55% for transaction, $0.30 for all-inclusive delivery|
Includes a website, an online ordering, a booking, menu creation, Facebook posts, Google listing, payment gateway, marketing tools and other features. Everything is provided in one package at $99 per month with no commission fees or other payments. There’s a trial demo version.
Includes a delivery tracking, a shipment management, an order management, and routing. For $100 per month you can sign up for a package with limited functionality. The full package costs more. There’s a trial period.
A “last mile” delivery integration service. The package for $149 per month includes an online ordering, a fleet management and an order tracking. The full range of services can be obtained for $1,999 per month. There’s a demo version.
Includes an ordering system, a control panel for managers, an app for couriers, an order tracking solution and other services. The cost is $99 per month + a commission fee for each order.
Includes a website, an online ordering, an app (template), a delivery control panel and several basic marketing tools. The cost depends on the country, there are commission fees. You can sign up for a free option, but then you will need to give 7% from each order.
Staff Recruitment, Training, and Retention
Staffing has been one of the main problems of American restaurants for the past 20 years. In the past they would try to solve it by hiring experienced professionals but this strategy failed due to high salary costs. Now restaurateurs prefer to hire experienced employees for key positions only, and fill all other vacancies with newcomers.
The problem of lack of experience is solved in the following way:
- 68% create guides for new staff and job descriptions;
- 53% conduct training on performance of services, safety, etiquette;
- 46% use a mentoring system and surveillance of the employees;
- 32% also hold harassment seminars.
How and what to train staff is described in the following Upserve article.
Business Registration, Taxes
|Name||How to obtain||Price|
|Business License||Visit the U.S. Small Business Administration (SBA) website for specific state and city rules.||$50 + other charges ($25 to $7,000).|
|Food Service License||Start by reviewing a supplier application for your state on the Food and Drug Administration (FDA) website.||From $100 to $1,000.|
|Liquor License||Each state has its own Alcoholic Beverage Control Board (ABC). Learn the rules of your state and city/town.||Depends on to the license type. The fees can be found on the ABC website.|
|Food Handler’s Permit||It is obtained from the city/town or county health department. The employees must be trained and obtain the permit to work with food products.||Depends on the state and the organization that trains people and issues the permit.|
|Employer Identification Number (EIN)||Start with an online application on the Internal Revenue Service (IRS) website.||Free of charge.|
In addition to the above-mentioned, a restaurant may require other licenses: Live Entertainment and Music License, Pool Table License, Sign Permit, etc. A complete list is usually available from your local municipality or state website.
In the last step you must write a business plan. There is no standard form for this document, so you can simply download a template from the Internet and fill it out. If a business plan is needed to find financing, it should be done according to bank standards. Here are samples of a business plan and a guidance for writing one from UBS bank. When your business plan is ready, you can begin implementing your business idea.