Launching and managing a new restaurant is a huge challenge - This handbook will guide you through the management and operations portion of building your new restaurant.
Table of Contents
- Create Business Plan and Brand
- Food Costs
- POS & Technology
- Inventory Tracking
- Managing Other Restaurant Costs
- SOPs and Manuals
- Employee Training
- Customer Service
- Marketing your Restaurant
- Restaurant Consultants
Opening a new restaurant involves a lot of important topics. This handbook will help guide you through the management and operations portion of building your new restaurant. If you are looking for the technical details of How to Open a New Restaurant including getting started and financial information check out our guide on that!
Reading about opening a new restaurant often makes you feel like the industry will chew you up and spit you out but, if you are reading guides like this you have a much better chance of making it. Planning ahead is the most important rule (after making your customer happy of course!).
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Create Business Plan and Brand
Determine your value proposition. Are you offering luxury or convenience? How will you summarize your restaurant to customers, investors, or future employees? What’s your elevator pitch? What makes you different?
With your value proposition and business approach solidified, it’s time to move to the intangible—the brand. Create a mood board of your restaurant. Exploring other restaurants and venues will help inspire you to translate your vision into life.
When you’re done, focus on a few elements, write out a pitch (value proposition), and share these with someone you trust. Does it make sense to them? If so, you’re ready. If not, go back to the drawing board.
The second largest cost to a restaurant is food, right after labor. Decreasing the cost to make food can make or break a restaurant. According to Toast - a POS system made for the restaurant industry - the sweet spot in food costs is 25% in casual dining and 35% in fine dining. The goal is to plan out menu costing to make sure you stay in this sweet spot and stay profitable. A great tool created by Toast is the food cost calculator which helps you break down costs of each individual ingredient. It is important to remember things like garnish and salt. They may seem small today but in the long run those small pieces can really add up.
A menu can differentiate your restaurant. No matter how cool, innovative, and unique a menu is, at the end of the day, it needs to be built to make you money.
First, do some competitive research. Are your competitors offering similar items? If so, what are their prices? Your customers will compare too—even if it’s subconscious. Then, with a range in mind, build your own menu and focus on your gross profit margin. Run the numbers and confirm that the prices are enough to set you up for bottom-line success.
Another tip for building a cost effective menu is to introduce balance for price fluctuations. Mix in less variable cost items like chicken and pasta dishes to support more variable dishes like local meat or fish. It can anchor your menu to be more consistent and easy to predict and control the margin. When planning your menu make sure cost and time to prepare are top of mind.
You will also need to think of what type or theme you are planning for your restaurant, keeping the food on theme will help make sure people know what they are getting when they walk in the door. There are three menus that need to be planned the standard menu that will change very little as your restaurant grows, the specials menu and the drinks menu.
Edwyn the Operations Manager of Hart House an upscale lakeside dining establishment had an important piece of advice for all new restaurant managers. When planning a menu make sure to use seasonal items to help save on cost and introduce the best flavor to a dish. Seasonal products will have better taste than those in a greenhouse outside of the expected season. It is also important to have ingredient crossover to limit waste and reduce the cost of using specialty items. For example if you are using a carrot use the item in several different ways like pureed in a soup, shaved on a salad, and use the tops to garnish a dish. You will see less wasted product and you can save money by purchasing at scale.
The standard menu is what will become your staples. Musso and Frank Grill in West Hollywood has been in business in West Hollywood since 1919 and the menu has changed very little since it was first released.
Each menu item should be broken down by ingredient to make sure prep time and cost meet up with customer expectations. Shop around to get the best deals and make sure each ingredient is readily available to you. There is nothing worse then having to tell a customer that you are out of something. Each item section will require a station and equipment make sure you are prepared with the right items and set up to get items out of the kitchen quickly.
Another important decision when making a menu is how your menu looks. Customers often read a menu like a book and accentuating the meals with the highest profit margins like those with carbs and trending dishes will help improve your bottom line. Here are 8 design tips from 99design’s to help you along.
Menu specials are a great way to use up ingredients that you may have ordered too much of, or in season items that often cost less than other ingredients. Make sure to keep your kitchen stations in the back in mind as you don’t want menu specials to throw of the flow of your standard menu items.
While there are countless cool things you can do with a drink menu the same general practices for your standard menu apply. Many restaurant experts suggest splitting your drink and standard menu to seep sizing low, they also suggest to keep your drink menu on theme. The most important tip is to explain the drink, don’t leave your customer guessing what is in their drink. The will take server time and increase the odds of a customer ordering the cheapest drink.
Food ordering will be a very important part of your, or your chefs job description. There are many options when it comes to ordering like using Gordons or Sysco the food industry staples that offer lots of options at a low cost. If your restaurant is looking to be known for local high quality products you may want to look at specialty suppliers like KM Food Service serving the LA area from local farmers.
You may also want to try something new like ChefHero a startup in Canada breaking into the US market. The company is an online marketplace for suppliers and restaurant operators that allows you to order from many different suppliers in one easy to use site. While the company still only has a few states available on their list it looks like this style of ordering cold save a restaurant going for a local feel or trying to avoid the big companies like Sysco, a lot of time.
Food waste is one of the easiest ways to lose profit margin. Although most articles are around solving for food waste after a restaurant is open there are a few key processes that can be put in place to ensure food waste is minimized from the start.
A food waste audit program can help keep employees and managers aware of what is being thrown out and why. Lean Path is an innovative way of making tracking waste easy by measuring proportion in items and the reason for their disposal. If you do not want to get too invested in knowing your food waste using a simple pen and paper method will still allow you to monitor your waste and change your ordering or prep process to save money.
Hart House’s Operations Manager Edwyn Kumar advises all new managers to take a walk and check out the garbage. Look at what is being thrown out the most and start reducing waste one item at a time. Take into account item rotation and prep work and train employees to properly prep food using as much of the item as they can.
POS & Technology
In today’s digital age, there are growing ways to introduce technology into your processes: there are payroll tools to help bookkeepers and accountants easily budget money; scheduling tools to help managers track employee hours and tablets to help speed up customer ordering. Not only does technology help elevate efficiency, but it can also elevate the dining experience for customers (73% of diners agree that technology enhances their restaurant experience).Conduct an audit of your business and determine what technology would help your business efficiencies. Your problems are unique: your technology choices should reflect that.
As systems get more advanced your Point of Sales system (POS) can start to integrate with other systems creating an ecosystem of data that gets managers out of the office saving your restaurant time. POS systems like Toast and Lightspeed can integrate with different products like accounting, scheduling, food waste management, reservations and many more. A POS will become the main hub for all your other systems so make sure you choose a system that will work best for what you need. Check out our post on how to choose the right POS system.
Push Operations integrates with POS systems like Toast and Lightspeed giving you built in scheduling, time attendance and payroll. The benefit of integrating time attendance and payroll is getting labor forecasting connected with your payroll and sales system. The forecasting lets you see what your restaurant is expected to sell and what labor you will use in the day.
Inventory tracking can be done right from your POS system. Toast and Lightspeed both have built in data integration systems that allow you to track inventory and total food costs. If your POS system does not have this option Camcode an asset tracking system has created an all encompassing list of inventory management options for your phone.
Hart House ensures a qualified staff member is available to receive product ensuring the invoice and pricing is accurate. This is especially important with new suppliers. After receiving the product storing the product is important. Use the first in first out method and make sure employees are rotating product, watch that product is being stored in the right location at the optimal temperature.
While you don’t often think of accounting when looking at opening a new restaurant this will be an important part of an owners job (even if you hire an accountant). Options like Quickbooks and Xero integrate with your POS automating some of the required functions. It will be important to keep this in mind when choosing a POS system.
Managing Other Restaurant Cost
As you open your new restaurant there will be many unexpected or surprise costs. Some of those required costs that often get too much budget include equipment, tableware and restaurant decorations. Each one is important to your overall restaurant so make sure you are giving them the right amount of thought. Hidden fees can add up, make sure you are spotting them all.
Buying equipment can be difficult, you may have planned your restaurant well but do you really know what size fridge you need or how big your over will be for the order speed you require. Many restaurant owners suggest investing in used equipment to get started. It would be awful to invest in a great fridge only to realize it is not big enough for your operation six months later.
You can look for used restaurant products on sites like Burkett or buy low cost products at Webstaurants. You can also look for local stores like Restaurant World located in LA selling new and used products. The use of your restaurant network will help in finding equipment. If you know people in the industry ask around you may even get lucky and snag a good deal when someone else is upgrading their equipment.
Your table settings can match the theme and style of your restaurant however it is common to bulk order basic white settings from places like Webstaurants. Many restaurant owners do not plan out their required table settings and either over or underspend. After planning out your expected traffic make sure you have enough tableware for the busiest restaurant times but not too much as storage is often a luxury in the restaurant business.
The design of your restaurant is important to the atmosphere. You can choose a theme, create a minimalist style or go all out with a feature wall. However you decide to do the design it will cost money and this is often the place where your budget runs over. Here are a few decor DIY ideas you can do for your restaurant on a budget.
The largest part of any restaurateur’s budget is labor. It is important to be on top of your scheduling to ensure you are not losing money on labor costs. Having an easy to understand schedule will help keep your employee retention and satisfaction up. Here are a few tips on scheduling.
Long gone are the days where paper schedules should waste valuable manager time. Scheduling tools like Push Operations let managers automate schedule preparation, let employees add and drop shifts online as well as communicate with other staff members, and integrate labor costs into your POS, payroll and accounting system (depending on the programs you choose).
Adding a reservation or booking system like Open Table can help optimize labor for busy times.
Scheduling Plan - Hiring the Right Amount of Employees
The Entrepreneur advises payroll to be 25% to 35% of total sales to keep your new restaurant profitable. The Entrepreneur also gives great tips on what positions you will require like a manager, chefs, cooks, servers, dishwashers, bussers, hosts and bartenders. As you are getting started it is likely many of your positions will have high cross over. Make sure employees have a clear understanding of where their positions fall back to so nothing gets missed as you open.
- Job boards are a great resource for getting started
- Referral programs can help you find people who are trusted
- Consultants have relationships and can help you meet people through networking
The amount of people you hire depends on the capacity of your restaurant, but, in general, you’ll need a head chef, a few sous chefs, waiters, hostesses, and a bartender (if you’re serving alcohol). First, focus your efforts on hiring a head chef: they’re the ones who will help you construct a menu, build a vision, and introduce a culture. Then, move to the staff.
Gauging Busy Times
Scheduling software like Push Operations can help you gauge when your restaurant needs to schedule more or less labor. As your system runs it collects historical data regarding past labor, sales and weather patterns in your area to help you plan and manage labor costs more efficiently. Forecasting is not available in all scheduling software and for the best results, it is good to have an integrated system allowing your data to connect giving you more information with less manual labor.
If you are not using a system that allows for forecasting using prior sales is a great way to get started with labor planning. Keep in mind weather and local events going on around you to make sure you are not running short or sending too many employees home.
Tracking employee meal breaks
Tracking employee break time is an important step in making sure you are compliant with all current labor regulations. Avoid a restaurant lawsuit by documenting everything when it comes to taking breaks in California. Labor laws lean heavily towards employees but, having the right paperwork will ensure you are ready in case any dispute comes your way. Push Operations has a time and attendance component that allows managers to set up waivers if breaks are being skipped or set reminders to make sure required breaks are not being skipped.
SOPs and Manuals
Standard operating procedures (SOPs) matter to your business because they help you spend less time training new staff. A manual is written to help teach an employee how to operate a machine or learn a subject. For example, you would write a manual on how to use the oven or a coffee machine. You could also use a manual to teach your cooks how to prepare food the way your brand expects it or your servers about wine giving them more ability to suggest the right pairings.
SOPs are used to explain how to do a certain task including putting together a burger or making a drink menu item. There is no set length to these items they just need to be enough to help an employee complete a step or learn a process without the need to ask the manager for help. Spending the time to write out your processes prior to opening will give you more time to manage and be with your customers when your restaurant is open. This means less employee questions and stronger accountability.
Opening and Closing SOP’s
You shouldn’t be at your restaurant every waking moment, meaning someone will have to open or close your restaurant for you. This is a great place to start writing your SOPs. Outline the checklist you want your employee to go through to make sure nothing is missed. Include the simple but important items like taking out the garbage, locking or unlocking the door and making sure the till is taken care of. Training an employee to complete this process is important however a list keeps them accountable and leaves less to memory increasing your chance of completion. This will also make training easier as you add new employees to your restaurant.
There are many other areas of your restaurant that can be optimized using SOP’s and manuals. You may know what you want done, but you may also want a day off in the near future. You cannot do everything at once and delegation will become important in ensuring your restaurant survives. Look into creating procedures for your inventory records, food storage and food preparation. SOPs will be great to have in the kitchen to make sure every dish comes out consistently with the right ingredients at the right time. Your bar drinks will require similar SOPs to keep the same consistency.
Health and Safety Manual
You will require three sections in your health and safety manual:
Each section will play an important role in keeping your restaurant safe and clean for your guests.
All of the SOPs and manuals you completed above can be placed together in your employee training manual helping you streamline your new hire training program. You can set up your training manual by sections including front-of-house, back-of-house and management. Each manual will have cross over processes and can be tailored to the SOPs and manuals that pertain to each position. As you grow (or franchise) you can break these manuals out further. Your employees will always be prepared for what is expected of them.
Turnover in the restaurant industry is over 70% and employee retention is important. Setting clear expectations and outlining the company for a new employee will help keep people on longer. Acknowledge employee performance and paying a competitive wage will help keep your good hires on staff longer. Save money on training by getting managers engaged and invest in training from the beginning.
Push Operations has a feature in the Time & Attendance module that allows employers to send push notifications direct to employees phones to inform them of important messaging like new features or changes happening at the restaurant. The message can also be pushed to the employee account prior to clock in making sure the employee gets the message before they start their shift. Restaurants like Hart House use this feature to let employees know about wine pairings and special changes happening that day. The feature also allows you to attach forms that require signatures and keeps those forms saved in the employees Push file.
The customer experience has moved past good service and now encompasses every interaction a customer has with your restaurant. Customers are looking for share worthy moments and meals for their social media accounts. Keeping consistent food and service will help you navigate customer preference.
Creating a loyalty program
If you are choosing a cloud based POS system like Lightspeed you can add a loyalty program to your system through your POS system. If you are not going with an integrated system companies like Craver make a platform that allows you to easily set up a loyalty program.
Loyalty programs have become a standard in the industry (especially for cafes!) and keep your regulars coming back. While you don’t need one it helps if you are looking to accomplish online orders or repeat business.
Food Delivery Service
If you choose to work with a food delivery service be prepared to pay 13% to 35% to the service for getting that customer to you. While it is hard to ignore the food delivery service companies popping up here are a few things to think of when trying to choose which ones to work with.
Use training and happy staff to create a personalized and memorable service for your customers every time. Get employees involved and ask your customers as much as you can about how you are doing. It is better for you to ask when they are still in the building, then for them to leave a comment on one of your social accounts later.
Marketing your Restaurant
If you have read this far you are prepared for starting in the restaurant industry. Determination, learning and good old trial and error are keys to getting through the hump of the first year. One of the most important things to do for your new restaurant is to tell people about it. Start by creating a marketing plan so you don’t waste money. Then plan out your grand opening.
The most important part of social media is creating an online community. Start your social media early and create buzz for your restaurant opening. Here are some other great tips on how to create restaurant buzz before you open. Use your social media accounts to share sneak peaks of your restaurant, style and menu items. Take lots of pictures but be careful how much you share so you don’t look like spam.
When promoting your new restaurant online there are many options. You can promote on Google or Bing and create keyword search ads. You can create display ads on these two sites or pay to promote on a site you think your customers frequent the most. Each one will take time to learn. Here are some great resources to get you started promoting your restaurant online:
Your Unique Talking Point
Think of the last time you saw something so cool at a restaurant you had to tell your friends, it doesn't happen often does it? Barton G has locations in New York, Los Angeles, and Orlando. Barton G prides itself on creating shareable moments that people talk about long after they have left the restaurant. Customers can order a steak that comes with a fork the size of their bodies, pasta with a singing disco ball and their signature Marie Antoinette cotton candy dessert. Each plate comes out larger than life and Instagram worthy.
You may not have to be as extra as Barton G’s but take a page from their book and try and create something that gets everyone talking about your restaurant. Slow on Tuesdays try a special like $2 beer, make it so good people talk about it outside of the work week. Some restaurants use features like Instagram worthy walls or customer service/ food that is so good it knocks your socks off. Define the one thing you want to be known for and make sure you promote and rock that one thing as much as you can. Every avenue you use to market is great but word of mouth is always the best way to get people in the door.
To open a restaurant, you’ll have to make a lot of decisions. Despite how much research you do yourself, you won’t have all the answers. Consultants have expertise in the industry: they know what works and what doesn’t. They’re well-versed in budgets, management systems, and hiring. They work with you to find unique solutions. Hiring a consultant is an investment, but it can set your restaurant up for success.
This document is provided by Push Technologies Inc. ("Push Operations") for information purposes only. This is not an official or legal document and should not be taken as legal advice. Push Operations does not guarantee or warrant the accuracy or completeness of the information provided. For the most accurate and up-to-date information, please check with the proper governing authority.