How best to develop a restuarant / bar

By Mark van Ogtrop
October 2019 Beacon
Sky Hospitality

12 important steps to follow when starting a restaurant / bar

Make sure that you prepare yourself well before you invest in restaurant / bar. The steps below will help as guideline and checklist of what not to include and not forget. These steps are done with the assumption that you already have identified the RIGHT LOCATION ! Yes, your location is the most crucial and most important factor to success……. but we all also know that often that affects the development price = rent price or acquisition cost of the site………..


12 Steps to watch for :

1. Do your market research

Once you have your location decided, you have define the right concept. In order to do so one first has to do home work and complete a thorough market study : what is being offered as benchmark in the nearby area of your location; what is already there or not and what works; what are the demographics in my location and hence my target market, what is the price positioning of my competitors…….all important questions to answer first……..


2. Create a really good Concept

With the research information you are then to define the right concept. A concept should offer something quite unique and it should fit and answer to your market and target group. Define the USPs (unique selling points) in advance that you wish to create and execute.


3. Calculate your maximum investment budget

This is probably the most important point and believe it or not, the one most often not done or not done correctly ! You have to firstly complete a 5 year revenue forecast and P&L (profit and loss statement ). Once you have calculated your bot-tom line = EBITDA, you can then calculate backwards what your maximum in-vestment budget can be. Considering the IRR that you require and cost of debt (annual interest and capital on your loan if you have any ) So for example if your EBITDA is THB 20 million per annum and you need a yield of 7 %, your total investment should not exceed approx. THB 210 million ( 20 mln minus reserve 5 mln = 15 mln @ yield of 7 % ) Besides the maximum investment you are to complete an annual budget and a pre- opening budget.


4. Pick your consultants well

You need to define which consultants you need in the development process and you need to pick the right professionals. The number of consultants surely de-pends on the size of your project and for mid to small size projects you can combine certain functions. A sample of the consultants and the functions that you need to cover are the following : Architect incl or excl structural design and M&E de-sign (mechanical & electrical ) ; Interior Design; Kitchen Design; QS = quantity surveyor for budgeting, procurement, contracting; Project Management; Light-ing & IT Design and Audio Design. (you often may easily want to skip the last two as it all becomes too costly….. but don’t ! = the last two are the most important and will at the end of the day makes the difference in your restaurant being a suc-cess !! The mistake that most often is made, is the thinking that “my team or I can do this myself”. If you want to save on total development budget you are better of spending on good consultants to get the job done on time, with right specs, the right procurement, the right supervision and right control. At the end of the day you will save more by engaging professional help..


5. Give a very concise brief to all consultants

Create a detailed and concise brief to all the consultants. Nothing is worse then to let consultants just go ahead and design, as it will then always come out too costly. Be clear in your brief what you donot need. Often projects get over spec-ified by consultants and you end up with elevated investment sum.


6. Know you priority areas where to spend

Spend wisely , in right areas - especially in restaurant / bars the spending should not be on main architecture, but on Ambiance. Often the first things that are de-signed are normally walls, floors, ceilings etc, These are exactly the areas that need the least investment with regards to materials used, so they should be prior-itized last and you should spend your money on what creates ambiance (see step 9)


7. Create a WOW factor

When developing a concept you need to think about creating an important WOW factor. You need this WOW factor , so that people can talk about it and “like” or “post” it on social media. It is then important to create an “instagrammable” spot or two ……..let them take those selfies…… Agree with your interior designer on this.


8. As marketing tool add IT factor to the business

Add important IT elements to the business, to make it more appealing and marketable in todays world, ie add menus that are digital or tablets or menus with backlight, add POS systems that are on mobile or tablet, (for more fast food ) ordering systems by screen / tablet


9. Focus on what creates “Ambiance”

This is a pet peeve for success : Focus on 3 key items that make or break a suc-cessful restaurant design : Music / Lighting / Soft furniture. What makes a restaurant tick, which restaurants are always full ? You can cut on any budget item but don’t cut on these 3 elements : 1. Make sure you have darn good music everywhere, with the right balance of volume, inside, outside and with multiple speakers (and not two loud speakers blasting). Focus on this as this makes people come and stay. 2. Get a top notch lighting consultant and see that you create great atmosphere with good lighting and make sure all lighting is dimmable. 3. Focus on comfortable seating and soft furnitures, throw pillows, lounge cushions etc

“I don’t need a ceiling and just only give me a concrete floor, and if I put good music with right dimmed lighting and comfort and the restaurant will work”


10. Produce good Brand and produce Marketing Launch

Make sure that you create a catching and exciting Brand Name and go through good selection process. See with the team that you compile a proper marketing launch plan. This launch plan is to include a social media plan, a communication plan, plus an advertising plan on social media with Face book Ads and Line Ads, which are very effective.


11. Create great Food and Beverage

It is no secret that you need high Quality Food and Beverage, served at right selling price. You are to define in advance your food cost and beverage cost and set the right selling price. Do benchmarking and get the selling prices of your competitors as F&B pricing is very competitive.. Good news is that people will always pay for good quality food !


12. Put together the Best TEAM ever !

Select and recruit the best team . Get your team to be “actors” in the business and they are to be ambassadors for your restaurant / bar. Focus on hiring top notch host or hostesses and PR persons to well promote the outlet.


HAVE FUN !!- this is most important ingredient you need to bring to the table; Create an atmosphere among all stakeholders to HAVE FUN both during the pre- opening and during operation.


by Beacon Sky Hospitality, Bangkok October 2019

Beacon Sky Hospitality is an advisory firm with offices in Bangkok and Phuket Thailand and assists owners and developers with the acquisition, development, repositioning, branding, conceptualization, financing and asset management of hospitality real estate.