Feasibility studies offer you the chance to “get it right” before committing time, money and business resources to an idea that may not work in the way you originally planned, causing you to invest even more to correct flaws, remove limitations, and then simply try again. Feasibility studies may also open your eyes to new possibilities, opportunities and solutions you might never have otherwise considered.
Budding Entrepreneurs who start new restaurants may overestimate the size of the market in their area and not take into account the tough competition they will face from established restaurants nearby. Doing a feasibility study prior to investing the time and money to open a restaurant can help an entrepreneur make a more informed decision about their chances of success?
A high-traffic location is preferable, one close to major streets with lots of visibility to vehicle or pedestrian traffic. Make sure parking is ample and easy for customers to access. Look for businesses in the area that could create demand for your restaurant or Food Court – large office complexes, hotels or retail centres for example. Be sure to consider the trade-off between a location’s suitability and the lease cost. new restaurant with high Rental can make it extremely difficult for the Restaurant / Food Court to reach positive cash flow.
Obtain Clientele Statistics
Studying demographic characteristics such as age and income will help you estimate the size of your potential market. If you are planning a mid-price, family-style restaurant for example, you need to know how many families reside in your area. A heavy population of singles or college students will probably not support your restaurant.
Look not only at the total number of restaurants in your immediate area but also at the styles of restaurants that are prevalent. Consider whether your area is already saturated with restaurants similar to the concept you will be offering — similar cuisine, price point and target markets. Analyze the strengths and weaknesses of each major competitor and determine whether your proposed restaurant will stand apart from competitors and be memorable to customers.
Once you have a good idea what type of food you want to offer, break down the cost of each menu item. Determine who your major suppliers will be and ask them for pricing. POS software’s are available to help you accurately calculate projected food cost. You may consider reducing the number of items on your menu to keep food cost down..
An entrepreneur contemplating opening a restaurant should take a hard look at whether he has the skill set and experience to make the venture a success. He should ask himself whether he has the eye for detail to maintain high customer satisfaction. He needs to understand how to make the kitchen operation run smoothly. He may determine that it is not feasible for him to be the general manager of the restaurant’s operations and elect to hire a manager who already has a track record of success in the industry.
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