By Andrew Parr
This article is in conjunction with a videocast. To learn more about these methods, watch BSP380: Restaurant Opening Order Of Operations - RO4.
You are sitting at the corner of a dimly lit bar after a killer 10-hour shift. You and your two best friends on the line are plotting to open your own place, definitely sooner than later, all while scribbling notes onto cocktail napkins from the bar top. Or maybe you are an IT project manager who has always daydreamed in your cubicle of opening a light, airy wine and cheese cafe. Or maybe, just maybe, you are a seasoned food & beverage veteran who is done following other people's rules and you are ready to set out on your own path, to be your own boss, to drive your own mission. Here’s the catch: The 6 Phases of New Restaurant Opening Order Of Operations is not what we’ve been taught - far from it!
No matter what your scenario, there are three conditions you currently face: what you know, what you don’t know, and the deepest, darkest hole of them all, what you don’t know you don’t know. It doesn’t matter - you’re going to open a new restaurant! You get a rush of adrenaline and are filled with desire to get started. What nobody tells you is that you are about to do it all in the wrong order!
Typically, new restaurant owners start with some combination of these 6 things:
Name the restaurant - something that is deeply meaningful to you (and still needs to resonate with your employees and customers).
Pay someone to design a logo so it becomes a real thing - to make it tangible. We are people who truly love visual representation. Logos are fun and exciting (and stickers!).
Perhaps there are some thoughts about the concept or the menu. There may even be notebooks stacked upon notebooks of recipe ideas.
Start talking to all of your favorite vendors that you have used before - loyalty is important, and of course they will hook us up!
Decide on the POS system. They are going to start calling any day, so you might as well get this out of the way - sign the contract and check one more thing off the list.
Someone asks you where it is going to be, and then it dawns on you…ah ha, I need to sign a lease right now.
Whoa, put on the brakes, my friend! You are now over 300 steps ahead of schedule.
The six phases of New Restaurant Opening Order Of Operations (RO4) come from something we, as dedicated restaurant consultants, call the Countdown To Launch. Countdown To Launch is a checklist of over 800 things you need to do along your path to opening a new restaurant. Mind blown, not sure what you just heard? I’ll repeat that. It’s a detailed checklist, the critical path of over 800 things you need to do to open a new restaurant! There are overarching things like, have you created your About Story? It will be shared with everyone you come into contact with - employees, customers, vendors - everyone. There are also small things like, do you have an office supply order guide (gotta have printer paper, staples, and Sharpies)? And then some things that just make us shake our heads if we fail to do them, like buying a safe and stocking it with cash prior to mock services. Before we get into some of the nitty-gritty, here are the six phases of new Restaurant Opening Order Of Operations:
Develop Your Brand
The Business Model
Phase 1 - Develop Your Brand
This phase frequently begins four to six months prior to lease signing. Yep, there is a lot that needs to happen before you engage your Commercial Realtor. You really need to know yourself and what your business represents before picking a spot and signing a lease. The starting point is your MVA - your Mission, your Values, and your About. Dig deep here; dig until your head hurts and your hands are calloused. What is your motivation, your story, your personal history?
What is your mission, what are you trying to accomplish, and why should that be important to the people associated with your business?
What are your values, what do you stand for, and who will be aligned with that?
And your story, are you driven by family experiences, your culture, prior work experience? You have to develop and be able to tell your story in a comprehensive, consistent, compelling fashion, and tell it to anyone and everyone who will listen. This becomes the foundation of everything your new restaurant is built upon.
Phase 2 - The Business Model
Here is where we really begin to look at the “how” of what you set out to do. Now is the time to look at capitalization for your new restaurant opening. How much money do I need to open a new restaurant? No matter what type of restaurant you are going to open – full service, hybrid, fast casual, virtual kitchen, food truck – whatever the model, the answer is, you need more than you think. Here, also, is where you lay the groundwork for your “Business Within The Business,” a topic we will further address in Phase 5.
Getting back to your money, it is always harder, takes longer and COSTS MORE MONEY THAN YOU THINK. The better capitalized you are, the better chance of success you have. The best time to build your capital is in this phase. You need to build your runway. Going back to investors, a bank, or your family for more money right before you open is a recipe for disaster. No one wants to throw more money in the pot after they realize you burned through everything you have just to get open.
This is where you also build your investment in your most valuable asset - your people. It is something we call Workplaces Worth Working and it involves the following four buckets:
Wages - Pay a living wage. The end.
Benefits - Are not an amenity, they are a necessity.
Culture - Is the decisions that are made when no one is watching.
Education - Lead people, not pieces of paper.
Failure to set up a business model that properly balances investment in Wages, Benefits, Culture, and Education is a race to the bottom. It prevents you from being a Workplace Worth Working and leads to churn, turnover, and exceptionally high hidden costs that will doom your business. Full service restaurant turnover is currently at 106%. If you have a staff of 50, that means you will lose and rehire 53 people over the course of a year. This leads to job posting expenses, time and money in interviewing, training expenses, higher food and beverage cost, lower check averages, fewer return visits from regulars who are not in touch with your revolving door of staff, more comps and voids, and tons of other intangible expenses. The turnover of line level employees can cost you up to $6,000 per employee. That means at 106% turnover for a staff of 50, you are out $318,000. If you want to attract and retain the best staff possible, you need to put your head down and do the work here.
Phase 3 - Selection Process
Hey, wanna find your location? Now is the time to start that process. In fact, begin the process of selecting all the people and things here! Select your Real Estate professional, your attorney (or attorneys), Accountant, CPA, Financial Planner, Permitting Specialist, vendors, technology partners, Architect, General Contractor, your space, and your lease. Hell, if you feel so inclined, select us as your restaurant consulting partners and let us guide you through this maze!
Attorney, or attorneys, you say? Yes, you will need:
An attorney to help set up your operating agreement, especially if you have a partner, partners, or are taking on investors.
You will need an attorney who specializes in commercial landlord-tenant law, and they should be engaged as you begin the LOI (Letter of Intent) process through your Real Estate professional and potential landlord.
And you will need an attorney who specializes in Liquor License law if you are planning to serve any alcohol at all, be it beer and wine only, or spirits as well.
If you can find an attorney who operates across one or more of these practices, that’s great. The most important thing is that you select partners who have vast experience in working through these areas specifically for the type of business you are opening. If you have an accountant that doesn’t know that CO2 should fall under “other expenses” or “recurring operating expenses,” and not be calculated as part of COGS (cost of goods sold), find yourself a new accountant (now, right now!) who is accustomed to accounting for restaurants.
As for your landlord-tenant attorney, put a big star next to the selection of this person, and get them involved as soon as your Real Estate professional says the words “Letter of Intent.” Your Letter of Intent (LOI) becomes the foundation of some of the most pivotal parts of your lease and will affect your business for as long as the lease is in force. This person is going to save you an immense amount of money, time, and frustration when you bring them on early in the process. I know, you dread attorneys. Guess what? You need them and will appreciate them when your business is healthy as a result of everything they touch along the way.
Phase 4 - Build It
This process begins about nine months prior to opening day and includes the build-out of your new restaurant, but, and this is a big “but,” be prepared for it to take longer, based on:
Your locality’s permitting process
General Contractor availability
And a whole host of factors that are 100% out of your control
I know, we are people who live our professional lives in fifteen-minute increments, thriving on the control that we bring to the process and seemingly bending time to our will. This is going to be hard, really hard. Just make sure you have strong relationships with the people who are now in control of your clock, and make sure they understand that you want to hear the good, the bad, and the ugly as soon as they know. Then you can make proper decisions in a timely manner. The clock affects everything and everyone else on this project. It ticks most slowly right now.
This is also the time where you build:
Workplaces Worth Working (human resources and administrative process)
All of your policies, procedures, job descriptions, job posts, and SOPs
This shit is a pain in the ass, and also foundational to your business. If you are a culinary wizard, you may thrive on recipe development and hate the rest. If you are a FOH person, you may thrive on the human resources function and be frightened by the rest. No matter your perspective, balance your time across all disciplines, as you have plenty of time here if you use it wisely.
Phase 5 - Stretch Run
The Stretch Run typically begins about 8 to 12 weeks prior to opening day. It’s time to test and taste your recipes here. Refine them and finalize them. It’s also where you begin to show your face publicly in the world of social media.
Begin those teasers.
Launch what we call “The First 6.” Put together six foundational pieces of social media content, launch them on all the platforms (don’t forget about LinkedIn as a valuable resource on the professional side of social media), and really begin to engage and grow your audience.
This is when your PR efforts will need to kick in with outreach and collaboration to show your brand to your community.
There is also something we call the “Business Within The Business.” What type of business depends on who you are and what your business model is. Perhaps you begin doing pop-ups, or farmer’s markets, or CPG (consumer packaged goods), or private events for select audience members. There are any number of other options that are geared to start generating revenue right now, prior to even opening your doors. Did anyone ever tell you it is ok to generate revenue and develop brand recognition BEFORE you open for business? No? Well, by all means, please do!
Phase 6 - Final Countdown
We are SO close you can taste it! This phase begins about four weeks prior to opening. Here’s where it all comes at you at once. The light you see at the end of the tunnel - well, that’s attached to the front of the freight train bearing down on you.
You need to schedule final inspections and potentially reschedule inspections when you don’t pass (because you missed the hand sink next to the ice machine or you had a lightbulb out in one of your exit signs).
You need to schedule and execute staff onboarding and training (and by the way, no doubt, in the middle of training, there will be a fire inspection where they need to set off the sirens for 15 minutes straight).
You need to pull out your order guides and work with your vendors to get your product for training, and then again for your opening orders.
By successfully navigating your way through the first five phases and setting a strong foundation, you will be able to get that freight train to switch tracks so you will not get hit by it. Your emotional swings at this process will be huge and frequent. Taking care of yourself and as a result, the others around you is of paramount importance. Self-care needs to be your mantra here.
The challenges and rewards of opening a new restaurant are many and varied. Yet, you’ve done it! You went through it all (all 800+ steps of the Countdown To Launch). You pressed, you persevered, you showed patience when you needed it the most, and tomorrow is opening day! You’ve crossed the finish line, hooray! Or have you?
Actually, you are now just beginning the next chapter.
This is your opportunity.
Tell your story.
Bring your community into your four walls while also expanding your four walls to encompass your entire community.
Be prepared to meet them wherever they are.
The old restaurant philosophy of “If you build it, he will come” is just not true any longer. If you only focus on what’s on the plate instead of how it got there, who put it there, and why it’s on the menu to begin with, you created just another commodity that can be copied, appropriated, and irrelevant all too quickly. It is time for all the work you did on your Mission, Values, and About to be the shining North Star that guides you, your team, and your community forward. The 6 Phases of New Restaurant Opening Order Of Operations is not what we’ve been taught - far from it!