Type of restaurant
There are plenty of people sitting at home wondering how it went bad. How did this venture fail? 80% of restaurants fail in three years. To beat the odds, you must be strategic in planning BEFORE you open your business. The specific type of restaurant to open to maximize your chance of making a comfortable living working for yourself, is the fast casual restaurant. A simple counter service fast casual type of restaurant with a small foot print and low overhead. The trends are clear that this type of restaurant is thriving today.
The dream
It may be tempting to open your grand vision, spend hundreds of thousands of dollars in a 10,000-square foot space, totally renovated to your exact specifications. This type of restaurant will need dozens of staff and managers, and you will have to run the bar until 2am every night. Every restaurateur has had the grand the vision but to make sure you are one of the 20% that survive, is to learn how to tame the vision. It needs to be trimmed down it in the right places. The vision can survive through the overall theme and personal drive.
OK, so I just killed your dream and maybe you feel like there is no pride in operating a small fast casual type of restaurant. You must look at what business ownership means to you. Are you in business just to say that you are in business? Will you only feel pride if you execute your grand vision business? You should have the pride of operating a PROFITABLE business. Maybe it isn't some large sports bar or fine dining fancy sit-down, but you will make money.
You will make money and you can do it in 40 hours a week (And with good planning maybe even less). Maybe not at first as the startup will consume many days and nights, but done right you will have more free time than any of those fancy business owners. You will be able to take great pride knowing you are making a good living for you and your family while also having the time to spend with them.
What type of food
The original fast casual restaurant is the pizza joint. They proliferate every corner of America, and have survived for decades because it can be very profitable. Chinese food has also successfully spread across the country in the take-out and delivery format. Chances are right now where ever you are you can order pizza and Chinese food from multiple restaurants. Keeping a small footprint combined with low labor needs create the perfect environment for profitability.
Don't think you have to do pizza or Chinese to be successful in fast casual. Almost any style of food can fit the fast casual type of restaurant.
- Sandwich
- Burger
- Barbecue
- Wings
- Taco
- Burrito
- Waffle
- Asian
- Salads
Major chains like Chipotle Mexican Grill, Boston Market and Panera Bread have been fast casual from the start. Fine dining groups have launched new chains like Shake Shack, and more fine dinning chefs are getting into the game. It is hard to know if the market is following the consumer trend or the consumers are embracing the market trend. What ever direction it is, the trend is clear that more people are eating at fast casual restaurants.
What does this mean for an restaurateur
The fast casual trend is great for the aspiring restaurateur as it allows for the creation of a business with low opening and operating costs. The reason these type of restaurants are so popular from the business side is the relatively low cost and higher margins. The fact that the consumer is embracing the concept is fantastic. This opens up the space of opportunities for a restaurateur. Strip malls, office building cafes and old pizza joints are all on the table now. You don't have to build out a million dollar stand alone restaurant to be successful. The fast casual restaurant, done right, can actually be cheaper and easier to operate than a food truck! The sales to investment ratio will be very high.
Restaurant size
Size is money. Costs will scale exponentially with square footage. One of the best facets of a fast casual restaurant is is small size. Opening a small fast casual type of restaurant will only need around 1500 to 2000 square feet and maybe even smaller if it is setup properly. Benefits to a smaller space include:
- Lower rent
- Lower utilities
- Less staff and lower labor costs
- Less equipment and repair
- Lower maintenance costs
Location
A fast casual restaurant has the advantage of being able to fit in almost any type of space. Because turnover at restaurants is high, there are many opportunities with previous shops. Finding a space that was a restaurant before can save tens of thousands of dollars in start up. Building a kitchen from scratch is quite costly. Just remodeling one and adding a few pieces of equipment is a great way for restaurateurs to minimize your startup capital. You may be surprised what is out there, you may be able to rent a fully equipped restaurant with a little premium in rent. Landlords may offer rent to own on the equipment which is great to reduce your out of pocket costs.
Menu
Fast casual restaurants have simple but well-rounded menus typically adhering to a theme. A small focused menu utilizing ingredients well will help to minimize food costs. Many sit down restaurant have been killed by having a large unmanageable menu. Simply being a fast casual restaurant necessitates a very optimized menu, which will lower food costs and drive up margins. These menus can be executed very fast during peak hours, maximizing sales. Fast casual restaurants have the speed and convenience of fast food while providing much better food to the customer. Catering can be added to provide revenue without using front of house square footage, an advantage most fast food places can't do.
Labor
Labor costs are rising around the country and may in fact be driving some of the popularity from restaurateurs of fast casual. The small menu helps reduce the prep and cooking costs, while the counter service alleviates the need for a swarm of servers. Minimum wage hikes are a reality and restaurants are finding ways to cope with the added cost. Full scale restaurants will have to raise prices to make up the difference or risk over working employees. The fast casual restaurant is already optimized on labor, only needing what is absolutely necessary.
Summary
Fast casual is clearly the type of restaurant that can deliver minimized costs and maximized profit. Startup cost can be very small and operating cost can be very manageable. Labor and food costs are as minimal as can be done, outside of fast food. A good fast casual restaurant can provide a very good living for an aspiring restaurateur.
Our experts have opened fast casual restaurants and are here to help! If you are thinking about opening this type of restaurant in the future or finding it hard to keep one profitable, consider a Restaurant Coaching membership!
