It’s every restaurant owner-to-be’s dream to have a bustling restaurant that creates memorable experiences for customers. Success in the restaurant industry can mean many different things, but most restaurant owners would agree that a big piece of “success” resides in how often that bell at the entrance of your restaurant chimes. A robust business model and well-executed grand opening will generate momentum that can get your restaurant off to a running start as curious customers begin trickling in to see the result of your hard work. It doesn’t matter if you dream of fine dining or food trucks, Evolve Payment has combined the past experiences of our merchants in the restaurant industry to give you a solid springboard to kick start your new restaurant.
Setting Your Initial Budget
Before anything else, you’ll need to be clear on how much money you’re going to spend as you open your restaurant. Although operating costs are essential for budgeting, they’ll play a more significant part in running your restaurant instead of building it. Set your initial budget based on your financial capabilities while also considering the recurring costs that come with keeping the lights on in your restaurant after the grand opening. It’s important to strike a balance between frugality and extravagance—spend enough money to set your restaurant up for long-term success but don’t break the bank. Paying too much money upfront can empty the coffers early and force you to cut corners once your customers start showing up.
Funding for Small Restaurants
Community banks are a great alternative if you’re opening a small restaurant or don’t have the financial resources to acquire and pay back big restaurant funding. Many community banks are more willing to financially back small businesses, including restaurants. You can get the necessary cash upfront to open your restaurant without worrying about paying back massive loans by talking to local banks.
Often, these smaller banks have fantastic customer service and dedication towards their merchants that larger banks can’t match. Evolve Payment is partnered with numerous community banks, and we have acquired funding for merchants of all sizes. If you’re interested in working with our network of community banks to get financing for your restaurant, don’t hesitate to reach out, we’ll be happy to introduce you.
Setting Your Initial Budget
The first decision restaurant owners-to-be need to make is determining who will be eating at their restaurant. Understanding your restaurant patrons’ rough age range, tastes, and interests will give you a better idea of what you’re selling and where you need to sell it. This will set the stage for every other decision you make as you build your restaurant, as every future decision will accommodate your ideal customer. Visit similar restaurants and see who shows up. Ask around, and talk to customers. Get advice and input from them to craft an image of what your ideal customer will look like. If done correctly, this step will make sure everything else is correct, too.
Marketing, Branding, and Customer Experience
Restaurants depend on marketing and branding just as much as any other business. Customers will encounter your brand throughout their time interacting with your restaurant. Everything from the music you play to your name and logo plays a part in creating an enjoyable and memorable experience for your customers. Brands are powerful. They evoke emotions and turn customers into advocates, which is a handy tool for new restaurants. Take your time while building your customer experience; it will pay dividends.
Location and Entry Experience
Location, location, location. After identifying your ideal customer, the next step is finding out where they live, where they work, and most importantly, where they like to eat. Often, these three considerations are related. Customers will eat lunch near their offices or may stop at your restaurant after work for happy hour. The weekends might be slower, however, as customers eat closer to where they live. The location of your restaurant also contributes to the overall brand because you’ll be associated with the neighborhood or district you’re in. Are you in a high-priced, scenic, or upscale part of town? If so, your customer’s expectations will be vastly different than if you’re in a working-class urban environment. Unless you’re opening a food truck, location is a close-to-permanent trait of your business, so do your research and choose wisely!
After deciding on your location, you’ll want to brainstorm the look of your entry experience. In other words, how will your customers enter your door? Pull in your location and the ideal customer when making this decision because they’re closely related. The goal is to accommodate the customer and make it seamless and convenient as they enter and get ready to order food. Will your customers be arriving on foot, by bike, or by car? This will determine if your restaurant needs bike racks, walk-up order windows, or a parking lot. The easier it is for your customers to find your restaurant, enter, and pay, the more profitable it will be.
Dining Experience
Once customers walk through the door, their senses will be saturated by the look, feel, smells, and sounds of your restaurant. This is an excellent opportunity to communicate your brand to first-time customers while delivering a strong first impression. Consider all the details while deciding on your dining experience. Do you want your customers to sit down or buy and leave? What type of decor will you use? Will you be playing music? If you offer takeout services or want to provide to-go packaging for your customers, this is a great opportunity to add a touch of your brand to another aspect of your customer’s dining experience.
Digital Presence
Even if your restaurant doesn’t sell anything online, you’ll still want a robust digital presence to attract customers, feature positive reviews, and address negative reviews. Your website is the foundation of your restaurant’s digital presence and should get plenty of attention as you prepare your restaurant for launch. Restaurant websites don’t have to be complex. Simply adding pictures of your food, directions, your menu, and the history of your restaurant is a good starting point. If you plan on providing an online ordering service, make sure your website is easy to navigate and up to date. Your website will leave an important first impression on some customers who’ve potentially never entered your restaurant.
After building your website, you’ll want to set up your Google My Business and social media accounts. This will put you on the map and provide visibility as customers explore dining options near them. Google My Business and social media platforms allow customers to write reviews on your restaurant, which is a great feature that will build your credibility. Make sure you respond to every review, both positive and negative. Thank customers for positive reviews, and have a contingency plan for negative reviews. Silence is acceptance, so be sure never to leave a negative review unaddressed.
If you want assistance with establishing your restaurant’s digital presence, reach out to our sister company, Evolve Systems. You’ll get the same responsiveness and customer service as with Evolve Payment, and we will sort out everything digital for you. Whether you want to advertise online, be active on social media, or analyze traffic and conversions, we’re here to help.
Building Loyalty
Repeat business in the restaurant industry is crucial for success. Rarely will restaurants make a profit off a first-time customer. Instead, it may take three or four visits before you realize a profit. Because of this, restaurant loyalty is an important moneymaker and should be a focus of your restaurant. If you want an extra incentive for building customer loyalty, a gift card or loyalty program is a great way to encourage customers to come back and bring a friend. Before developing a strategy for creating repeat customers, your restaurant will need to identify which customers are repeats by recording a list of their visits. You can record and analyze data through your Point-of-Sale (POS) system, which we’ll expand upon below.
How Are Your Customers Paying?
The first step in establishing the payment side of your restaurant business is to determine how you want your customers to pay you. Will you be accepting credit cards? Although credit cards require additional infrastructure to set up and may be considered a hassle to manage by some restaurant owners, studies show that customers spend significantly more when using plastic over paper. Credit cards are convenient, quick, secure, and cleaner than handling cash—a key consideration after COVID-19 increased the importance of a sanitary checkout experience.
If you decide to accept credit cards, you’ll need to choose the best POS system for your restaurant. What may seem like a headache waiting to happen is actually a relatively simple decision to make, and Evolve Payment has set up POS systems for merchants of many different sizes and industries, including restaurants. If you’d like a detailed walkthrough of your POS options, you can contact our team, and we’ll help implement a POS system that’s perfect for your restaurant. If this is something you think you can handle independently, then Evolve Payment has the following POS system recommendations, depending on the type of restaurant you’re opening.
Lightspeed // Upserve
The full name for Upserve is “Upserve by Lightspeed,” so we’re combining these two POS systems because of this. Upserve and Lightspeed POS systems are ideal for restaurants that do order ticket management and like collecting and utilizing data. Their reporting and analytical capabilities are among the best in the market, giving restaurants the ability to track sales by food item and manage employee time cards. Lightspeed and Upserve POS systems have WIFI capabilities, so you’ll always have internet access when you need it.
Mynt // ShopKeep
Mynt POS or ShopKeep POS (another solution owned by Lightspeed) systems can manage inventory outside of just food items. This is ideal for restaurants that also sell merchandise like coffee mugs or t-shirts. Mynt and ShopKeep are easier ways to distinguish between the front of house or shop, meaning you’ll never doubt if that item was coffee or a coffee mug.
POS Systems by Restaurant
Restaurant Type
Lightspeed // Upserve
Mynt // ShopKeep
Sitdown
X
Fast-casual
X
Formal dining
X
Foodtrucks
X
Markets
X
Delis
X
Coffee shops
X
The Numbers Behind Restaurant Payment Processing
The industry average credit card processing rate for restaurants is 2.75%. Since you’re a retail business (also referred to as Business to Consumer, or B2C) and not Business to Business (B2B), it’s not possible to pull tax code info on consumers. Because of this, restaurants are limited to level 2 interchange rates and cannot reach level 3 rates. To better understand interchange management and how these rates relate to your restaurant, you can read our interchange rate explanation blog.
To Surcharge or Not to Surcharge?
A surcharge is a modest fee applied to a customer’s credit card purchase to offset the transaction costs from your payment processor, as discussed above. Although mixed feelings exist in the restaurant industry towards surcharging, it’s an ethical and effective strategy when done correctly. Setting up a surcharging program isn’t for everyone, but it’s a good option for merchants worried that credit card processing fees will tip the balance sheet into the red.
Surcharges may seem like a complex addition to an already confusing aspect of running a business, but Evolve Payment’s mission is to provide clarity for merchants who already have enough on their plate. If you’d like to learn more about surcharging before making your decision, or would like to learn about the steps needed to implement a surcharging program, we have resources available. Or, if you’re more of a hands-on learner, or you’d like an even more detailed breakdown of surcharging, reach out to our team. We’ll walk you through the surcharging process and get you started in anticipation of your restaurant opening.
Opening a restaurant is a rewarding experience, but it can also feel overwhelming. If there are any topics in this blog that you’d like to discuss further, a member of the Evolve Payment team is happy to help. We’ve worked with merchants in many different areas of the restaurant industry and can act as your primary resource as you continue your journey. We can help you get funding, find you the best rates possible, and give you more advice on POS systems. Don’t hesitate to contact our team; we can’t wait to hear from you!