A Guide To Starting A Restaurant, Café Or Take-away
A guide tostarting arestaurant,café iness
ContentsIntroduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51. Turning an idea into a business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72. Business planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113. Starting a restaurant, café or take-away business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154. Licence and regulatory information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235. Key Contacts and Industry Associations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32A guide to starting a restaurant, café or take-awayP3
So you wish to starta restaurant, café ortake-away business?Starting a restaurant, caféor take-away business canbe exciting and rewarding,however there are manychallenges that you willencounter along the way,and that’s even beforeyou open your doors.
IntroductionA high percentage of businesses fail within their firstthree years of operation. Good ideas don’t alwaysmake good businesses! Businesses that surviveand thrive have a number of things in common.This guide will provide you with answers to manyquestions you may already have and will be a greatstarting point when considering commencing anynew business.It will also give you more specific help andinformation into what is required and what isrecommended when starting or buying a restaurant,café or take-away business.What this guide does coverThis guide is divided in to five parts. It will assist youin making key decisions and provide advice in thefollowing areas: 1. Turning an idea into a businessWhat this guide doesn’t coverThis guide will not give you all the answers. Everyeffort has been made to ensure that the informationprovided is accurate. You should note howeverthat this information is intended as a guide only,providing an overview of general informationavailable for new business starters. It is not intendedto be an exhaustive source of information and shouldnot be seen to constitute legal or financial advice.You should, when necessary, seek your own advicefor any legal or financial issues raised in relation toestablishing your business.Those people that have had a successful business inanother industry or State may wish to start readingindustry specific information from Chapter 3 onwards.However, Chapters 1 and 2 do provide you with auseful list of questions that you may wish to considerduring the development of your business plan. 2. Business planning 3. Starting a restaurant, café ortake-away business 4. Licence and regulatory information 5. Key Contacts and Industry Associations.Chapters 1 and 2 provide advice that can be usedto set up businesses other than a restaurant, café ortake-away business.A guide to starting a restaurant, café or take-awayP5
Starting a business is riskyat best and understandingthe problems you will faceand working out how youwill tackle them beforeyou start will increase yourchances of succeeding.
1Turning anidea intoa businessBefore you start any business you need to get a reallygood focus on your business idea and just what itis you want to do. Starting a business is risky at bestand understanding the problems you will face andworking out how you will tackle them before youstart will increase your chances of succeeding.Here are some questions to assist you to thinkthrough what you need to know and do:About the moneyOne of the leading causes of business failure isinsufficient start-up capital. Once you have takencare of your building and equipment needs youmust also have enough money on hand to coveroperating expenses for at least one year. In additionyou should include your salary as the owner andmoney to repay any loans.About youAsk yourself:You will be your own most important asset,so an objective appraisal of your strengths andweaknesses is essential. Do you know how much you can contributeto the business set-up?Ask yourself: Are you a self-starter? Do you get along with a variety of personalities? How much money do you need to get started? What are the alternatives in financingyour business? What do you need to do to get a loan? How good are you at making decisions? What should you know about accountingand record keeping? Do you have the physical and emotionalstamina to run a business? What level of profits do you anticipate? How well do you plan and organise? How much credit can you get fromyour suppliers? How will the business affect yourrelationships / family? Are you willing to reinvest your salary / businessprofits to help your business grow? Have you worked for someone else asa supervisor or manager? Have you talked to your Bank Manager andAccountant about your plans? Have you had any business training? Have you considered a partner? Are you willing to take advice andconstructive criticism?A guide to starting a restaurant, café or take-awayP7
Turning an ideainto a businessAbout the business Is the building in good condition?There are four basic needs for success in small business– sound management practices, industry experience,technical support and planning ability. Few peoplestart a business with all these areas covered. Will the landlord transfer the lease to you? Have you considered buying a franchise?Ask yourself:About the people How does your business idea differ from othersimilar business?Your staff will be critical to the success ofyour business. What will you name your business? Why?Your goal should be to hire employees who will beproductive and add value to your business. What purpose will your restaurant, caféor take-away business serve? What is the state of the industry you areplanning to enter? Who will your clients or customers be? How will you market your business’ goodsor services? How much will you charge? How will you measure your business successor failure?Ask yourself: How many employees will you need? Who will you hire? How will you recruit / hire? What qualifications / experience will they require? Will your family be involved? What wages will you pay? What training plans do you have? Who is your competition? Should you employ contractors? Who will be your suppliers? Should you have an apprentice or trainee? Where will you operate your business?Before you employ staff you must ensure youunderstand how the structure of your businessmay affect the wages and conditions you willneed to provide to your employees. Your businessand workers are covered by the federal workplacerelations system, the Fair Work Act. Is it a good location? Will you have sufficient room to expandif necessary? Do you know exactly what equipment and suppliesyou will need and how much they will cost? Have you a plan to control your inventory? What technology will you rely on? How will your business impact the environment? What will the hours of operation be? If you are buying an existing business: Are you sure you know the real reason why theowner wants to sell? Have you compared the cost of buying anexisting business with the cost of starting anew business? Is the equipment / inventory up to date and ingood condition?P8 Will the landlord allow any structural alterations?A guide to starting a restaurant, café or take-awayFor more information about the award that coversyour workers go to www.fairwork.gov.au or yourindustry association www.restaurantcater.asn.au.When you employ staff it is also important that youcalculate your costs. The costs will not just includewages but also the ongoing costs of superannuation,workers compensation insurance, leave entitlementsand possibly payroll tax. These can typically add 2530% to wage costs.Other costs that should be considered are thoseassociated with training, equipment, protectiveclothing, fringe benefits and supervision. Findingand keeping the right staff is often the majorchallenge in business.
Turning an ideainto a businessTypes of businessesBefore commencing a business you will need todecide what structure will suit your business. Thereare significant advantages and disadvantages foreach type of structure and you should consult abusiness advisor, accountant or solicitor for advice.The most common forms of business structure are:Knowing where to look and find the rightinformation easily is a great help when startinga new business. The Department of StateDevelopment Small Business ss )provides information and free interactive toolsand workbooks, to assist South Australianbusinesses plan and grow their business ideas.Sole traderThe business has no separate legal existence from itsowner. As a sole trader you will be responsible for theliabilities of your business.PartnershipA few extra questions: Are you passionate about entering business? Could you make more money working forsomeone else?Is a contractual relationship between two or morepeople where the profits, losses, risks and assets arelegally shared according to the terms of the contract. Do you have supportive family and friends?Trust Do you know where to get further helpand advice?Is where a business is transferred to a third party whohas legal control and has a duty to run that businessto benefit someone else.CompanyIs a legal entity separate from its shareholders.A company director has additional legal andreporting obligations.You should discuss the advantages anddisadvantages of each business structure withyour accountant and determine which is themost appropriate for you. Do you understand how your work / life balancemay change?If you have answered all these questions carefullyyou have already done some hard work and seriousthinking. The next step is to put all these thoughtsinto words by creating a business plan.Another great resource is the sa.gov.au website.SA is the State Government’s one-stop contact pointfor Government information and services. Particularlyuseful is the ‘Business, Industry and Trade’ link you willfind on their home page.There are many and varied legal requirements whenstarting / operating a business. Because businessesare so diverse it is not possible or practical to listevery mandatory requirement for all businesses.Businesses will also need to comply with federal,state and local council laws and requirements.A comprehensive flow chart is provided in Chapter4 – Licence and regulatory information. This sectionwill assist by providing you with direction in meetingyour legal obligations.A guide to starting a restaurant, café or take-awayP9
A business plan providesspecific, organisedinformation about yourcompany. It providesdirection, keeps you on trackand is usually a requirementwhen you seek finance.
2BusinessplanningWhat is a business planand why do I need one?A business plan provides specific, organisedinformation about your company. It providesdirection, keeps you on track and is usually arequirement when you seek finance. It preciselydefines your business, identifies your goals andserves as your business resume. It helps you allocateresources properly, handle unforseen problems andmake the right decisions.A business plan should be a work in progress. Evensuccessful restaurant, café or take-away businessesshould maintain a current business plan.Every successful business plan shouldinclude something under each of the followingtopic headings:1. Executive summary2. Market analysis3. Company description4. Organisation and management5. Marketing strategy6. Product or service7. Funding8. Financials1. Executive summaryThe Executive summary is the most importantsection of your business plan. It provides a conciseoverview of the entire plan and it tells the reader whyyou think your business ideas will be successful. Itshould be the last section you write after you workout all the details of your business plan.Typically it would include: a mission / vision statement date of business commencement details of key personnel and the functionthey perform number of employees location of business description of plant or facilities products provided or services rendered banking relationship summary of company growth potential summary of management’s future plans.If you are just starting a restaurant, café or take-awaybusiness you won’t have a lot of information orhistory to draw on. Focus instead on your experienceand background as well as the factors that led youto start this business. Show how your business canprovide a solution for your target market.9. AppendixA guide to starting a restaurant, café or take-awayP 11
Business planning2. Market analysisRegulatory restrictionsThe market analysis section should illustrateyour knowledge about the restaurant, café ortake-away industry. This section should include anindustry description and outlook, target marketinformation, any market test results, lead timesand a competitor evaluation.This should include information related to customeror government regulatory requirements or potentialchanges in the future and how you will comply withthese requirements.Industry description and outlookThis section should look at how all the differentelements of your business will fit together.It should explain succinctly why you are in therestaurant, café or take-away business, whatmarket place needs you are satisfying and whyyour business will be successful.This overview should include a description of yourindustry, its current size, its historic rate of growth,trends and characteristics as well as major customergroups within your industry.Target marketYour target market is simply the group of customersyou wish to focus on. When you are definingyour target market it is important to narrow it toa manageable size as many businesses make themistake of trying to be all things to all people. e.g. thecorporate breakfast market, weddings and functions,passing tourist trade, etc.You should state the characteristics of the primarymarket you are targeting, its size, the extent to whichyou feel you will be able to gain market share andwhy, your pricing and gross margin targets, yourresources, the purchasing cycle of your potentialcustomers, trends and potential changes which mayimpact your primary target market.Market testsInclude any results that may have come from anycustomer research or market testing.Supply / lead timesYou should detail the availability of supply of yourinputs, the range of suppliers who can service youeffectively and estimated lead times.P 123. Company description4. Organisation and managementWho does what in your business? What is theirbackground and why are you bringing them intoyour business? You will need to detail your businessorganisational structure, details about the ownership,profiles of your management team and any specificskills or qualifications that may be relevant.5. Marketing strategyMarketing definitions are numerous butfundamentally, marketing is the process of creatingyour customers and every business needs customers.This area in your plan should detail your strategy (alonger term direction) e.g. a franchise strategy ratherthan your marketing tactics (short term response)e.g. put advertisement in newspaper.A separate promotional strategy or marketingplan should detail how you wish to communicateyour message to customers. You may wish to usespecialist agencies to help with your communicatione.g. graphic designers for logos and signs, advertisingagencies, public relations companies etc.Competitive analysis6. Product or serviceYou need to identify your competition by productor service as well as by market segment, assesstheir strengths and weaknesses, determine howimportant your target market is to your competitionand identify any barriers, which may hinder you asyou enter the market.What are you selling? Focus on the areas whereyou have a distinct advantage with your productor service. Identify the niche you will be filling.Give the reader evidence as to why people will bewilling to pay you versus others. Provide details ofkey suppliers, availability of product or service andproduct costs.A guide to starting a restaurant, café or take-away
Business planningOverall this section should include:9. Appendix a detailed description of your food andservice offeringThe appendix section should only be provided toreaders such as potential financiers on an ‘as needs’basis. Your business plan will be a critical referenceand communication tool but it is not for everyoneto see. Therefore the detail included in an appendixshould be on hand but not always included in themain body of the plan. information related to your product’s life cycle any protected procedures or recipes – particularlyrelevant for franchises any ongoing research.7. FundingTypically an appendix would include:If you are utilising a business plan to assist in securingfunding you will need to include the following: credit history your current funding requirement menu / wine list your future funding requirements (over the next3-5 years) recipe costings how you will use your funds (e.g. capitalexpenditure, working capital, acquisitions, etc.) market research findings any existing collateral (e.g. your house orother assets).Each explanation of these is extremely important toa future creditor since they will directly impact yourability to repay any loans. resumes of key staff letters of reference copies of licences, permits, patents etc. copies of legal documents such as leasesand contracts.Any copies of your plan should be controlled. Keep adistribution record of who has a copy of your plan, asthis will allow you to update and maintain your plan.8. FinancialsThe financials should be developed after you haveanalysed the market and set clear objectives.You should include: historical financial data – if you are buying anestablished restaurant, café or take-away businessyou will need to provide historical data related tothe businesses performance (3-5 year history ifpossible) of income statements, balance sheetsand cash-flow statements.Business planning summaryRegardless of whether you are looking to raisefinance for your business idea, if you have diligentlycompleted the requirements of a formal businessplan, researched and answered the questions aboutyour business that need answering, you will beconsiderably better prepared for the challengesopening a restaurant, cafe or take-away businesswill bring. projected financial data – creditors will wantto see what you expect your business to beable to achieve in the next 3-5 years. Each year’sdocuments should include forecasted profitand loss statements, balance sheets, cash-flowstatements and capital expenditure budgets.In your first year projections you should look atsupplying monthly or quarterly figures. Make surethat your projections match any funding requestsand there are no inconsistencies.A guide to starting a restaurant, café or take-awayP 13
Starting a business in thehospitality industry can be arewarding undertaking andlike all businesses it comeswith its share of challenges.
3Starting arestaurant, caféor take-awaybusinessSo you wish to start a restaurant,café or take-away business?Starting a business in the hospitality industry canbe a rewarding undertaking and like all businesses
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