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Restaurant Success: The Main Ingredients

Restaurant Success: The Main Ingredients

Eileen Figure Sandlin | Entrepreneur Magazine

Finally, Hanning recommends buying used equipment when you start out, especially when it comes to big-ticket items like refrigerators. “In a few years, when your cash flow is better and you’re duct-taping your appliances together, then you can buy new,” he says. “Restaurant auctions often have good deals.”

Study the Menu

Probably one of the most exciting aspects of establishing a restaurant is coming up with a winning food lineup that dazzles diners. Naturally, menu selections should reflect your establishment’s theme consistently (i.e., no herbed couscous at a pizza parlor), and you should create signature menu items that set you apart from the competition. For instance, Lao built his dumpling empire on six varieties of dumplings (including a chocolate dessert dumpling) and simple add-ons like Asian salad, noodle soup and green-tea milkshakes. It takes approximately 2.5 minutes from order to delivery—and he sells about 1.4 million dumplings a year. “That’s more dumplings than I ever imagined I’d see in my life,” he says with a laugh.

At Four Food Studio, Sidhom and co-owner Jay Grossman, 34, avoid “menu fatigue” by rotating the offerings on a seasonal basis. They keep their loyal customers informed about the new selections through an e-mail blast sent just before the menu changes.

Anita Lo, chef and co-owner of both Rickshaw Dumpling Bar and Annisa, a contemporary American restaurant in New York City’s West Village with 2006 sales of $1.5 million, features a five- to seven-course tasting menu in addition to the regular menu to keep clientele interested in her culinary offerings. “I tailor the tasting menu to each table and never bring back the same dishes,” says Lo, 41. “I also keep a database of everything my regular customers have ever eaten, so they have a unique dining experience every time they come in.”

Pricing menu items is an art unto itself. Your prices should reflect everything from food costs to labor (both prep staff and servers) and overhead (i.e., utilities). You should also build in a profit margin of at least 10 percent to 15 percent to make sure the business is on a firm footing for future growth.