Restaurants are something that we’re all familiar with. They have a deep history as they’ve represented changes in dining culture and taste preferences over time.
They’re also a place to go for everything from a large celebration to a quick lunch. However, when it comes to the restaurant industry, not many people are familiar with its specifics.
The restaurant industry includes professional restaurants and bars along with various other food service establishments. They allow customers to come in, order food, and eat on-site. The restaurant industry is in the same category as the hospitality industry.
This article will provide you with an overview of the restaurant industry along with how you can get into it.
What Is the Restaurant Industry?
The restaurant industry is a sector of the marketplace that prepares food and beverages to be consumed by people on-site or through curbside pick up services, different types of catering, or banquets. It’s used to describe an industry that focuses on supplying food services in cafés, restaurants, bars, and similar settings.
Restaurants can be standalone restaurants, fast food restaurants, chain restaurants, pop up restaurants, and formal restaurants. If a business allows customers to come in, order food, and eat on-site, it's likely part of the restaurant industry.
The restaurant industry is considered one part of the hospitality industry. Common job titles for these kinds of businesses include different types of chefs, waiters, restaurant manager, inventory control manager, bar staff, and customer service personnel.
Being in the hospitality industry, restaurants can take advantage of hospitality software. This is how they can stay on top of daily tasks like menu engineering and the bar opening and closing checklist.
Restaurant Industry vs. Food Service Industry
It’s common for people to confuse the restaurant industry with the food service industry. In fact, the two terms are often used synonymously. Almost every location that serves food could be classified as part of the restaurant industry, but that’s not always correct.
To be part of the restaurant industry, the establishment should have a place for people to sit and eat. The food service industry includes establishments that prepare and serve food without expecting people to eat onsite.
While the two terms are often interchangeable, the food service industry and restaurant industry differ quite a bit. The most significant difference is that the restaurant industry provides a dine-in experience.
How Has the Restaurant Industry Changed?
Over the years, the restaurant industry has gone through many changes, as have restaurant industry trends. This is partly due to technology, consumer lifestyle changes, and an increase in female leadership roles within the industry.
The norm for today’s restaurant industry has only existed for a short period of time.
The following are examples of how the restaurant industry has changed:
Open Concept Kitchens
More and more restaurants are choosing an open concept kitchen approach. This means that they want to show they have nothing to hide. Both casual and formal restaurants are incorporating this idea into their business strategy.
With this concept, restaurants are more concerned about their presentation and the appearance of staff. From the kitchen staff to the hostesses, everything and everyone must be in excellent shape. This is due to increased exposure to customers.
Efficiency and Speed
In terms of the restaurant experience, efficiency and speed have a whole new meaning. From the reservation-making process to online ordering and payment processing. Customers have high expectations. They want things done quickly, efficiently, and correctly the first time around.
There are new apps for restaurant staff that are created every week that help with efficiency. By staying up-to-date on the latest restaurant technology, restaurateurs ensure delivering top-notch services to their customers.
Social Media
Social media has changed practically every industry out there. The restaurant industry is no exception to this. Professional food critics aren’t the only deciding factor for new restaurants and whether they’ll make it or not. In fact, the public’s voice through social media has a huge sway on O2O efforts.
The people’s opinion is important, and it goes a long way. Google My Business and Yelp are just the beginning of what can help or hurt a restaurant’s reputation. Bloggers, social media influencers, and ordinary people share their opinions online. Social media is also a great way to promote your loyalty program.
Well-Informed Guests
Guests that visit restaurants these days are well-informed. They know more than ever about what’s happening at your restaurant. Guests are knowledgeable about food cost, food safety, quality produce, and the price they should be paying. They will also have opinions about other details like restaurant decor.
Frequency
Back in the day, going out to eat was something that was saved for special occasions. However, these days, the frequency of going out to eat has increased quite a bit.
This is due to lifestyle changes and people who are more food-savvy than ever. Restaurants can benefit from this by changing their menus, adding new items, and reevaluating their menus to see how they can stand out more.
How To Get Into the Restaurant Industry
For many, becoming an entrepreneur by owning and operating a restaurant is a dream. For others, diving into the restaurant industry is a challenge.
There are a few steps and considerations that you can’t miss in order to succeed within this industry. Here’s how to get into the restaurant industry:
Choose a Restaurant Concept and Menu
It all starts with a restaurant concept. This can be considered the fun part of the entire process since your imagination runs wild.
Your restaurant concept should include the type of restaurant you’re interested in along with the service style and the style of food. Here are a few common restaurant concepts:
- Fine dining restaurant
- Fast-casual restaurant
- Ghost kitchen concept
When you choose a restaurant concept, you’ll also want to develop your brand. Your brand should be more specific, and it should communicate its mission to the public. Think about your restaurant name, logo, and menu design so that it’s all cohesive.
Building a menu, including a restaurant QR code menu, requires a little creativity. Your menu items will determine the kind of equipment you’ll need, the crowd you’re looking to attract, and the skills your staff should have.
While working on how to make a restaurant menu, be sure to think about your demographic. For instance, if you’re planning on opening a restaurant in a college town, the menu should be customized to college-aged customers. If this isn’t your target market, then choosing a new location (or concept) is ideal.
Develop a Restaurant Business Plan
Like any new business, a reliable business plan is required. Most restaurant business plans are split into sections that describe the different aspects of your business, including the concept and financials.
Your business plan will help you sort out the details of your business and help you get potential investors. Here are some components to include in your eCommerce business plan:
- Executive Summary. This is a summary of everything listed below. It’s the first part of your business plan, but it’s ideally written last.
- Company Overview. Go into detail about your company overview and what plans you have for your business.
- Management Structure. Sort out the details for restaurant management and ownership.
- Staffing Needs. It’s common for businesses to underestimate the number of employees or staff members they need. Writing it down can give you a more realistic vision of how many people you need to hire to run your business.
- eCommerce Marketing and Competitive Analysis. This component is research-heavy. Include an analysis of the competition and demographics in the location you’ve chosen.
- Advertising Strategies. With the use of your marketing analysis, you can choose the ideal advertising and marketing strategies.
- Financial Projection. If you’re looking to secure funding for this venture, this component is crucial. Create a sales forecast and a break even analysis.
Obtain Funding
Most people don't have the capital that is required to open up a restaurant. That means they’ll need some kind of financial assistance. By obtaining funding from other sources, you can make your dreams of owning a restaurant a reality.
Start off by estimating the cost to open a bar or restaurant. With this, you’ll also want to look into how much the daily operations will cost. This information can be used to create a budget and forecast for six months to one year.
Compare your total cost to the capital you currently have and determine how much extra funding you’ll need. Costs like equipment, MRO inventory, licenses, and staff salaries, like an eCommerce manager salary, should also be included in your calculations.
Choose a Location
There are a few factors that you should consider when choosing a location for your restaurant. These include:
- Demographics. The niche market your restaurant targets should coincide with the demographics of the area.
- Local competition. It’s ideal to choose a location where restaurants similar to yours are successful. However, avoid areas that are highly saturated with restaurants that compete with your concept.
- Visibility and accessibility. Choose a location that has good visibility, decent vehicle traffic, and foot traffic. Also, take into consideration parking availability along with ease of access for cars, pedestrians, and people with disabilities.
- Labor costs. These depend on the location. If your restaurant is located in an area with high living costs, you’ll have to pay more in wages to attract decent employees.
Obtain Restaurant Permits and Licenses
Starting a new restaurant requires you to obtain the necessary local, federal, and state permits and licenses. Obtaining legal counsel when you file for restaurant licenses and permits ensures that all steps are completed properly.
With the proper permits and licenses for your restaurant, you can legally open up for business. Common licenses include:
- Business license
- Employee Identification Number (EIN)
- Liquor License - learn how to get a liquor license here
- Food Service License
Choose an Equipment and Food Supplier
Your restaurant’s kitchen should have all the necessary catering or bakery equipment before you open. This includes refrigeration units and cooking equipment. Your menu can help you determine whether you’ll need other special equipment such as cheese making accessories, popcorn making accessories, pasta cookers or pizza ovens.
Choose an equipment supplier that specializes in commercial kitchen and restaurant equipment. Looking into the wholesale price of items is helpful for this step.
When it comes to food suppliers, you’ll want to choose ones you can trust. Most restaurants take advantage of the opportunity to work with suppliers of wholesale products. These include wholesale meat, bulk fish suppliers, and wholesale produce.
It’s also common for restaurants to utilize eCommerce and order management platforms, such as BlueCart. These platforms make it easy for restaurants and chefs to keep up with restaurant inventory management.
If you’re looking into learning how BlueCart can help you succeed in the restaurant industry, book a demo today!
What Is the Future of the Restaurant Industry
The restaurant industry is among the rapidly changing ones. The pandemic has further accelerated the transformation of the sector. Restaurant businesses that don’t actively adapt to the changes in demand risk losing their place in the market. Here are some of the trends that are expected to shape the future of the restaurant industry.
- Takeout and deliveries. The surge in food deliveries is fueled by the growth of third-party companies like DoorDash and Uber Eats. These solutions help customers pick their meals and they don’t have to think about cooking dinner. Furthermore, an increasing number of businesses in the restaurant industry integrate solutions like Revolution Ordering that help them manage their own online orders. The busy lifestyle of many people is also a catalyst for online food ordering.
- Ghost kitchens. In recent years, this concept has become widely popular. Setting up a ghost kitchen requires far less capital compared to opening a restaurant. These businesses rely on online orders and don’t offer on-premise dining. This makes their labor costs and other expenses such as rent significantly lower.
- Automation. As labor is usually the biggest item in restaurant expenses, many businesses in the sector look for ways to automate different tasks or processes in order to reduce their labor costs. From using robot chefs or waiters to investing in self-ordering kiosks, there are multiple aspects of automation for the restaurant industry. As it’s one of the largest sectors in the economy, providers of software invest a lot of time and effort into developing new automation solutions for restaurants.
- Sustainability. An increasing number of customers factor in a restaurant’s eco-friendly policies when they pick a dining place. That’s why green practices such as sustainability, usage of biodegradable supplies, and the reduction of food waste in restaurants can have multiple benefits for businesses. They can cut certain costs and attract eco-conscious customers.
Frequently Asked Questions About the Restaurant Industry
What Is the Restaurant Industry?
The restaurant industry refers to establishments that prepare and serve food while also having designated areas for guests to sit down and eat. It’s part of the hospitality industry and includes restaurants, bars, cafés, and similar establishments.
What Business Category Is a Restaurant?
A restaurant falls under the hospitality industry. Restaurants, bars, and other similar businesses are categorized under the “Food and Drink” category of the hospitality industry.
What Are Five Segments of the Restaurant Industry?
The five segments of the restaurant industry include:
- Casual dining
- Fine dining
- Family dining
- Quick service or fast food
- Quick casual
What Is the Outlook for the Restaurant Industry?
The restaurant industry is forecast to grow significantly in the next few years, reaching $898 billion in sales by 2022. This growth will create 400,000 new jobs in the industry, for a total of 14.9 million employed by the end of 2022. The outlook for the restaurant industry is positive, with strong growth expected in both sales and employment.
What Is Affecting the Restaurant Industry?
There are many factors affecting the restaurant industry. The economy is one of the most important factors, as it can impact both consumer confidence and spending power. Other important factors include changes in dietary trends, advances in food technology, and the overall competitive landscape.
What Are the Different Types of Restaurants?
Establishments within the restaurant industry can be categorized as fine dining, casual dining, fast casual, fast food, cafes, and bars. Fine dining restaurants offer upscale meals with extensive service, while casual dining offers a more relaxed atmosphere. Fast casual combines quick service with higher quality ingredients, and fast food focuses on quick, inexpensive meals. Cafes often specialize in coffee and light fare, and bars focus on alcoholic beverages.
What Licenses and Permits Are Required to Open a Restaurant?
The required licenses and permits vary by location but typically include a business license, food service license, liquor license (if serving alcohol), health department permit, fire department permit, and occupancy permit. It's essential to check local regulations to ensure compliance.
What Are the Main Challenges Faced by Business Owners in the Restaurant Industry?
Common challenges include high operating costs, fluctuating food prices, labor shortages, maintaining consistent quality, adapting to changing customer preferences, managing competition, and complying with health and safety regulations. Effective management and strategic planning are essential to overcome these challenges.