(Updated March 11, 2020) The restaurant industry continues to grow. More than 58,000 restaurants opened their doors in 2019 (D&B). As with new businesses in any industry, that number pales compared to the list of marketing opportunities they may ultimately represent.
The Who, What, & When Of Opening A New Restaurant
Why? Before a restaurant can open, an incredible amount of preparation takes place before an order is taken, a table is set, or a meal is served. Much of it is industry specific. Most of what is needed requires the advice, assistance, creativity, and skill of professionals whose expertise lies outside the core competencies of the founder(s).
Opening A New Restaurant Is A Puzzle – It Takes A Team
Here are some of the professional services new restaurants need both before and after opening day:
- Branding Consultant
- Interior Designer
- Menu Consultant
- PR & Direct Marketing
- Local & Social Media Management
Then there is the matter of sourcing physical infrastructure. This includes kitchen equipment, dining room fixtures and furnishings, glassware, plates, utensils, as well as the food and drink items that become the menu the restaurant serves.
Consider a typical list of kitchen equipment (visit this site to see what this means):
- Refrigeration Equipment
- Commercial Grills
- Ice Machines
- Salamander Broilers
- Grease Traps
- Chef Knives
- Commercial Shelving
- Squeeze Bottles
- Restaurant POS System with Kitchen Printer
Expenses First. Guest Checks Later.
Opening and then operating a new restaurant requires many significant investments. Some are one-time costs. Some require long term commitments. Owners need to make the right choices. For marketers who want to be part of the picture, timing is everything. According to business finance and accounting firm Sage.com, the following are estimates of typical restaurant startup costs:
- Lease Security Deposit/Loan Down Payment – $2,000-$12,000
- Licenses & Permits – $$100-$300 each
- Legal Fees – $500-$2,000
- Building Improvements (Owners) – $250,000-$350,000
- Kitchen/Cooking Equipment (New) – $50,000-$150,000
- Dining Room (Furniture, tableware, etc. on avg.) – $80,000
- POS System – $20,000
- Signage & Promotion (Opening) – $20,000-$30,000
- ADA Accessibility – Variable
Each of these needs leads to specialized sourcing and professional assistance. Providers of these products and services should be focused on reaching new restaurants at the earliest possible stage. There are sources of project development news that can help providers of relevant products and services with potential leads.
How Can Marketers Identify New Restaurant Prospects?
Remember what distinguishes a lead from a prospect. A lead is unqualified. Just a contact drawn from a public record or list. If a lead fits your target market, can afford what you sell, and is in a position to make a buying decision, the lead becomes a qualified prospect and the sales process can begin.
So where to begin? Searching for “new restaurants currently in development” will produce links to industry publications as well as news sites announcing hospitality projects large and (relatively) small. Examples are Restaurant News Resource and Eater NY.
Cracking The Restaurant Code
Marketers who are willing to do the legwork can begin with SIC codes. Restaurants and drinking places are in Major Group 58. It is possible to get a sense of the total number of restaurant establishments by doing a simple web search. Visiting the Department of Labor website and searching for Major Group 58 will get you to the links that provide an overview of the establishments you may be interested in.
It is more efficient and will yield a more accurate result to use a data professional who can provide a list of prospects according to ethnic style and type. The 8-digit SIC code for Chinese restaurants is 58120103. Steak restaurants are 58120802. Searching for “Actual Company Start Year” will reveal new establishments.
Another DIY approach is to search UCC-1 filings. These are documents filed on a state by state basis by commercial lenders who hold liens on collateral pledged by business borrowers. The names of the borrower and lender are primary details of each filing and so the industry or line of business that the borrower belongs to is knowable, i.e., a restaurant. The filings specify exactly what has been financed and when, under what terms, and in what amounts. Depending on who is doing the research, granular details can emerge from UCC filings.
If utilizing SIC codes and UCC filings it is important to keep in mind that while potentially fruitful, sifting through the data is tedious and time consuming. An experienced data professional with access to the relevant resources as well as the Dun & Bradstreet database of new businesses can identify U.S. restaurants serving various ethnic cuisines, that opened in 2018. All at a reasonable cost, while saving you time and effort.
Industry Growth Is Slow But Steady
According to a report released by the National Restaurant Association, the restaurant industry’s projected overall sales in 2019 will be $863 billion, up 3.6% over last year. This growth rate is below the historical growth rate going back to 1970 of 6.4%. Nevertheless, over 65,000 new restaurant and food service establishments opened in 2018. This is an industry that is constantly replenishing itself.
The report goes on to describe what the restaurant industry contributes now and will likely contribute to the American economy:
- 1 million+: Restaurant locations in the United States.
- 15.3 million: Restaurant industry employees.
- 1.6 million: New restaurant jobs created by 2029.
- 10%: Restaurant workforce as part of the overall U.S. workforce.
- 9 in 10: Restaurant managers who started at entry level.
- 8 in 10: Restaurant owners who started their industry careers in entry-level positions.
- 9 in 10: Restaurants with fewer than 50 employees.
- 7 in 10: Restaurants that are single-unit operations.
Staying Relevant: Top Ten Culinary Trends
The National Restaurant Association offers insight into the latest culinary trends. This affects restaurants across the board, from brand new to well established. New restaurants in particular may be in a position to satisfy the demand for emerging styles, sourcing ethics, taste profiles and ingredients. Suppliers who can step in and keep them well stocked can benefit. The list of trends transcends regional and ethnic cuisines:
- Cannabis/ CBD-infused drinks
- Cannabis/ CBD-infused food
- Zero-waste cooking (fresh ideas for unused food)
- Globally inspired breakfast dishes
- Global flavors in kids’ meals
- Hyper-local (e.g. restaurant gardens, onsite beer brewing, house-made items)
- New cuts of meat (e.g. shoulder tender, oyster steak, Vegas Strip Steak, Merlot cut)
- Veggie-centric, vegetable forward cuisine (e.g. fresh produce is star of the dish)
- Chef-driven fast-casual concepts
- Craft/artisan/locally produced spirits
Direct Marketers Must Take Their Own Advice: “Act Now!…”
The restaurant industry is the nexus of many industries, and supports a sizable chunk of the U.S. labor force. New restaurants may start small, but the best ones plan to grow. Just as their customers expect prompt service, restaurant entrepreneurs are have no stomach for inaction. Reaching new and established restaurant businesses when their needs are greatest must be the focus of marketers to this dynamic industry.
The infographic below provides a snapshot of trends in this dynamic industry: