Using a Consultant to start a Restaurant Business

Posted by fshsfhsfh on Friday, July 15, 2011

Over a dozen people have asked me to recommend a good consultant to help them conceptualize and start a restaurant/food service business. The next question they asked was if it was worth the money to hire a consultant. This is a very tricky question and depends on the profile of the consultant, past record of helping start-up restaurant businesses and the fee they would charge. But here are some general guidelines you can use:

1) My personal belief is that consultants are more helpful for established businesses looking to fine-tune their business model/operational processes.
2) For start-ups they are useful for creating theoretical business viability plans i.e. while you are still evaluating whether to invest or not.
3) They can provide you some useful contacts - brokers, interior designers, kitchen equipment manufacturers etc. But you can find a lot of these nowadays quite easily though services like Justdial, meet with a few vendors and evaluate them. The value of using a consultant for putting you in touch with useful contacts is overstated in my opinion.
4) As a new restaurant business, if you are hiring a consultant, here are the kind of areas you will really need support and guidance on - so make sure if the consultant can deliver along these lines:
a) Refine your business concept to one that can make money for you. This will mean doing a reasonably accurate cost estimate/analysis with all the components involved.
b) Refining your product proposition very clearly - will the customer clearly understand what your USP is and will they be willing to pay what your business model wants them to pay? This will also include giving you very specific inputs on what to include in the menu and what not, how to price he products etc.
c) At the location you have chosen, will you be able to realistically achieve the customer volumes that your business plan forecasts. i.e. will you be able to get say "100" customer walking in everyday, if that is what your business plan is built on.
d) Help with hiring staff across all levels - the chef, the kitchen staff, the stewards, delivery boys, washing staff, assistants etc. This is an area consultants may be very weak on.
e) Telling you how and what to budget for marketing and identifying options where you can get the most bang for the buck and why? Most consultants are comfortable with a few avenues (e.g. newspaper advertising) and they will push you towards that irrespective of whether that will work for your specific business or not.
f) Help you with licenses (you will get little support from them on this - check my post on licenses required for a restaurant
g) Giving you MIS templates and teaching you how to measure and track the progress of your business. I haven't seen consultants having these - very scary as they are advising you on how to run your business without even prividing you with the basic tools to help you find out where you stand.
f) Essentially you will need a consultant who can tell you what to do if he were investing his own money into the business. This is where I see a conflict - consultants are focused on keeping you happy to get their fees - so they won't tell you that something is a dumb idea - e.g. it is in their interest that you identify a location and start your business soon, so that they can collect their fees quickly. So they will find it difficult to directly tell you that this is a bad location for your concept and drive them towards makign compromises for you, while these compromises help them finish their work quickly. These conflicts typically arise in every single component of starting your business.

5) I would recommend an alternate approach of hiring a really good person to create and run the businesses, even if you end up paying him more than market salary to him, offer an aggressive profit sharing mechanism and also offer some sweat equity. You will end up paying this individual almost the same as you would to a consultant, but this individual will be more interested in making your business successful than a consultant who has no stake in the business. I have been very surprised with the quality of people available - it's just that they may not be very articulate and it will take you time before you are confident with their skills - essentially think of the second level staff in good restaurants/hotels - e.g. not the Chef, but the F&B manager or the assistant chef in a good restaurant in a hotel like Taj. Finding a really good person with whom you can build trust and business chemistry will not be easy - but will be worth the effort.

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