Six Tips for Bootstrapping Your Restaurant’s Growth

by Bruce Hakutizwi6 Min Read

While it’s commonplace for the average fast casual franchise startup to require an initial investment in the mid-to-high six figures, and for a high-end restaurant to cost over $1 million prior to serving its first guest, that level of startup or growth investment isn’t always strictly necessary.

In fact, creative and savvy restaurant entrepreneurs can start and grow exciting restaurant concepts with comparatively tiny budgets if they’re willing to approach the project with a bootstrapping attitude.

Does Bootstrapping Mean Settling for Less?

When entrepreneurs hear the term “bootstrapping,” it might conjure up the idea of cutting corners and slacking on quality in order to save money. But true bootstrapping (as we’re discussing it here) has nothing to do with settling for lower quality. Instead, it’s all about planning and executing your startup and/or growth strategies with a meticulous eye on cost containment, value, and testing.

Sure, it may mean “sacrificing” aspects of the restaurant dream that have become tradition but aren’t truly necessary, (like top-shelf, custom-designed menus, tablecloths, and monogrammed linen napkins). But it also means focusing the intentionally smaller budget you’ve allotted on investments that have a direct bearing on the eventual success of the venture, rather than just on its aesthetic or traditional appeal.

How Do You Separate Needs and Wants?

As with any budgeting effort, one of the first requirements in bootstrapping your restaurant’s growth is to identify which aspects of the project you have in mind are needs (absolutely essential to the successful realization of your goal,) and wants (niceties and conveniences, but non-essential for success.)

A Forbes article highlighting the success of the Tau Poco restaurant in Birmingham, Alabama — started with just $13,000 in October of 2013 — offers this insight from Tau Poco’s founder, chef Chris DuPont:

"Ultimately, you'll be graded on the food," he says. "Diners do not come back because you put in a $600,000 kitchen — they're coming to eat the food."

So, for a restaurant owner looking to grow their business, the main question that needs to filter every investment decision you make is, “will this purchase improve my customer’s dining experience?”

If the answer is not an unequivocal "Yes," then it’s probably a want, and can be limited or even discarded when you’re bootstrapping your startup or growth efforts.

DuPont’s goal for Tau Poco was to offer diners an unrivaled selection of international flavor combinations in quick-served mashups for a new kind of unique lunch-hour fare. He’d already made a success of a more traditional, French-influenced fine dining restaurant in Birmingham, but wanted to test the waters of the more casual experience he envisioned for Tau Poco without jeopardizing his established restaurant’s financial standing with an expensive startup.

So, he located a small existing restaurant space with a reasonable rent, economized on every aspect of the remodel, hired a local artist to handle all the interior design and promotional materials (at a fraction of the cost of high-priced professional restaurant marketing agencies,) and focused his remaining budget on just enough high-quality equipment and ingredients to get things started.

During their first month in operation, Tau Poco averaged about 100 diners per day with an average bill of $10. That’s approximately a 300 percent ROI in the first month, and continued profit going forward.

DuPont concludes, "You don't need $100,000 to open something you're passionate about. Anyone could open a restaurant with a credit card, and get their business going.”

Before moving on to the six tips described below, be sure you’ve effectively weeded out unnecessary wants from your to-do list, and that you’re focusing on the needs.

How to Bootstrap Your Restaurant’s Growth

The following five “buckets” will actually hold a number of different tips and tricks for starting or growing a successful restaurant on a tiny budget. Consider each as a general approach to forming your growth strategy rather than a specific action item, then apply each approach to your own unique goals and circumstances to determine an action plan that’s customized for you.

If Growth is the Goal, It Makes Sense to Start Small

Whether you’re considering a brand new restaurant startup or just a previously unexplored expansion of your established restaurant’s menu, the smart way to bootstrap that growth is by starting with the smallest effective change and build from there.

In the software world, this concept is called “minimum viable product,” meaning it’s better to get the simplest, most basic version of an app into the hands of the user rather than spending a lot of time, effort, and money on developing fancy bells and whistles only to find out later on that the user isn’t interested.

Similarly, whether it’s a new food truck concept, an excursion into Mediterranean tacos, or a new all-you-can eat cricket bar, instead of going into debt funding a full-scale blowout grand opening, set up a small corner of your current restaurant and offer free samples to current customers. Or rent a booth at a local farmer’s market to see what the public thinks of your new cuisine.

Test Everything, Every Step of the Way

Along the same lines, don’t even take a small step like those described above and then leave it to sink or swim. Every step you take in your growth strategy should be taken with an eye on continually testing and optimizing the results.

Chefs do this naturally all the time: as they develop new recipes or put their own personal spin on traditional dishes, they pay close attention to the reactions from customers. In fact, smart chefs will often try out new dishes on friends, family, staff, and a host of other “beta testers” before even offering it to a paying customer. Then, they may introduce the dish as a “Chef’s Special” for a day or two, and make a point of finding out from the customer or the server how the diners enjoyed it.

Over time, tweaking the dish continually, they’ll end up with a masterpiece that they’re proud to add to the regular menu.

That same concept should be applied to every step in your restaurant growth strategy: when you’re ready to launch your “minimal viable product,” make sure you have procedures in place to collect data, test the customer’s reaction to the change, and make improvements on the fly. Or, if you realize it’s just not the right time for that particular product or service, pull the plug on it before you waste any additional resources.

Economize Wherever Possible

Going back to the example of Tau Poco, Chef DuPont may have been tempted to go all out by hiring an A-list team of restaurant marketing pros and splashing his concept all over every glossy page and influential food blog in the country, but he chose to go a different route:

He invested as little as possible, making sure to focus on just the bare necessities that would result in his customers getting the very best taste of what Tau Poco had to offer. Then, once he realized the concept had legs and could be profitable, he was able to start adding some more “wants” onto his growing budget.

There are generally dozens of options for nearly every purchase you want or need to make to grow your restaurant as you’re envisioning. They’ll range from DIY projects and hiring local college kids to bringing in the best and the brightest professionals to provide the highest possible level of quality and sophistication.

If you’re bootstrapping your restaurant growth, you’re going to want to focus on the lower end of that scale. As the Tau Poco example proves, that doesn’t mean looking or feeling unprofessional, it simply means getting what you need as economically as possible, even if it requires extra work.

Lease, Don’t Buy

While purchasing equipment is usually the most economical choice over the long term, when you’re still in the initial startup and testing phases of growth, leasing makes much more sense. It generally costs less on a month-to-month basis and it offers faster and easier liquidity should you find that the concept isn’t working out or the equipment isn’t what you really need.

Don’t Go All In Until You’re Sure

If you’re already following the previous four tips, this one is a no-brainer. By intentionally starting small, saving money wherever possible, testing everything with an eye on optimization, and choosing a more flexible lease over buying expensive equipment outright, you’re in the perfect position to pull the trigger and shut things down if and when that becomes necessary. Or, to pivot and make major changes without burning hundreds of thousands of dollars in the process.

The fact is, as exciting as it is for restaurant entrepreneurs to experiment, try new things, and work hard to grow their businesses, small businesses fail regularly, and restaurants are certainly no exception. There’s no magic secret to restaurant success. So, rather than letting your potential failure become a catastrophe, following these five bootstrapping tips can make sure it’s just another valuable learning experience on your way to bigger and better things.

And, if instead it’s a roaring success, you’re even further ahead because you’re not left in debt or answering to a team of impatient investors.

Bruce Hakutizwi

@BizForSaleUS | LinkedIn | Website

Bruce Hakutizwi is the U.S. and International Business manager for us.Businessesforsale.com. He is passionate about helping entrepreneurs succeed and regularly writes about restaurant growth and small business management.

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