Key Success Factors In Owning a Restaurant Business

Owning a restaurant offers many possibilities for growth, creativity and culinary adventure. The industry as whole is still growing and expanding. Yet, the industry is also highly competitive and dynamic. Consumers' spending habits have grown more cautious, while their dietary preferences have become more specific and their expectations of food quality have grown more discerning. Now more than ever, restaurant owners must implement savvy business practices and pay attention to the latest trends if they want to be successful.

What is required to operate a restaurant business?

Restaurant businesses relying heavily on labor, food products and equipment, and capital intensity is generally high. While experienced staff and quality menu items can raise labor costs for owning a restaurant, having a sound business plan in place can help to offset costly mistakes.

Are restaurant businesses very profitable?

The restaurant industry as a whole is expected to grow slowly, yet with concerns with food costs and maintaining sales volume may mean that overall profit margins can be slim. According to BizBuySell Insight data, the median revenue for restaurant businesses is $543,977. The average cash flow multiple is 2.07, resulting in a median sale price of $185,000. To generate profit, restaurant businesses must monitor gross profit dollars for menu items while providing high quality dishes and meeting high service standards.

Is the restaurant industry very competitive?

The restaurant industry is increasingly competitive, with many newer players shining as they tap into new food and menu trends.Combine that with the challenge of rising labor costs and keeping qualified staff, restaurant owners are feeling continual pressure to maintain profit margins. As a result, trends veer towards higher growth in quick-service and fast-casual restaurants.

What are the keys to a successful restaurant business?

A successful restaurant business requires a good understanding of the market, how to manage food production efficiently while maintaining a solid profit margin. It also requires skilled employees, great service and keeping up to current regulatory procedures.

Owning a restaurant business can be a challenge, considering the industry is growing slowly (but steady) and market concentration is high. Furthermore, customer demand for healthier and more exotic menu items means that owners need to continually keep up with trends. However, savvy business owners will be successful if they provide customers with what they want, maintain a good profit margins while bring in repeat customers. With careful planning and an eye on current best practices, a restaurant business could be a profitable move.


“2017 State of the Industry,” National Restaurant Association, Print edition: 978-1-931400-94-7, Digital edition: 978-0-9978029-0-0, National Restaurant Association 2017.

Mealey, Lori, “How to Start a New Restaurant,” The Balance Small Business, 4 July 2018, Dotdash,, Accessed May 2018.

“How to Open a Restaurant in California,” UpCounsel,, Accessed May 2018.

“Don’t Fall Victim to Restaurant Profitability Myths,” National Restaurant Association,, Accessed May 2018.

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