RESTAURANT PLANNING

A. FEASIBILITY STUDY
• Before opening a restaurant, feasibility study must be
conducted. A feasibility study is an advanced assessment of
whether an investment will be viable before any funds are
committed. It is a research done to guide the planners and
architects of the project, operational staff and the owner, at a
later stage.

• The investor may commission the feasibility study to a public

accounting firm, market research agency or a management
consulting establishment.
 FEASIBILITY STUDY_Contd…

• Most feasibility studies include following:

a. Evaluation of the market and future trends

b. Evaluation of the proposed location
c. Analysing the competition
d. Demand Estimation
e. Preparation of projected financial statement
EVALUATION OF THE MARKET AND FUTURE
TRENDS

This evaluation includes demographic information on future

customers like age, sex, marital status, number of children,
family income, type of employment, place of residence, etc. It
also identifies market segments such as housewives,
businesspersons, students, children, etc. who will support the
business.
 Evaluation of the proposed location
• In hotel and foodservice business, the keyword over the time has
been, “Location, Location, Location”.
• Even an average property will run profitably, in an area where
customer traffic continuous. Such locations would be downtown
areas, business and shopping districts, transportation terminals,
etc. Such sites are expensive but could have major parking
problems. Additional investments would have to be made for
underground parking or parking towers.
• A site away from the main traffic like suburbs, highways, parks
and heritage centres, will be cheaper and with plenty of parking
spaces. However, the establishments located here would have
either something very unique to offer or large advertisements
located here would have either something very unique to offer or
large advertisement budgets to attract people.
 Evaluation of the proposed location_
Contd…
Following factors must be considered while
evaluating the location for restaurant:

• Population base,
• Visibility,
• Accessibility,
• Parking.
 Analysing the competition
• This study takes an inventory of all competing establishments in
the area. While all types of restaurants are a competition, those
establishments offering products and services closest to that
offered by the investor pose the real threats. Competitor can be
broadly classified into two categories.-

• Direct Competitor: It refers to the competition among the

business firms that offer same product or service to the same
target market at the similar price range. It is also known as 1st
level competition.
 Analysing the competition_Contd…

• Indirect or 1st level Competition: It refers to the competition

among the business firms that offer similar product or service to
the similar target market. It can be further classified into two
sub-categories.
• 2nd level competition: The competition among the business
firms that offer similar product or service to the similar target
market at similar price.
• 3rd level competition: The competition among the business firms
that offer similar service to the mass market.
 Analysing the competition_Contd…
The feasibility study evaluates the following factors of the
competition:

• Type of restaurant
• History of the competitors
• Type of entertainment facilities offered by competitiors
• Customer satisfaction levels
• Days and hours of operation
• Menu prices
 Estimate demand:

The feasibility study also ascertains the following:

• The type and volume of demand for both food and beverage
service.
• The adequacy with which the demand is satisfied by
competition.
• The strengths and limitations of competition.
• The opportunities for the proposed site.
• Demand is determined by the sales figures. This is done with a
survey. Sometimes information is available with public libraries,
town hall, economic department, etc. or by commissioning a
market research firm that gets this information. Market research
firms will also interview customers and get their needs and
wants. They would ask questions like their food preferences,
amount they are willing to pay, how often they dine out, time
spent on dining out, how much they are willing to travel, etc.
 Prepare projected financial statements

• The feasibility study, at the end of the day, has to reflect the
projected profit and loss statements over a five or ten year
period.
• Total Revenue – Direct Costs = Gross Profit
• Gross Profit – Indirect Costs = Profit before Tax
• Profit before Tax – Tax = Profit after Tax
 B. PROJECT PLANNING

• Project planning is the fruition of the feasibility study when a

decision is made to build a restaurant. At this stage, there is a
checklist of issues to be determined:

1. Capital Structure
2. Selection of Site
3. Architectural Considerations
4. Operational Planning
 1. Capital Structure

• Capital Structure is the way a project is financed. An

organization has several options to decide on its capital
structure. These options are based on how much of funds are
required, the degree of autonomy required and whether the
business can give the return on investment. The options
available are:
• Sole Proprietorship
• Partnership
• Company
1. Private Ltd Co.
2. Public Ltd. Co.
 The Sole Proprietor
This is a person who wants to go alone and has the requisite
finance in his estimation to launch the restaurant on his own.
Definition as per the Partnership Act 1890 in UK is:
“Partnership is the relation which subsists between persons
carrying on a business in common, with a view of profit “.
• The features of sole proprietorship are following:
• The enterprise is owned and controlled by one person.
• High degree of risk involved.
• It does not require legal legislation and attend formalities.
• Business can be started simply after obtaining necessary
manufacturing licenses and permits.
 Partnerships

• A sole entrepreneur may decide that he or she may not have the
full resources to finance the project and therefore, identifies a
like-minded friend or professional who would join him in the
venture.
• Definition as per the Partnership Act 1890 in UK is:
• “Partnership is the relation which subsists between persons
carrying on a business in common, with a view of profit”.
 Features of partnership
• The features of partnership are following:
• A partnership comes into existence when two or more persons
agree to share their profits of a business, which they run
together (Indian Partnership Act, 1930).
• Those who enter into an agreement are individually called
‘partners’ and collectively called ‘firm’.
• Partnership is the outcome of a voluntary agreement between
the persons. Therefore, a partnership cannot come into existence
by a law or by status and a partnership agreement should have
all the essential of a valid contract.
• Maximum number of members that a firm may have is 20 but if
the agreement is to carry on banking activities, not more than 10
persons can be a partner in such firm.
• It is not compulsory for a firm to get itself registered.
 Company
Company: A company may be understood as an association
of persons in which money is contributed by them to carry on
some business. Persons who contribute the money are called
the shareholders or members of the company. There are two
types of company.

• Private Limited Company: A private limited company is

one which is open to a few shareholders. It differs from
partnerships in as much as they have limited liability, which
means that are responsible for debts to the extent of their
investments. The appropriate authority like the Chamber of
Commerce may permit a private limited company by seeking
a proof from a bank of the ready cash the investors have
deposited with them.
The feature of private limited company are following:

• At least 2 members are required to form such firm.

• Formation is simpler than public limited company.
• Minimum number directors needed is 2.
• No public invitation can be made.
• Shares cannot be quoted at the Stock Exchange.
The Features of public limited companies are that

• At least 7 members are required to form such firm.

• Formation is difficult.
• Minimum number directors needed is 3.
• Shares cannot be allotted till the amount of maximum
subscription in cash has been received.
• Invitation to public to subscribe for the share can be
made.
• Shares can be quoted at the Stock Exchange.
 Methods of Raising Funds

• There are two ways of raising funds:

• Borrowing
• Ownership
• Borrowing can be related to time:

• Short-term Funds that is available for a year and less.

Short-term finance is got from :

• Bank Loans

• Bank overdrafts: This requires a good relationship with the

banks with whom a business has an account with. This
facility is given by the bank only if the track record of funds
flow has been healthy.
• Medium – term funds that is available from one to five
years:
• Share issues are permitted by the regulatory body in some
conditions to inject fresh finances into the business.
• Loan Stock: Every business can borrow up to four times its
paid up capital. Some businesses take only part of the amount
initially and can be exercise the full option later.
• Asset Sales is the least costly way but results in the loss of
assets. This is an extreme measure to keep business afloat.
• Bank loans are the most common source of medium to long-
term funds and costs depend on the prevailing interest rate.
• Grants are given by patron or the govt. to benefit the
community. Those running food services to hospitals, schools
or pension homes can avail of govt. grants put aside for such
purposes.
• Long-term funds that are over five years share the same
options given above as medium term loans.
• All funds have cost in terms of money and relationships.
They have to be factored into the business costs to be
serviced from profits.
 2. SITE SELECTION
• Size of the plot must be kept in mind with permissible built-
up area. Is that area adequate for the planned restaurant?

• The shape of the plot can also severely jeopardize costs and
plans. Investors prefer rectangular or square plots. L-shaped
plots and those with odd corners and angles can be a
challenge.

• Plots must be level. This is a challenge especially in hilly

areas where cost of levelling is prohibitive. Plots with a hill
slope will need expensive retaining wall on the slope to
protect the plot from shifting soil and landslides.
 SITE SELECTION_ Contd…
• Visibility of the site is important in this business. Investors
would like the site to be visible from the road to enable
motorists to identify the restaurant easily. On highways this is
not a problem as restaurants are given sites just off the road.
But in city limits, visibility can be a challenge. Plots that are on
the main street are more expensive than those in by-lanes
because of visibility factor.

• Adjoining properties need to be taken into account. Some

restaurants can be overshadowed by tall structures. Other may
lose its credibility because of the nature of the business that the
adjoining building owner are involved in. we don’t want to
have a motor garage next to the restaurant or a chemical
factory with all its odours and pollutants.
 SITE SELECTION_ Contd…
• Cost is the biggest factor of choice. Land is expensive
everywhere in the world. Unfortunately, restaurants need
prime sites in business or shopping districts. This becomes the
most important cost in the whole project requiring the
appropriate return on investment.
• The legislative aspects of the site are also to be taken into
account. The question one asks is, “is the site approved for the
restaurant?” The other aspect is the ownership of the plot.
Many plots are under litigation of ownership. One has to
carefully check the antecedents of the plot before purchase.
• Municipal support is essential to any site. This support comes
in the form of access to electricity poles, sewage drains,
garbage disposal, water connections, road connections, street
lightning and fire services.
 3. Architectural Considerations
• When designing the buildings, the following questions need to
be answered:
• How can the restaurant be made attractive to guests?

• The decision to visit a restaurant for the first-time visitor is

made outside the restaurant. The decision is largely influenced
by the attractiveness of the restaurant façade.

• What will make it superior to the competitor?

• Most restaurant owners know the importance of attractive looks

of the building. One has to out-beat them in its presentation.
 Architectural Considerations_Contd…

• What design will be apt for successful operation?

• Ultimately, the restaurant must be able to satisfy the guest’s

needs once he or she is inside the restaurant. The design must
bring about free flow of guest traffic; ensure a reception area,
a good coordination between the kitchen and service area and
the aspects of hygiene, sanitation and safety.
 Architectural Considerations_Contd…

• What design will reduce operating costs?

• We want proper storage areas for perishables, protection from
thefts and pilferage and easy maintenance costs.
• What design will reduce project costs? some of the least cost
structures are:

• Vertical structures for multi-tiered restaurants.

• Uniform floors, sunken floors are more expensive.
• Straight lines of services like plumbing, electrical conduits and
gas pipes.
• Use of basement for support services like locker rooms, staff
cafeteria etc.
 4. Operational Planning
• Operational planning is critical as it ensures the smooth
conduct of operations once the business is underway. It also
ensures the way planned profits are to be achieved by making
policy decisions that governs the operations in future.
Important issues addressed are:

• What type of restaurant are we offering? This is answered by

the feasibility study made and the market research conducted.
The types of service are many as brought out in a previous
chapter. There are many choices including specialty
restaurant in entertainment districts, coffee shop in business
complexes, snack bars at petrol stations or fast food
operations in university campuses.
 Operational Planning_ Contd…
• The type of service is another consideration. So, the owner will
have to decide whether to offer a silver service, pre-plated service
or self service from the many other options available.

• The number of covers that must be provided to meet the

profitability targets. The number of covers is largely determined
by the size of the facility and the options it provides. Plenty of
space gives better flexibility in numbers but in cost of acquiring
that space needs greater return on investment. Covers in smaller
spaces can be provided by stand-up tables along the walls,
counters tops that serve as bar and food counter s, small
restaurants augment covers with take-away services and home-
delivery services.
 Operational Planning_ Contd…
• Menu planning. This is the most important in keeping with
the objectives of the restaurants. Equipment selection to
manage capacities. Smaller restaurants may need the food to
be pre-prepared elsewhere to manage space. Fast food
operations are models that deal with this aspect well. Choice
of equipment is also essential that is compatible with menu
offers.
• Systems and procedures that will ensure the smooth flow of
communication during operations. An important part of
systems and procedures are the food and beverage control
systems right from purchasing, receiving, storing, issuing and
consumption. Systems have to be developed to account the
revenues.
• Human resources play important part in operational planning.
The two main questions that challenge the owner are a) How
many people must I have? and b) what level of skills must I
get?
 Restaurant layout
• No matter what type, size, or location- every restaurant has a basic
layout that includes some general areas including an entrance, the
kitchen, and restrooms. However, these areas are often overlooked in
the general design of a restaurant, when new owners tend to focus on
the dining room or bar. Paying attention to the small details of a new
restaurant will help produce a positive customer experience and build
business right from day one.

• To create a fine restaurant, good plan is necessary and designing a good

plan is not happening, unless it has appropriate design layout.
Generally, the overall goal of each restaurant layout design is to create a
straight and smooth flow of food service, employees and equipment
with no cross or back traffic.

• In designing a restaurant layout there are areas that need to be

considered long away. These areas are receiving, kitchen, dining area,
bar, services, cashier area, staff space, office, restroom, storage and
employee restroom. Each one of these areas are essential and need to
consider and design well.
 Receiving Area & Office

Receiving area is generally located at the back of the house

with the access from the main street it is also located close to
the kitchen and it is the first point that the food and supplies
are taken into the restaurant. Therefore, it should be designed
carefully. The receiving area must be protected from the snow,
rain, heat and other excessive temperature and at the same time
should not be visible to the customers but should have visual
accessibility from the managers' office.
 Kitchen & Storage Area

• Kitchen generally located between storage and dining area.

Kitchen itself is divided into different sub areas like storage
(dry storage and cold storage or refrigerator), preparation
area, ware-washing area, cooking and final preparation,
fabrication area each of these areas should be designed
carefully according to the requirements in the menu. It is
proper to say for serving high quality meals it is necessary to
design high quality kitchen.
Layout of Common Restaurant Kitchen

DELIVERIES OFFICE

COLD STORAGE DAILY STORAGE DRY STORAGE

VEGETABLE BUTCHERY
PREPARATION

COOKING AREA

WASHING FINAL
AREA PREPARATION

SERVICE
 The Restaurant Entrance

• The entrance area to a new restaurant can be as important as

the inside when it comes to gaining new customers.
Depending on your theme, you can use signs, music, lighting,
awnings, and flowers to make an attractive restaurant
entrance. While the dining room, bar, and kitchen are
important parts of a new restaurant design, don’t forget the
entry area. After all, it is the first area that customers see.
Signage, lighting, seating, and decorations are just a few
areas to consider when opening a new restaurant.
 The Waiting Area

Not all restaurants have the space to designate as a waiting

area. Those do have space may opt to keep it separate, while
others incorporate it into a bar area. Along with benches or
chairs for customers to wait comfortably, waiting area should
also have some menus nearby for customers to peruse as they
wait. This is also a good place to display a bulletin board of
other events at restaurant (wine tastings, weekly specials,
happy hour, etc.).
 Dining Area & Bar
• Dining area can be either outside inside or on both side of
restaurant. Dining area generally situated near the holding and
service area so that food temperatures maintained to the point
of service. Size of dining area is equally affect the number of
customers, bigger dining area can serve more amounts of
customers, and defining a service space; it is necessary in
dining room especially in big dining area to increase the speed
of service. Dining area has more functionality includes,
entertaining customers and guests, celebrating special
occasions, gathering and holding family meetings etc. Bar can
be located in those restaurant that serves alcoholics drinks. If
the owner does not want the extra noise in dining room, the
bar can be separated by partitioning or allocating a separate
space or getting a better sound absorbance
• Cashier area is needed in those restaurants that customers have
to pay in their way out it is occupying a smaller area, mostly
located inside the dining room.
 Office of the Restaurant

Office is another part in restaurant design, which is necessary

for the restaurant manager, assistant and chef. The managers'
office needs to be secured and located in a closet door properly
demarcated from dining and kitchen area. It is better to have a
visual access to control entrance into the dining area and
kitchen, these areas are control by camera.
 Staff Room

• Each restaurant needs a room for their staff (staff room). The
staff can leave their belongings and change their cloths.
Moreover, staff needs separated restroom separately from
customers' restroom it is possible to add shower in their area.
 Rest Room for the Guests

• Restroom needs to have direct access, but not visual access to

dining area. Restroom should have opening like window to
provide fresh air for guest.
 PRIMERY CONSIDERATION IN RESTAURANT
DESIGN

• Restaurants have different types and concepts, but still there

are many factors, which need to be implemented in the
design of all restaurants. These factors can be categorized
and changed according to the different variables like types of
restaurant, owner and designer preference, climate, types of
customers.
• These are the factors that needs consideration and should be
designed carefully in each restaurant’s types: Space
estimation, lighting design, colour design, heating cooling
and ventilation design, floor covering, wall covering and so
forth.
 Space Estimation
• According to "Ching" a place which is too high or too big
can have negative energy on users or even observers (Ching,
1996). Each type of restaurant according to the number of
services, needs different sizes for each area; proper to say
number of customers, tables and chairs can have effects on
restaurant space and sizes.
• The space required for each function and facility is dependent
upon many factors which are not constant for all types of
operations. The factors involved included includes the
number of meals to be provided for the functions and tasks to
be performed; the equipment requirement the number of
employees and the corresponding workplace required for
storage materials and suitable space for traffic movement. A
rough guide one may keep in mind the following figures
while estimating space requirement.
Estimated total facility space for food
service facilities

Types of operation Area per seat (sq. ft.)

Table service 12 to 15

Counter Service 18 20 (Including the counter)

Cafeteria Service 10 to 12
Table shows the toilet number according to
customer’s places
Approximately space allocation for
restaurant planning
 Lighting Design

• Light and shade can render and give characteristic to the

space, Light also can change the human moods, brightness
can make people feel happy and absence of light can cause
sadness. Generally, there are three major aspects in lighting
design: function, human health and aesthetic.
• Designing light is one of the important factors in interior
design and should be considered, specially, when there are
different artificial lights in the interior space.
 Lighting Design_Contd…
Good lighting:
• Is an energy saver and efficient?
• Perception is limited on intended object.
• Providing night-time visibility.
• Control the bright as much as needed.
Bad Lighting:
• Is the lights that waste the energy?
• Make light pollution.
• Create visual distortion and glare.
• Obscures the view of stars.
 Lighting Design_Contd…

• The aim of using light in architecture is to make, provide and

increase the environment visually according to function of
the place.
• Lighting level in restaurant design depends on the activity in
that area, which is minimum 5-15 foot-candles in dining area
and 75-100 foot-candle maximum in fast food restaurant.
Entrance, dining area and bar should have more control on
lighting during day and night.
 Colour Design
• Colour and light linked closely to each other without light,
colour cannot be perceived. Different elements can affect
design. One of the significant elements is colour. Colour can
transform the temperature feeling, which is divided to warm
and cool hues, where as other colours like cream and grey are
counted as neutral colours and they do not transform any
temperature felling.
• Hesselgreen (1969) wrote that colour perception can be
transformed in to temperature conception in human mind.
Figure 1 is showing the effect of colour in environment of a
restaurant. Colour has a great capability to change the space
dimensions as well. Colour can dramatically change the
space and environment; It can make a small room seems
bigger or dark room look smaller.
 Colour Design_Contd…

• Architect and designers should choose proper colour to create

pleasant atmosphere and satisfy both restaurant customers
and owners. Before choosing the colours, designer should
choose the mood that wants to express in the space.
• Generally, bright colours and colourful tones are mostly
dedicated to the fast foods and quick service restaurant which
could be recognizable and attract people from proximity,
while full service restaurant offer more muted tones.
• Park Avenue Restaurant in New York is the only restaurants
that the menu and the interiors' is changing according to the
seasons, spring, summer, fall and winter.
Park Avenue Restaurant in New York
 Heating, Cooling and Ventilation
• One of the important and expensive considerations in any
restaurant design is heating, cooling and ventilation system. Each
kitchen in any type and size, creates heat and smell and when it
comes to the big and crowded kitchens for restaurant ventilation
system plays an important role, on the other hand, heating and
cooling system can protect the customers in restaurant during
summer heat and winter cold, which ends to the better sale for
owner and customers satisfaction.

• Usually, a well-situated air conditioning system during

construction would provide a better controlled heating, cooling
and well-ventilated atmosphere. It could also be a centralized and
automated by computer system technology.
 Floor Covering

• Restaurant floor is more than a pattern for covering the

surface. Floor can work as a directional signal; elegancy,
comfort ability and either reflect or absorb sound.

• It is essential to choose appropriate cover for restaurant floor,

aside from being easy to clean it shouldn’t get dirty fast as
well, also it shouldn’t be slippery but be smooth at same
time, and it is better to be sound absorbance and doesn’t
cause much sound while chairs are moving, and people are
walking in top of it.
 Wall Covering
• Wall material and finishes can have effects on atmosphere,
interior areas and entire design in the restaurants. They can
be wood, stone, plaster, brick, glass, concrete, metal, plastic
or wall paper; these materials can have different colour,
pattern and texture.

• Like restaurants floor covering materials, wall covering

materials for restaurants also should easily get clean and stay
clean for as long as it can, it is better to be sound absorbance
and at the same time be resistance to tear and wear.