This is a part 5 of a 7 part series about how to start your own bar, restaurant, or nightclub business in Japan.
Lesson 5 of 7: Bar, Restaurant, Nightclub – Potential Problems and Solutions
During Lesson 5, I’ll cover the following topics:
- Inadequate or Inappropriate Funding
- High Competition
- Knowing the Laws to Follow
- Failed Inspections
Inadequate or Inappropriate Funding
Face it: restaurants are expensive businesses to run, and this is one business where cash flow is critical.
One common mistake that restaurateurs make is only funding the first phase of their operation: development. Chances are that you will not turn a profit during your first or even second year, so it is imperative that you have enough funding to support your operation through its first two years, at least.
Also, do not solely fund your restaurant with business loans. Once your store is up and running, you must begin repayment of business loans immediately, and loan payments can comprise of a huge percentage of your budget. It’s a much better idea to find investors. Investors typically do not require repayment from day one of operation and can wait until you begin to turn a profit to realize a return on their investments.
And one more thing: it’s best to be very conservative in growth projections early in the life of a business. After all, it’s better to be in a position to catch up with sales than to have overrun them.
Recent statistics show that a growing number of consumers in Japan are eating out, and that their tastes are expanding rapidly to include a wider array of international food. As a result, the restaurant business in Japan has become increasingly competitive in recent years. Carefully research your competition. How many restaurants are already in your chosen location? How does that number compare to the number of potential customers? What are the strengths and weaknesses of those existing restaurants?
If after your research you still feel that there is room in the market for your restaurant, consider ways to compete effectively with existing restaurants. Is there a type of cuisine or a price range that is not being adequately covered that you could provide? Can you exploit weaknesses of the other restaurants?
One of the best ways to compete with established businesses is in the area of quality. If you offer the highest value for the quality received, you are beginning on solid ground. In the restaurant business, getting a great value produces happy customers, and happy customers grow businesses.
Knowing the Laws to Follow
With the influx of restaurants in Japan, the Public Health Center has increased its control of regulations that relate to the health and safety of the public. As regulations may differ slightly between prefectures, it is very important that you learn what those laws and regulations are so you can abide by them.
When you submit your application to the Public Health Center and the Fire Department as described in Lesson 2, be sure to ask about any specific laws in that area. Ask if you can have the regulations in writing. If you do not speak perfect Japanese, be sure to have a trusted native Japanese resource with you to interpret.
It is also an excellent idea to consult existing restaurant owners for their experience and advice regarding the permissions and regulations as well.
The Public Health Center is very strict in their application of their regulations. This is a very important area for you to pay attention to, since a failed inspection can delay the opening of your restaurant, and this can cost you a lot of time and money.
Study the requirements carefully early in your development process. The sooner you find potential issues in your restaurant’s layout, construction, or practices, the better position you are in to fix them. Talk with other restaurant owners about problems they faced, and learn from their mistakes.
From an early stage in your development, try to get on friendly terms with the officials that will be inspecting your store. Assure them that you want to work with them to meet their standards, and ask many questions up front to ensure that you understand what they are looking for. If inspectors do not feel that you are trying to “get away with” things or trying to “cheat the system” they will be much more likely to help you meet their requirements. Some inspectors might even be willing to come to your site and do a “pre-inspection”. This is invaluable, as it gives you extra time to fix potential problems.
Finally, build time into your roll-out schedule to deal with potential setbacks.
The more information you can get up front, the better prepared you will be to avoid problems later.
Here are some books worth reading about opening a bar, restaurant, or nightclub.