Workers restaurants are characterized by a relatively fixed menu based on home style or Middle Eastern Cuisine and usually serve a meal that includes meat and side dishes at a relatively low, fixed price. This differs from regular restaurants offering a varied lunch menu.
Low closure rates, as demand is fixed and the food is basic. In addition, many restaurants have been running for a long time. Most restaurants are independent and there are almost no franchises or chains in the industry.
Customers: Defining the Target Market and its Size, Market Segmenting
Potential clientele in the industry includes the entire population, mainly people working in the restaurant’s vicinity. Most clientele is comprised of regular customers.
Main competition is posed by similar restaurants and fast food businesses active in the geographical vicinity.
Vendors are divided into two main groups:
- Kitchen equipment- there are various vendors in Israel offering various restaurant kitchen needs solutions. It is important to confirm that the vendors also offer support and service for equipment.
- Dining area equipment including tables, chairs, tablecloth, etc.
- Tableware-plates, cups, cutlery, etc.
There are many vendors supplying this type of equipment and cost varies according to quality. A yearly 5% wastage rate should be taken into account in regards to breakable equipment.
Food and Drink Vendors
There is a wide variety of food and drink vendors in Israel. Principle importance in choosing vendors, aside from price, is credibility and quality of supplied product. One should discern whether it is more profitable to work with one vendor as opposed to working with a number of vendors.
Marketing resources depend upon the restaurant’s nature and potential clientele, and therefore a single method cannot be specified. As many of these restaurants have been in existence for a long time, preeminent marketing is solely by reputation and a regular clientele.
Factors Affecting Success:
A number of parameters may affect the restaurant's success. Among them:
- Food quality and price- as most clientele is regular, these are the primary considerations affecting the decision to dine at the restaurant. The monthly cost of meals is a significant sum for potential diners.
- Location-the restaurant’s location is important to its success. before establishing a restaurant, one should inquire as to the potential clientele in the area as well as relevant competition.
- Customer service- quality of service is a central factor and key to the restaurant’s success. Customer allegiance will be gained by a restaurant that stresses good service.
- Investment in remodeling and designing the restaurant.
- Investment in equipment
- Local authority licensing process.
Establishment of a restaurant requires recruitment and employment of appropriate human resources, the number of employees depends on the type of restaurant.
Most duties required in managing and running a workers restaurant does not require any training, and most knowledge can be acquired with practical experience. The senior cook, however, is usually a graduate of a professional cooking school.
- Restaurant equipment and furniture.
- Kitchenware and utensils.
- Kitchen equipment should be purchased according to the type of food prepared.
Industry Revenue and Profitability
Below is data pertaining to 2004:
Average meal price in NIS:32-45 NIS
Average monthly revenue: 60-120 thousand NIS for an average sized restaurant.
Typical Terms of Payment:
Vendor credit terms vary according to buying and bargaining power of both parties.
Customers pay in cash or by credit card. Settling of accounts with factories/ businesses, and mediators occurs on a monthly basis and includes credit terms.
The food and restaurant industry is a high-risk industry- there are many new business, but the number of failed or closed businesses is high as well. The highest investment required is in appropriating and remodeling the location, an investment which will be completely lost in case of failure. A partial return on the supply investment may be possible, as the market is abundant with used supplies.
Licenses and Certifications:
In order to open a restaurant, one must obtain a license from local authorities, and the ministry of health, after qualifying for such a permit.
In addition, a police permit is also required if alcoholic beverages are served.
The establishment of a restaurant should be meticulously reviewed- business locality, physical locality, in addition to financial and marketing aspects. This review along with correct planning and aid of professionals will decrease the chances of failure.
Note that food has a short shelf life and high depreciation. It is important to avoid purchasing a large amount of inventory in order to prevent wastage.
A kashrus certificate is a major consideration and is important to many customers. A kosher restaurant must compose its menu according to kashrus requirements, pay an inspector, and may not be operated on Saturdays and religious holidays. A non-kosher restaurant, on the other hand, may suffer the loss of many customers who only eat kosher food. The decision to open a kosher restaurant should be made only after issues of geographical area, competition, and potential clientele have been thoroughly examined according to the owner's beliefs.
It is recommended to consult with your local Business Development Center regarding business establishment and operations. In addition, the book: Guide for Entrepreneurs- Recipes for a Successful Restaurant, published by the Business Development Center, may also be consulted.
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