Examples of mistakes restaurant owners make. The correct sequence to open a restaurant – what is a trade area analysis? :Chapter 1

This report analyses the Japanese market.

1. the importance of order

In most things, order is more important than things. For example, when driving a car, if you put the car in gear first without turning the engine, the car will never start.

Or when watching television, no matter how many channels you turn without switching on the power switch, the television will never work.

Naturally, almost no one makes mistakes in such simple matters that have become habitual, but when it comes to opening an udon, soba or ramen shop, there are many people who get the important opening sequence wrong.

As a result, countless irreversible things have happened.

2. the characteristics of those who got the opening sequence wrong

The following is a summary of the characteristics of people who have failed in opening a new udon noodle or ramen restaurant because they opened in the wrong order. There are so many people who fail because they jumped into a real estate agency, decided on a location first and opened a shop.

People who failed because they opened their shops in the wrong order

1.They are opening a restaurant with a product that is not yet finished and with an unfinished taste. Or they are trying to compromise and open a restaurant when the product level is still low.
2.The business model is not yet complete. The flow of money has not been fully calculated. The business model is not clear on how much sales and how much profit will be made, so after the shop is opened, things happen that were not supposed to happen.
3.The concept of the shop has not been fully considered. The values and mission have not been clarified before the concept. The business fundamentals of ‘who to target and what kind of business to do’ have not been clarified, so there is no consistency between location, product creation, shop creation, etc.
4.The customer base is not clearly identified because 4 above has not been done. Therefore, the customers you originally want to get and the location do not match.
5.Many people open a shop without fully determining whether they are really suited to this business and whether they can continue to be passionate about it and not give up, no matter how hard it is. (There are also many people who start because they see that others are making money and mistakenly think that this business will be easy to make money, when in fact these are the people who should not start a noodle business.)

3. the importance of passion

The first thing we check with our students at our Udon, Soba and Ramen schools is whether this is a business they are truly passionate about.
And if they find that they can’t ignite their passion, we recommend that they never start this business.

Phil Knight, founder of Nike, the world’s number one athletic goods business, has the following advice for aspiring food and drink business people.

‘Mr Knight has this to say.

‘People often say, “I want to open a restaurant”. But unless you are prepared to work 23 hours a day in a restaurant kitchen, and unless you can say, even if you don’t make any money at all, that you really love this job, then you shouldn’t.’

Mr Knight is highly regarded as a business owner and is asked to manage by a variety of industries and companies.

But if it’s not a job where he’s prepared to work 23 hours a day, he’ll turn it down no matter how much money they offer him.” (From Kenichi Ohmae, Zero to One Idea Technique)

I think Mr Knight’s words are spot on.
Passion is very important in business because business is a sophisticated system and there is always a time lag.
A system is made up of various components that are connected, and there are always inputs and outputs.

The human body is also a system, for example, suppose you just drank a glass of water.
Drinking water is an input and going to the toilet after a while is an output.
Therefore, you do not go to the toilet immediately after drinking water, but always after a certain period of time.
Thus, there is always a time lag between input and output in a system.

In the case of the noodle business, let’s say you improve the level of your product today.
If you say that sales would immediately increase today, this is not the case at all, and it is only after a considerable amount of time has passed that sales increase and results are achieved.
And this time lag is not always constant, sometimes it may be short, but other times it may be very long and often unpredictable.
This is why patience is essential in business, and the source of patience is the strength of passion.

Stave Jobs, who founded Apple, also pointed to the importance of patience as ultimately the most important and indispensable factor in business success.

At the same time, in a world that is changing more and more significantly with the evolution of the internet, things are becoming more and more complex and it is becoming less and less easy to succeed in business.

4. correct opening sequence in the Yamato style

1. clarify values.

Each person has different and unique personal values.
On this basis, they lead their daily life, their family life and their business life.
Therefore, when thinking about values, it is important to divide them into three categories – personal, family and business – and never confuse them.

And when articulating values, the order of the values you have is even more important than the values themselves. For example, if there are two office workers, Mr A and Mr B. Mr A’s order of values is work first and family second, while Mr B’s order of values is family first and work second.
As a result, even though Ms A and Mr B have the same values, their behaviour is completely different simply because the order has been switched.
So more than what values you hold, the order of the values you hold is even more important, and as a result, the results you get in your long life will be different.

Then, when you are in the noodle business, you must also clarify the order of values.
When the values are clear, only customers who share those values will come to you.
Employees who work for you will only work with you for a long time if they also share similar values.

For example, if you believe that the most important thing is to provide good food, i.e. product quality, then customers will only come if they also understand how good the food tastes and are willing to pay a slightly higher price for good food.
Customers with the value system that anything goes as long as they are full and the price is low enough will not come to the restaurant.

The same applies to the employees: if they do not understand the importance of providing high quality products, they will not work with you for a long time.
Thus, in business, defining values is the first and most fundamental thing you need to do when starting a business.

For example, McDonald’s values have been QSC since the company’s inception, with a clear order of Quality, Service and Cleanliness.
This has enabled it to rise to become one of the top restaurant companies in the world.

The next four values of Dainesy are Safety (first), Courtesy (second), Show (quality of performance) (third) and Efficiency (pursuit of efficiency).

These are compared to,

As shown in the reference case above, about four values are easier for employees to understand and to penetrate. When employees have to make a decision in the field, they do not have to ask their supervisor every time, they can just make a decision according to the order of these values, which makes it easier for both supervisors and subordinates.

2. clarification of the mission

Once the values are clear, the next step is to clarify the mission.

Drucker, the father of manegement, clearly states that the purpose of business is to create customers and that the first thing to do in order to ‘create customers’ is to ‘determine our mission’.
The management philosophy, mission and vision often used in management can be summarised as follows.

Management philosophy is “a statement of the company’s (own shop’s) fundamental approach to society”
Mission is “an expression of what the company (or shop) wants to achieve in society”.
Vision is “an expression of the state of affairs when the company’s (shop’s) mission is realised”.

In essence, the mission was to express what the company (own shop) wanted to achieve in society.
In other words, it is to clarify what makes a company (shop) useful to society.
To put it more simply, it is about increasing the number of people who are happy.
Companies (shops) are allowed to exist in society in the first place because they are useful to society through their business.

For example, schools serve the purpose of educating people, and hospitals serve society by curing patients’ illnesses.
All organisations exist because they are able to please their customers in some way, and companies (restaurants) also exist for the benefit of their customers through their respective businesses.

Sometimes, in management lectures at noodle schools, I ask students, “What is your mission?” some students answer, “It is to make my family happy through the noodle business”, but their own merits and convenience are not the mission.

The mission is to identify in clear terms what you can do based on an understanding of “something specific that can help society”, what your company (your shop) is trying to do to increase the number of people who are happy, and what society needs.

Here is a story of three famous bricklayers to illustrate the mission in simple terms.
A bricklayer was laying bricks by the roadside when a traveller asked him, “What do you do?” and asked him a question.
Then the first said, “I work for a salary”.
The second said, “I work to be an excellent craftsman”.
The third person is working to ‘create a space that heals people’s hearts and makes them happy’.
Naturally, the third craftsman’s desire to serve many people is his mission.
This clear mission tells us what we must do.

I defined our mission some 25 years ago as being ‘a company that helps noodle specialty shops thrive’.
In short, we clarified our mission to be a company that contributes to the prosperity of noodle specialty shops, not just a company that sells noodle-making machines.

As a result, we strongly recognised the need for 24/7 maintenance, as udon, soba and ramen shops are busier on weekends and holidays than on weekdays, and the machines are prone to problems. It took a lot of persuasion within the company, but it became possible to carry out 24/7/365 maintenance, which had not been possible before, and as a result, we went from being ranked second in the small noodle-making machine industry to first.

Also, at that time, I saw an increasing number of customers who finally opened a shop but failed, so I opened an udon school, a soba school and a ramen school to prevent such customers from failing.

As described above, a mission can be said to be a compass for a business that tells them what they should do.
The mission enables us to see if what we are doing now is consistent with the mission, and it always guides us in the right direction.

It is not the content of the work that determines its value, but the purpose of the work, and the mission gives workers the energy to work.
When it is clear how the job serves society and makes many people happy, the mission gives the worker the motivation and the energy to do his or her best.
Because they work in sympathy with the mission, they are willing to give their best, even when times are tough.

The mission is important for the survival of the business, and we must share a clear answer to the question “What is our mission?” in order to increase the number of people who are happy, for the prosperity of the business and for the employees who are working for us.

3. clarification of the concept

The reason I began to think about the importance of concepts stems from the ‘design philosophy’ that was instilled in me in the Airframe Design Section of the Aircraft Division during my time at Kawasaki Heavy Industries.

In aircraft development and design, the first and most important thing that had to be clarified was the ‘design philosophy’, the essence that forms the backbone of the aircraft, which the designer must clarify in the development of the aircraft.

Once the design philosophy has been clarified, it cannot be easily changed.

When I learnt that the ‘design philosophy’ had to be clarified at the very beginning, I wondered what it meant in the case of aircraft development and design, but what it would mean in the case of general work.

As a result, I have found that in general work, this is the concept, and in determining the concept, the values and the mission are the bases.

In order to clarify the concept, the first thing that must be considered is the values that we have, as mentioned in the previous section.

Values are the criteria for deciding what is important and what is not important, the prioritisation of things and the weighting system of things. People grow up struggling and struggling to get what they lack, and they always bring this to the top of their values.

In short, values are also the parts of ourselves that are still lacking (needs), as we concentrate on getting what is first on the value scale.

Mission is the reason for our own or our organisation’s existence, which must be clarified next to values.

In short, it is an important theme to clarify the why…? is an important theme for clarifying the why.

A concept is a visible object, which can be a thing, a book, a product, etc.

In a nutshell, a concept is about what (what…?) is to clarify the “what”.

When a concept is used in business, the ‘essence of the business’ is the concept, and a famous and widely known good concept is the Starbucks concept ‘The Third Place’.

Starbuck’s is basically a café that sells drinks and food items, mainly coffee, but in fact the Starbucks concept is not about selling coffee.

For Starbucks, selling coffee is a means of doing business, and the essence of the Starbucks business, in essence the concept, is to provide a ‘third place’.

The first place is home.

The second place is the workplace or school.

The third place, therefore, is a space where you can relax, where you can smell the good coffee and where you are not at home or at school.

Providing such a place is the Starbucks concept and the essence of the Starbucks business.

If you think about it, I use Starbucks from time to time, but I never go there for a cup of coffee.

I go to Starbucks when I need a place to meet with someone, or to read a book or work on my computer when I have extra time.

This is especially helpful when working on a PC for long periods of time, as there are power outlets that visitors can easily use.

If you look around at the people in the shop after learning about the Starbucks concept, you will see that very few people are there just for a cup of coffee.

They are there to do something, or to make use of the Starbucks’ relaxed atmosphere.

Therefore, Starbucks is not in the business of making money by selling coffee, but by renting places, and this is the essence of Starbucks’ business, in short, the concept.

And Starbucks has implemented a number of innovations to ensure the consistency and adherence to this concept.

For example

1.Attention to shop ambience
2.Attention to shop openings and locations (premium locations)
3.Focus on the mode of operation (no franchising, directly managed shops)
4.Commitment to staff (investment in human resources)
5.Commitment to the menu (no alcohol, no food that requires the use of a knife and fork).
Incidentally, the concept of our noodle school is a school that eliminates the ‘loss of life time’ of our customers, a school that changes lives and this is the essence of our noodle school.

The essence of our business was also to “spread delicious, safe, homemade noodles all over the world that impress consumers”.

Thus, in business, the concept is the essence of the business.

Therefore, even if a business appears to be selling a product, the essence of the business is not about selling the product.

It is just one of the means to fulfil the essence of the business.

It is therefore very important to understand the nature of your own business.

Clarifying the mission is to clarify the Why…? is to clarify the What,
Clarifying the concept is to clarify the What? and clarifying the What…?
Clarifying the strategy is to clarify the How…? Clarifying the strategy is clarifying the how.

In short, by clarifying how to achieve it, starting a business is also about clarifying the 2W1H.

And it is important that the same consistent ideology runs through the mission, concept and strategy.

The business of the future is not selling products, but selling concepts.

IKEA is the world’s most powerful furniture store, which can be found anywhere in the world.
IKEA was so successful that many global challengers imitated it, but all the rivals who imitated it lost out and disappeared.

IKEA’s strategy is not a secret, it is open for all to see, but the values, mission, corporate culture and concept of the founding owners are clear, consistent and protected as DNA.

And because they have been consistent and have built up their values, clear mission, corporate culture, concept, know-how and various other elements over a long period of time, it is impossible to surpass IKEA even if you imitate them overnight.

IKEA’s rivals did not have such clear values, mission, corporate culture and concept, but only imitated the form and lacked consistency.

Therefore, in order to prosper for a long time, it is essential to have values, a clear mission, corporate culture and concept as the basis of a company. All of these are the starting point, and it is important that they are consistently upheld.

4. the clientele, interior and exterior of the shop are clearly defined

Once the concept is clear, the customers to aim for become clearer.
If the values and mission have just been clarified, the customers are those who share them. By clarifying the concept, it is also natural to determine what kind of lifestyle the customers are likely to have.

In the case of Starbucks, the main customers are not businessmen who smoke cigarettes, but people who enjoy a relaxed atmosphere. Therefore, most customers are women, students, businessmen and businesswomen.
Drink prices are also not cheap, at around 1.5 times the price of rival Doutor. The target customers are those who find more value in the atmosphere and location than in the price, and who use it as a quiet place to study or work, for business meetings or to meet with friends.

It also absolutely does not compete with Komeda Coffee, which provides the primary location.
Komeda Coffee’s main customers are middle-aged women, but if the concept changes, the customers’ lifestyles will completely change and there will be no rivalry and no competition for customers.

Therefore, if the same udon shop has a completely different concept, even if they are located next to each other, they will have different customers and will not compete with each other.
This allows Starbucks to have a strong and unique business without being in competition with convenience store coffee.

Thus, by defining a distinctive concept that is different from other shops, competition with other competitors is eliminated and you can do business comfortably in the Blue Ocean.
Therefore, defining a distinctive and distinctive concept is an effective measure to survive in business for a long time.

5. strategy clarification

Strategy is originally a military term, a way of fighting, and a term that likens business competition to war.

For example, there are various ways to climb Mt Fuji.
The difference between the different ways of climbing is the difference in strategy, and depending on the difference in strategy, you can win or lose in an advantageous way.

In terms of strategy, the best way is to never compete with other shops.
Strategy is also about not competing, but offering a high level of product quality or excellent service that is completely different from the level of other shops, or having a shop strength that other shops cannot imitate.

Strategy is about maximising your own shop’s and your own strengths in areas where there is a strong customer need, and keeping the customer attracted.
Setting opening hours is also a strategy, as is the 24-hour opening of convenience stores, but it is not an effective strategy because if all rivals do the same, there is no differentiation.

Therefore, if you anticipate and work on something that customers don’t even realise they are doing, and if it makes them very happy, then it can be a strategy that differentiates you from other shops.
Delivery-only restaurants using Uber Eats, for example, could be an effective strategy in the future.

6. check revenues with a business model simulation

As the customers become clearer and the strategy clearer, the location in which this business should be run becomes clearer and clearer.
At the same time, the size of the shop and the number of seats will also become clearer through the business model simulation.

In the business model simulation, we simulate and clarify, over and over again, whether or not the total investment is worth it and whether or not the desired profit can be secured.
All of this is calculated in our Udon School, Soba School and Ramen School using a business model simulation sheet, and we advise you on how to set up your business model to maximise your profits.

By repeating the business model simulation and improving its accuracy, we can determine how much sales and how much profit we can make by building a restaurant even before we actually open the restaurant.
The parameters in this case are the number of seats, turnover, customer turnover, raw material cost rate, labour costs, utilities, rent and other expenses, etc. If you change each of these parameters, the overall sales and profits will change, and you will see how wrong your conventional wisdom has been.
Half of the success or failure of a noodle business is determined by the creation of this business model.

For example, companies that have successfully developed a chain of multiple shops have been able to do so because they have developed an excellent business model.
In order to develop a chain in a short time, it is necessary to make a profit, so a major issue is how to create a business model that can be profitable and without strain.
Therefore, it is recommended to be prepared to invest about half of the total energy required to open a chain in building the business model.

7. identify suitable locations and properties for profitable business models

Once the profitable business model has been identified in the previous section, the next step is to apply it to the actual trade area. Here, you can use the ‘trade area analysis’ that we undertake to analyse the approximate trade area, which will give you some idea of where you need to operate.

If you are in a suburban area, it will also become clear how many parking spaces you need in relation to the number of seats. Even in trade areas where you think there is enough daytime population and no need for parking, the trade area analysis often shows that the trade area is divided by railway lines, main roads or rivers, and that parking is in fact required. It is therefore essential to carry out a trade area analysis before deciding on a property. Based on the results of this analysis, the location and shop size to look for will become clear, and only here can the property be presented to the real estate agent.

8. collect information on properties at real estate agencies and look around at the properties introduced to you, and at other properties as well

Once the location and shop size (tsubo) have been decided at 7 above, we then contact a real estate agency specialising in commercial properties for rent in that area.

In order to obtain properties for our nationwide locations, we have visited real estate agencies in various areas and secured properties for our locations.
In our case, we give them specific conditions, such as the property being within walking distance of the nearest station, having a good parking space nearby, being of sufficient size and being relatively new.
As a result, if there is a candidate, we have gone to inspect the property many times, even if it is far away, and have carefully obtained the property.
If the property I liked still could not be found at the real estate agency, I sometimes drove myself and found a good property in passing.
It is also important that when you obtain information on a property from a real estate agent, you do not leave the possible property to others, but always check it thoroughly with your own eyes.

If the property is in a residential area, make sure that the necessary parking space can be secured, and also check the area around the property to make sure that there are no obstacles that could hinder you in the future if you open a noodle business.
There have been several cases in the past where, if the property is close to a residential area, customers parked without permission in front of neighbouring houses, resulting in many complaints and even forcing the business to close, even though it was barely thriving.

9. if a likely location is found

A further important matter that must be done before securing a property is that, before renting, you must always draw up a layout plan to ensure that the shop can be laid out efficiently as a shop and that it has the required number of seats.

Layout is essential because the location and size of the shop may be good, but it may not be in the right shape or the pillars may be in the way and prevent it from being a shop.
This is an important matter that many people actually fail to do, especially the smaller shops, as any obstruction can be fatal to the operation of the shop.
If there are problems with the layout, you should never rent the property, even if you like it.

Note: Most of the requirements must be done before deciding on a location. Just remember that if you do it after you have decided on a location, you will not be able to get it back.

Chapter 2: Why do so many people make mistakes in location? Continued in.

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