Introduction
Based on “Maslow Pyramid” theory, I believe that there are 5 legal business sectors if you decided to invest on it, 95% you will success: 1. Food & beverages Business. 2. Medicinal Business. 3. Educational Business. 4. Real Estate Business. 5. Sexual Business.
I decided to invest in Food & beverages Business by Open a Restaurant!!
Opening a new restaurant can be a risky business venture, but with the right planning, financing and plenty of hard work it's definitely doable. Owning a successful restaurant could be one of the most exciting and rewarding experiences of my life.
The restaurant industry is huge: it turns over an annual $630 billion in America alone. Yet setting up a restaurant is one of the riskiest ventures. Around 60% of American eateries close or change ownership within the first three years
How to open a restaurant? And on which factors the successes of the restaurant will depend on?

A successful restaurant involves more than just good food.
Getting ready to open a new restaurant can be overwhelming. There are some many different areas to consider, from financing to cooking.
I met some of the stakeholders to discuss the issue (Like: Ahmed El Wasseif – CEO of Coral Sea resort), I contacted with some experts (Like: Lorri Mealey / Restauranting Expert- About Money Magazine) and nearly all of them agreed on that the hereunder factors can effect on the restaurants success:

1. Determine a food concept: A food concept is the first thing to consider when planning on opening a restaurant.

a. Are we aiming for a family-style steakhouse, upscale French cuisine or a quick-service ethnic restaurant? Having a food concept will give us potential customers some idea of what they can expect from your restaurant. Determining a food concept from the get-go will also help us to structure and organize other aspects of our business. b. Some potential food concepts include: seafood, steakhouse, family-style restaurant, casual-dining restaurant, ethnic restaurant, pizzeria, sandwich shop, coffeehouse, and bakery.

“The food concept that I am targeting is Italian restaurant offer budget testy food with limited variety”… Once I have decided on a food concept, I can begin crafting my menu. “I believe I should not be worry about pricing or exact recipes to begin with, just try to get a sense of how my menu can best reflect my chosen food concept. Some things to consider when planning a menu include:

c. What potential competitors are offering? d. Where we will source the required ingredients, special equipment or layout requirements for the preparation of menu items. e. Whether any special personnel skills will be required.

2. Consider the ambiance: The ambiance or atmosphere of the restaurant is another important factor, relating to the food concept. Many varied factors contribute to the ambiance of a restaurant, such as furniture, lighting, dish and glassware, servers' uniforms, music, serving style and clientele. Having an idea of the ambiance that I wish to create is important as it will help to guide us during the decision-making process. Always keep an image of what I aim to achieve in mind.

The ambiance that I am targeting is Sicily restaurant style:

* Wooden chairs and tables “1950 model” * Parquet floor. * Low light * Classic music * Striped tables cover. * White wall with old frames. * No TV services. * Wi-Fi Service.

3. Choose a location with proper zoning: Before you create a business plan, write a menu, or dash off to the bank to apply for a loan, we must first decide where exactly your restaurant is going to be located. A restaurant's location is as crucial to its success as great food and service. It will influence many parts of our restaurant, including the menu. If we already have a certain restaurant location in mind, don’t get too attached until we know if it has all the right requirements for a successful restaurant.
There are 6 crucial elements to consider when looking at a potential restaurant location: f. Population Base: Are there enough people in the area to support your business? g. Parking is a must: People are lazy. There is just no way around it. If they have to walk a ways to get to your restaurant, they may opt to go somewhere else h. Visibility is important: Setting up shop in a location with either high foot or car traffic is ideal. Making your restaurant (or restaurant sign) visible to the public is like free advertising. It reminds them that your restaurant exists and they should stop by for dinner sometime. i. Size. j. Know your neighbors: When looking for a restaurant location, consider who else is doing business in the neighborhood. k. Understand the commitment you are making.

The location that I am targeting is one of Maadi, Heliopolis or Nasr City.

4. Plan on a serving style: Our food concept, target customers and location will all play a role in deciding on a service style. There are three main service styles: quick-service, mid-scale and upscale. It is important to decide which category our restaurant falls in to, as this distinction will help shape future decisions, such as staffing requirements and pricing. l. Quick-service restaurants, or fast-food restaurants, are known for their low-cost menus and quick preparation. Examples include burger joints, pizza restaurants and ethnic foods. m. Mid-scale restaurants fall halfway between fast-food and upscale restaurants. They offer full service and good value menus. Some mid-scale restaurants include buffets and salad bars. n. Upscale restaurants pride themselves on providing excellent food and high quality service. Fine-dining establishments are the fanciest type of restaurant available - they offer the best quality food at the highest prices

The serving style that I am targeting is Mid – Scale.

5. Securing Funding:

o. Look at our own resources. p. Ask friends and family for help. q. Partnership project method. r. Take advantage of government programs. s. Ask for business loans from the bank

I am targeting the funding solution from A to D.

6. Gathering Supplies:

t. Food service vendors. Reliable: food service distributors play an important role in the success of our business and we will want to choose a distributor who provides good quality products with prompt, consistent delivery i. We can find food service vendors online, in the Yellow Pages or by attending restaurant conferences or trade shows. ii. Ask other restaurants in your area that they get their products from. Ask which suppliers they like in particular and why. u. Get in touch with local producers: Restaurants using high-quality, locally-sourced ingredients are becoming increasingly popular. Approach local farmers and food manufacturers about buying food in bulk. Farmers can supply your restaurant with produce by the bushel, as well as fresh meat and dairy products. A local manufacturer, such as a bakery, can supply large quantities of breads, rolls and other baked goods. v. Shop around: we should make sure to shop around before signing any agreements with food suppliers. Getting a good deal does not necessarily mean choosing the supplier with the lowest price. The quality of the food and service provided are just as important. w. Look for references and contact other restaurants the supplier has worked with. x. Negotiate the details of food specifications, delivery times and terms of payment. Choosing a vendor with whom you can forge a good working relationship will be helpful in the long run. y. Hire employees: A well-trained and professional staff is essential to the success of any restaurant. Before hiring, we should decide how many employees we will need, what the job description for each position will be and what the pay scale will be. We should take the time to thoroughly interview each applicant. We also need to ensure that they are aware of exactly what their role will be within the restaurant, and what you expect of them. You will need to hire: iii. A manager. iv. Cooks. v. Servers. vi. To determine how many employees we will need, consider how many tables, seats and service stations we will have. Think about what our busiest hours will be and ensure they will be adequately staffed. we will also need to consider our budget, this will influence how many employees we can afford to hire and at what rate of.

7. Attracting Customers:

z. Know your target market. We should be aware that it is impossible to appeal to 100% of the market. We cannot satisfy everyone. With this in mind, focus on our target market. Identify what their needs are and do your best to meet those needs. Some examples of target markets are: vii. Teens, students and young adults. This is a large and ethnically diverse market. Fast-food or quick-service restaurants are popular with this market. viii. Families with children. Good value and a child friendly atmosphere are important here. Menus should cater to both adults and children. ix. Empty Nesters. Empty nesters consist of people aged between 50 and 65 with grown children who no longer live at home. This group tends to have a higher income and typically visits upscale restaurants. They are less concerned with price and are more focused on excellent service and outstanding food. Appeal to this group with elegant surroundings and a sophisticated ambiance.

I am targeting i and ii market.

{. Plan our grand opening: A grand opening is the best time to get press for your restaurant. Although it can be costly, the money you spend on our grand opening will be worth it if our restaurant gets publicity. A successful grand opening takes time and planning, so choose the date well in advance and consider hiring a local publicist to help with the advertising. Here are some ideas to help make our grand opening a success. x. Hire photographers. Make sure there is someone there to photograph your grand opening. That way, there will be pictures ready for any journalists looking to cover it. We should keep in mind that the press that comes after your grand opening is just as important as the press that informs the public of your opening. Do not let up on our public relations efforts just because our grand opening is over.

xi. Invite a reviewer: If we know that our food is top notch, you will want to invite a food critic or restaurant reviewer to our grand opening. This is sure to get us some press, although there is a risk that the press might be negative. xii. Invite a local celebrity: If we get a local politician, television host or any other local celebrity to come to our grand opening, we will be more likely to get some media coverage. xiii. Provide entertainment: By providing our customers with an enticing form of entertainment – such as a live band, DJ, classic music– we will create a night that they will remember. xiv. Place traditional ads. Contact local newspapers, magazines and broadcasting stations to see if they would be willing to cover a story about our restaurant and its upcoming grand opening. We could also write an editorial or an opinion article about why the community needs a restaurant like yours. xv. Offer incentives using social media. Facebook, Twitter, Foursquare, Yelp and other social media sites are this generation’s means of word of mouth marketing. Promote social media activity that promotes your restaurant by offering various incentives such as: 1. Free drinks for checking in to Foursquare while at the restaurant. 2. Receive 10% off your next bill with a Yelp Review. 3. Dessert thrown in with any entrée order with a location update in Facebook.

xvi. Create a logo that can catch on. The right restaurant logo can get customers' mouths watering before they even see the menu. Create a unique and eye-catching logo which your customers will come to associate with great food and top-notch service. xvii. Listen to employee and customer feedback. In the restaurant business there is always room to improve. Listening to both customer and employee feedback is a great way to figure out what you're doing right and what you could do better. xviii. Make sure our waiters are asking customers whether they enjoyed their meal – this isn’t just good for feedback, it’s good customer service. xix. Sites like tripadvisor.com are very useful when it comes to monitoring customer opinion. Don't be afraid of negative reviews, see what you can learn from them and move on. xx. Listening to employee feedback can help to create a better workplace for everybody. Happy employees lead to higher productivity, lower turnover of staff and satisfied customers

It’s estimated that the restaurant industry makes $684 billion in sales (The Economist Magazine – Sep, 2012 ) However, for every dollar earned, more than half is spent on labor, supplies, and repairs; insurance…the list goes on. So, it’s no surprise that restaurants aren’t known for their wide profit margins. Keeping an eye on menu costs can translate into significant savings over time, for any restaurant. Carefully monitoring food cost, portion sizes and kitchen waste can save money. The menu is the heart of a restaurant, so keeping it fit and trim will help its overall health and success.
Accordingly determine the food concept will lead us to how we can control our menu cost as the follows:
Concept:
1. Study Food Trends 2. Be Aware of Your Own Bias

* Layout: * Create a menu with the customer in Mind * Not everything has to go on the Menu * Restaurant menu should be original. Well, kind of. * Restaurant menu should be versatile. * You should know what to avoid on your restaurant menu. * Consider using local foods on your menu * You should know when to update your restaurant menu. * Design * Restaurant menu should have an easy to read format. * Restaurant menu should be a manageable size * Menu descriptions concept.

* Kitchen: * Understand the link between your kitchen and the menu * How to plan your restaurant kitchen * Keep your restaurant kitchen prep costs low * Your restaurant menu items should be easy to prepare. * Keep portion sizes under control * Minimize kitchen waste * Kitchen store room.

* Marketing: * Who’s your audience? * Market price * You should know when to offer special restaurant menus. * Promotion & offer

* Cost: * Understand how food cost works. * Food cost control * Price menu items * How to price your restaurant menu

Finally I recognize that my problem statement is: To what extend the food cost can effect on the restaurant success?
It doesn’t matter that you have the best menu in town, a high-traffic location, beautiful decor and rave reviews if your restaurant charges $12 for a meal that costs you $13 to serve (Sam Ashe-Edmunds, April, 2012). Some of the stakeholders that I met (local and mid scale) told me that menu pricing for restaurants is somewhat of a vague process. You can figure out how much you are paying for food supplies and simply charge three times as much. You can try to out-do your competition by lowering your prices, or you can do some guess-work around your margins and hope your customers will pay the prices you apply.
The options above, although not unheard of, probably incur too much risk. After all, your menu, pricing included, is one of the main reasons your customers come through your doors. They want to pay for the quality they felt they received. And no doubt, your prices will influence how your restaurant is perceived by the public.
In fact prices directly affect your restaurant's profitability, so it is important to spend the time required to get it as close to perfect as possible. Although there is no exact formula for calculating the food cost.
Restaurants should aim for a food cost of 28 to 35 percent of the overall operating budget. Smaller eateries should keep food costs closer to the 28 percent figure, whereas larger chain restaurants usually spend more on food, perhaps because there is a large corporation funding the operation (Sharon Platz, June 2013)
Calculate your overhead cost per meal served. This includes all of the nonfood costs to run your restaurant, such as labor, rent, marketing, taxes and other expenses. Determine a daily overhead cost to run the restaurant and divide that by the number of customers you estimate you will serve each day (Sam Ashe-Edmunds, Feb, 2014)
For example, if your overhead is $2,000 per day and you serve 250 customers daily, your overhead cost per person is $8. Include allowances for employee meals and food theft in the overhead figure, since these are not direct costs to serve a customer meal.
Determine the target food-cost percentage you want for your menu items. Use your overhead costs to guide you. (Sam Ashe-Edmunds, Feb, 2014)
For example, if you sell a meal for $12 and have an $8 overhead cost, your food costs must be no more than $4 to break even. If you want a profit of $2 per plate, your sales price would then need to be $14, giving you a food-cost percentage of about 29 percent. If you feel your market will not support meals that cost more than $14, your chef will need to prepare menu items for no more than $4 each. If you sell meals for less than $14, your chef will need to use less than $4 of ingredients per meal, using your 29 percent guide.

Based on the national restaurant association that published an article in cooperation with Restaurants Owners association, every restaurant experiences some degree of waste, but it is a controllable expense. Create systems to both minimize and record wasted product, such as meals returned by the customer, kitchen mistakes and spoilage. Keeping an accurate accounting of the value of wasted product can help to account for variances between ideal and actual food cost.
Also Poor portion control is one of the leading causes of food cost variances. Consider that your ideal food cost is based on the premise of exact portioning for each menu item, including the portioning of each ingredient within a menu item. If your prep and line cooks have gotten in the habit of "eyeballing" measurements rather than sticking to the exact recipes, chances are your food cost variance could be as much as 5% or more. Proven portion control strategies include the use of portioning scoops, scales and measuring spoons and cups. Pre-portioning can be effective in controlling costs by using portion baggies and a scale to pre-weigh product before stocking the cook line.
Common Menu Pricing Methods:
Your restaurant's appearance, menu choices and level of service all determine how menu items can be priced. Below are some common suggestions for how some restaurant owners choose to proceed:
You can make your menu items more flexible and add value by creating a more attractive name, an intriguing sauce or dressing or a special theme to the food. For instance, taking a normal hamburger and drizzling it in a spicy honey barbecue sauce might add a little pizzazz and appeal, giving the public more incentive to try it and the owner a reason to slightly increase the price.
Change prices in small increments.
Small increments are less noticeable when you need to increase prices, and small amounts of revenue can add up to a large gain in profit. Additionally, items ending in odd numbers such as .95 or .99 are less off-putting than whole numbers.
Use specials to intrigue guest interest.
Full-service restaurants are able to create occasional specials that guests can order off the menu. Although specials can be created from the food you already have in your inventory, they should not be concocted from week-old leftovers. Menu specials are a great way to create new, exciting menu items to entice your customers. If the special goes over well, you can certainly consider adding it to your menu to start making a consistent profit from it.

Ideal Food Cost Pricing Method
Quick Fact
Items like fryer oil, salt and pepper and condiments can affect your overall food cost. You should account for a variance of about 4% to keep from losing money on these indirect costs. For instance, if you are shooting for a food cost percentage of 32 percent, you should actually try to hit 28 percent to account for those extra costs.
This method calls for an owner to consider the actual cost of a menu item, and then consider his or her ideal food cost percentage. Ideal food cost percentage varies, but typically lies somewhere between 25 and 30 percent. The two are divided and voila, you have a menu item price. See the example below:
Ideal
Using the ideal food costing method, the chicken entrée should be priced at $14.16. To use this method, you need to know the cost of all the ingredients in the recipe for Lemon Rosemary Chicken, from the half cup of lemon juice to the pinch of fresh rosemary to the chicken itself. You also need to account for any side items that come with the entrée, and factor that into the menu price as well. Every food item on the plate matters. Since $14.16 is not a typical menu item price, you may want to lower it to $13.99; that is, if you cannot think of an inexpensive way to increase the perceived value of the plate enough to raise the price from $14.16 to $14.50.

Symbols in food menu pricing equation:
However, since factors like indirect costs, price volatility and competition are important to consider, this may not be the most reliable pricing method. Applying a price markup to all items in one fell swoop like this may inaccurately and unreasonably over- or under-price some of your items. And finally, it is always important to pay attention to the market and see what the customers in your area are willing to pay.
Competition Pricing Method
The restaurant owner using this method assigns prices to items based on the general market price or the prices assigned by the competition. Usually, the owner will either price the item to be the same as the competing prices, price it slightly lower to get those looking for a bargain, or price it higher to attract those looking for higher quality. This means that a restaurant has to work within a certain price, including labor and preparation, potentially putting a strain on the chef.

Beware of Price Gouging
Food service operations in ballparks or stadiums tend to charge people more for their food and goods, since guests do not have the option to leave and get food somewhere else. However, some places take this too far by charging more than what is considered reasonable. Be careful of those upper limits and be fair to your customers.
For instance, if the owner prices the Lemon Rosemary Chicken at $14.00 because that is just under the current competition's prices, and the ideal food cost percentage is 30 percent, the chef needs to make sure the kitchen is producing this item at no more than $4.20. This can be complicated.
Demand-Driven Pricing Method
This concept is based on the economics of supply and demand. For instance, restaurants in airports or concession stands at sports stadiums can get away with charging more for their food items because it is the only source of food in the vicinity. The demand for food is greater than the supply, so people are willing to pay more for it. Restaurants that offer specialty menu items or a unique and exciting ambience can get away with charging more since it reflects both the food and the experience.
Study your market and your customer base before pricing your menu items. You will most likely know what prices are simply too high, and the last thing you want to do is drive your customers away. Make your prices competitive and reasonable, and make sure you are offering the value appropriate for higher cost items.
Evaluate Current Profitability
When you know which menu items are the highest grossing items (meaning they result in the most profit before any other expenses are considered) then you know which items to promote. In the chart below, you can see by looking at the last column that the king crab legs are the most profitable item on this seafood menu. Even though the food cost is greater for the crab legs, the gross profit is higher as well. To many operators, it is the gross profit that matters most. To maximize your profit, you might consider raising the price of the other fish entrées slightly, or simply train your serving team to upsell the crab legs. Fish | Food Cost | Selling Price | Food Cost | Gross Profit | Halibut | 2.75 | $12.79 | 21.5 | 10.04 | KingCrab Legs | 7.50 | 20.79 | 36.4 | 13.29 | Salmon | 6.42 | 18.99 | 35.6 | 11.57 |

Increasing Profitability
Raising menu prices is a delicate issue. Many restaurant owners are unsure how to handle it because of how it might negatively affect their consumers' perception of the restaurant. Try the following suggestions to increase your restaurant's profitability:

How to Calculate Food Cost (Amanda McDougall with Tess Rose, November, 2011)
The Formula
Food Cost % = (Beginning Inventory + Purchases – Ending Inventory) / Food Sales
Memorize this: FC% = (BI + P - EI) / S
Food cost is calculated by taking your beginning inventory for the period (e.g. one week) and adding all of your purchases to that number. You then subtract the ending (closing) inventory number. This gives you the theoretical value of what you used that week in product. That number is divided by your sales and a percentage of sales are calculated for the cost. So when we say you have a food cost of 40% that means you spent .40 for every dollar you took in sales.
Example
Your data: $10,000 beginning inventory, $2,000 in purchases, $10,500 ending inventory, $5,000 in sales.
Your formula: FC% = (BI + P - EI) / S
(10,000 + 2,000 = 12,000) - 10,500 = 1,500
1,500/5,000 =.30 or 30% food cost
Potential Food Cost:
Total cost = cost per item x number of item sold
Total sales = sales prices x number of items sold
Potential Food Cost: total cost x 100 / total sales

Maximum Allowable Food Cost:
Calculate the operating budget and determine the amounts for the following: * Payroll and related expenses (e.g. wages, salaries, taxes, fringe benefits). * Overhead expenses (e.g. utilities, maintenance, advertising, supplies excluding food costs). * Target figure for profit minus tax.
For example: 1. Operating budget: 8,000 $ 2. Payroll: 2,080 $ 3. Overhead expenses: 1,600 $ 4. Target profit: 1,200 $

Figure out what percentage of your budget these take up, and then add those percentages together. For example, if your budget is 26% payroll, 20% overhead and 15% profit, it's a total of 61%. Subtract that number by 100 to get your maximum allowable food cost. In this example, it's 39%.
If your food cost is lower than your maximum allowable cost, then you are in line because you did not exceed the maximum amount. In this example, your actual food cost of 38% is slightly lower than your maximum allowable cost of 39%

Accordingly things to consider before pricing (variables effect the food costing process)
There are a variety of aspects that affect restaurant menu pricing methods. Consider the following influencing factors and how they affect your restaurant before you begin pricing or changing menu prices.
Direct costs: These are the ingredient costs associated with the food item itself. This involves the purchasing food, portion sizes, and food waste from spilling, overcooking or spoiling.
Indirect costs: Indirect costs are those that do not include the actual ingredients that make up a dish, but the aspects of your restaurant that add perceived value or quality. These provide significant basis upon which to charge higher prices.
Preparation and labor: The labor to prepare a menu item is considered an indirect cost. Menu items that require time, effort, artistry or talent to prepare merit a higher menu price than something that simply requires heating and plating.
Overhead expenses: Overhead costs for items such as décor, product presentation, amenities and marketing efforts. Although slightly less common, these can create added value and validate higher menu item prices.
Volatile food costs: Many raw commodity food items, or basic ingredients with minimal quality variance, may fluctuate as often as daily. For instance, flooding in Texas could wipe out a tomato crop, causing supply to drop and demand to increase. In a case such as this you have two easy options: raise your prices or work with a seasonal menu. Seasonal menus allow flexibility for buying crops in season, or in supply, to keep costs down.
Competition: Check out your competition on a regular basis. You might even go out to eat at your rival restaurants and take advantage of the opportunity to see what you can improve about your own operation. Also, most restaurants have their menus available online. A simple search on the Internet can reveal a lot about what is offered in your neighborhood.
Service type: Prices will undoubtedly change depending on whether your restaurant is a fast-casual restaurant or a fine dining restaurant. Be sure your prices represent the service value your customers receive. For instance, full service restaurants can always charge more for their hamburgers than quick-service joints, because full service restaurants are also providing greater ambience, better service and often better ingredients than the quick-service alternative.
Pricing boundaries: Determine your boundaries. Every restaurant situation is different and prices will vary depending on location, preparation and simple supply and demand. Figure out the very least you can charge while still making a reasonable profit in your business, and then determine the highest price your market will pay for your items. Gather information about demographics and average income levels in order to find out the prices people in your market area will pay.