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Business Ideas

How Profitable is Restaurant Business

How profitable is restaurant business, is a question everyone who wishes to venture into the restaurant business would love answered. This article will give you some answers.

All human beings eat because it is necessary for survival. Without food, a person will starve to death. In most Nigerian cities, people are busy trying to earn a living and have no time to cook. This problem has created opportunities for restaurant businesses to thrive.

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Because of these important reasons, restaurant businesses are valuable and lucrative in Nigeria. Please be warned it is not rosy all the way. The truth is that it is a stressful business.

How Profitable is Restaurant Business
Photo Source: OpenTable.com

Imagine how hard taking care of a newborn baby is. That is how tough restaurant business is. Adults are not different from babies when they are hungry. Babies cry for attention, while most adults yell when you fail to serve them on time.

You must be passionate to solve customers’ hunger and thirst problems to venture into this business. Second, you must have experience or learn from experts to fit into the shoe of a happy restaurant entrepreneur.

Let’s begin …

What are the factors that show a restaurant is set up properly? What are the qualities that differentiate a profitable restaurant from an unprofitable one? How profitable is restaurant business?

Let us dig the tough rocky soil to discover the gem in restaurant business and give answers for those questions.

Factors that Show a Restaurant is Set up Properly

For a Restaurant to make profit, it should be set up properly. The following factors are proof that it is set up properly. They are:

A business Plan

Businesses that wish to survive teething stage must have a blueprint.

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What is a business plan?

A business plan describes the business, what it does, which people own the company, whether it is a registered company, its registered office address, its financial estimates and whether the business is viable or not.

Other things in a business plan includes how much money they need, what it will use the money for, how the company hopes to repay borrowed funds, its management teams’ experience, its strengths and weaknesses, opportunities and threats, its competitors, the company’s comparative advantage and its unique selling point.

Source of Capital

Who will fund your restaurant business? Are you getting the funds from your savings alone, family and friends or a bank? If the source of capital is a bank, it could lead to unseen problems so make sure you start with what you have, and grow the business before seeking for other people’s money.

Have a Good Location

Location is the next vital thing since you now have the startup capital. If a restaurant does not have a good location the business has failed before it even started.

Depending on the business plan and the part of the market you wish to start from (low, middle and upper class), you should put the restaurant in a decent building that is accessible to central business areas, big office blocks, markets, motor parks, pedestrians, workers of all social class, traders and market women, car owners, taxi and bus drivers.

If the location determines the class of customers you will serve, then the query how profitable is restaurant business, should help you choose a building to start the business bearing in mind the cost implications of the choice you make.

Makeup of Startup Cost

Startup expenses for a new restaurant is mostly on fixed assets so spend wisely, buy quality products so you do not need to pay for avoidable repairs.

You need equipment such as gas cookers, micro wave oven, furniture and fittings, generator, air conditioners, a deep freezer and fridge, motor vehicle, television and rent. The rests are foodstuff and condiments, drinks, advertisement, salary cost and operating cash.

See: Cost of Starting a Restaurant in Nigeria

Recruit Capable Staff

How profitable is restaurant business you might wonder, as you start hiring staff. Why ask this question?

Because, it is the profit forecasts among other factors in the business plan that will help you select the type of staff you need to run the business.

Recruitment of staff is very important so you should not joke with it. Staff must have basic skills and be properly trained with wide experience in the business to enable them manage it profitably.

Identify Your Target Market

How profitable is restaurant business, for some answers study your target market and be clear who your customers are.

You business plan must state your target market. You were not set up to serve the world so differentiate yourself and serve a specific part of the market. Get your market share in the large restaurant business. Do not be a “Jack of all trades and master of none”.

The restaurant could be for low, medium, or high-class customers. Whatever size it is, you should aspire to make it bigger if you are in the business for the long-term by serving customers well.

Supply of Foodstuff and Drinks

Supply of quality raw food and condiments is very important for the success of the business. Get wholesalers to supply foodstuffs at the least market price. The drinks must come from depots of the manufacturers to cut off intermediaries.


How profitable is restaurant business? To be profitable a restaurant must hire first class cooks and assistants to serve customers.

As I said earlier, you should spare nothing to get the best staff to manage the kitchen. As they say, the way to a man’s heart is through his stomach. Therefore, you must cook well if you want the business to succeed and get repeat patronage from customers.

Study your locality and specialize to give customers the food they usually want at affordable prices.

Depending on whether it is a low, middle or high-class restaurant, you should specialize in cooking all or any of the following continental and local dishes such as fried rice, sea food, peppered chicken, toast bread, vegetable, afang and egusi soups and goat pepper soup to mention but a few.


Make sure the environment is cool, and the chairs and tables neatly arranged. The cutlery, china ware plates, cups and drinking glasses are clean (not stained with oil or leftover food).

Furnish restaurant with wooden or plastic chairs and tables, and paint it with bright red colors to stimulate appetite. In addition, the aroma in the restaurant should come from freshly cooked delicious foods, and not stale air from spoiling meat or rubbish you are yet to dispose.


All the attendants must dress in neat uniforms and cover their heads if they work in the kitchen. They must have good customers’ services training to know how to respond to different types of clients so that they will not push them away.

Price of Food and Drinks

To keep old and attract new customers to your restaurant, charge reasonable price for food and drinks. The restaurant must develop ways for attracting new and retaining old clients. One easy way is to satisfy them each time they buy from you so they would return for more.

Keep customers happy by selling at fair rates. You should only raise prices in line with market changes, but subject to improvement of service, food quality and the restaurants’ look.

Marketing Skills

As you ponder on how profitable is restaurant business, you realize that your management staffs’ marketing skills is a key reason for how profitable it can become.

If you cook the best food but customers do not know where you are, your business will fail. You can start the marketing campaign with a sign post in a strategic place in graphics displaying what you sell, followed by a website and Facebook account to engage with customers.

Next, organize contests, and give out mouth-watering prizes to customers.

Other ideas you may consider are:

  • highlight your unique selling point i.e. what sets your restaurant apart from the others
  • decorate the place with pictures of food, chicken, and meat to whet customers appetite
  • have colorful pictures of food in Menus that are easy to understand by customers
  • do marketing calls to corporate organizations, wedding planners, events and decoration managers
  • sponsor a television cooking show and make it viral by inviting local celebrities to eat and rate your food
  • package food for sale to schools and university campuses
  • Use digital advertising to reach customers by videos, pictures and television on the web

Profit and Loss Analysis

How profitable is restaurant business you may ask for the umpteenth time? Since you know the factors that show if a restaurant is set up properly, it will be profitable provided it sells quality food consistently (not good food today and bad tomorrow).

Get some basic accounting knowledge so that you can read your restaurants’ yearly financial statements.

Just know that sales less cost of goods sold gives you the gross profit. While gross profit less interest, taxes, other liabilities and fixed costs will give you the net profit.

Your task is to make sure your sales increase daily. Apart from making sure sales increase you should fix your eyes on the operating costs as well. Just make sure the sales are higher than your costs each month and you will make profit.

Qualities that Differentiate a Profitable Restaurant from an Unprofitable One

By now you know the factors that show if a restaurant started properly. The next task is to find out what qualities differentiate a profitable restaurant from an unprofitable one.

They are as follows:

  • a profitable restaurant must have a good place
  • is passionate about solving the customers hunger and thirst problems
  • hires experienced staff
  • manages its staff and the business in a professional way
  • gives staff incentives to enable them continue to improve on service delivery
  • buys foodstuffs, drinks and other condiments at wholesale price and sells at profit
  • cooks quality food and serves chilled drinks always
  • makes sure its premises is attractive
  • gets neatly organized cool eating rooms with comfortable furniture
  • makes its staff happy
  • provides attendants with neat uniforms
  • trains staff to serve customers well
  • must have colourful Menus
  • listens to customer feedback
  • corrects complaints immediately
  • cooks food customers want not what owners believe they want
  • welcomes customers happily each time they come in so they feel at home
  • creates easy to win competitions and gives mouth-watering prizes to customers
  • appreciates customers patronage by telling them they are valuable
  • advertises and continues to promote the business daily to push the brand
  • Knows its unique selling point and sells this competitive advantage

How profitable is restaurant business

The answer is that, it is as profitable as you want it to be. If you follow this guide for setting up a restaurant business and know what distinguishes one from another, you can start a successful restaurant business anywhere in the world.


Let me restate that your business is as profitable as you want it to be. In addition, profitability depends on whether you have a good management team, marketing skills, lean operations costs, happy staff, excellent customer services and the ability to differentiate your brand from close competitors.

For those of you that wish to start their restaurant but did not know how, after reading this article start that business now.

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Victor Usifo

He is a Writer, Speaker, Life Coach, Blogger with a passion for personal development. Hobbies includes: Reading, Writing and Research. InfoGuide Nigeria is a team of Resource Persons and Consultants led by Ifiokobong Ibanga. Page maintained by Ifiokobong Ibanga. If you need a personal assistance on this topic, kindly contact us.

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