The Banks Have it Wrong
David Klemt
Partner, KRG Hospitality Inc. | Bar, Beverage and Guest Experience Coach | IHI 2024 Global Top 100 Social Media Influencers in Hospitality | Host of Bar Hacks, IHI 2024 Global Top 40 Hospitality Podcasts
written by Doug Radkey
It’s widely assumed that a well-written business plan will impress banks and SBA-type programs, and secure the funding required to launch a hospitality concept.
When starting a bar, restaurant, or hotel, most people are told exactly that: “You just need a business plan.”
The problem, however, lies in how these business plans are created. Too often, aspiring entrepreneurs turn to fill-in-the-blank templates provided by banks or online resources. They believe that simply completing the form will open the doors to financing, and start them on the path to building a successful business.
Unfortunately, this approach can do more harm than good. Let’s explore why the traditional reliance on business plan templates, including AI-generated business plans, can set both businesses and lenders up for failure.
In this article I dive into real-world examples, examine the success and failure rates of loans in the hospitality industry, and outline why banks and other programs need to rethink their loan approval processes to reduce risks for not only themselves but the entrepreneurs they serve.
The Problem with Business Plan Templates
Imagine this scenario: You’re excited to open a hospitality business, but you don’t know where to begin. You do some research, and learn quickly that you need a business plan to secure a loan. The bank or Small Business Administration (SBA) offers you a convenient template to complete, or you find one online that seems like it will do the job. You fill in the blanks, submit the plan, and, to your delight, the bank approves all or a portion of your loan.
However, the approval doesn’t mean your business plan is actually sound. Read that again.
It only means it meets the basic requirements of the bank’s loan approval checklist. A template provides a false sense of security, making entrepreneurs think they’ve covered all their bases when, in reality, crucial aspects of the business are left unaddressed.
For example, I recently reviewed a business plan for a client who had used a bank-provided template prior to our engagement. The plan was approved by the bank, but upon closer inspection, I found numerous errors: the start-up financial projections were unrealistic, the cash-flow analysis was incomplete, and crucial aspects of market analysis were missing.
The result? The project is on track to run out of money before it even opens its doors.
This example highlights a troubling issue: Templates don’t provide clarity, and they certainly don’t prompt critical thinking about the true costs to start, and the real challenges that the business will face once it’s operating.
The Risks of Using Templates
Business plan templates may seem like an easy solution, but they come with significant risks.
The Dangers of AI-Generated Business Plans
As technology advances, AI-powered business plan generators are becoming more popular. I’ve seen a few ads for them over the past few months.
These tools claim to be able to create a business plan in minutes, promising efficiency and ease. However, relying on AI to write your business plan is just as dangerous as using a template. The same issues apply: lack of clarity, shallow financial analysis, and the absence of critical thinking.
AI-generated business plans may provide a surface-level solution, but they cannot replace the deep analysis required to make a business successful. Business plans need to be customized and thought out thoroughly, with insights drawn from real-world strategic planning.
Click here to continue reading this article.
The Psychology of Dining Space Design
written by Nathen Dube, RSE
When someone decides they’re going to dine out, they’re basing their selection on more than just what they want to eat; it’s about the entire experience.
The design and layout of a dining space impact guest behavior , emotions, and overall satisfaction to a significant degree. From the colors on the walls to the lighting overhead, every element plays a role in shaping the dining experience.
This article explores the psychological principles behind effective dining space design, offering insights into how restaurants can use these elements to enhance guest satisfaction, and boost sales.
The Impact of Color Schemes
How Different Colors Evoke Specific Emotions and Moods
Colors are powerful tools in setting the mood and atmosphere of a dining space. Different colors can evoke specific emotions and reactions, influencing how guests feel and behave in a restaurant.
Warm colors like reds, oranges, and yellows are stimulating, and can create a lively, energetic atmosphere, often used in fast-food restaurants to encourage quick eating and high turnover.
On the other hand, cool colors such as blues, greens, and purples have a calming effect, promoting relaxation and longer stays, making them ideal for fine-dining establishments.
Neutral colors like whites, grays, and beiges provide a clean and modern look, allowing other design elements to stand out, and making a space feel larger and more open.
Examples of Color Choices and Their Psychological Effects
Red is known to stimulate appetite and increase heart rate, making it a popular choice for fast-food chains.
However, it should be used sparingly in fine dining as it can be overwhelming.
Blue, on the other hand, suppresses appetite and promotes calmness, suitable for seafood restaurants or venues where a relaxed dining experience is desired. Green, associated with freshness and health, is often used in vegetarian and farm-to-table restaurants to reinforce the concept of natural, wholesome food.
Case Studies of Restaurants Using Color to Influence Dining Choices and Atmosphere
Consider McDonald’s use of red and yellow in its branding and interiors. These colors stimulate hunger, and create a sense of urgency, encouraging quick dining and high guest turnover.
In contrast, Starbucks uses a palette of warm browns and greens to create a cozy, inviting atmosphere that encourages guests to linger, increasing the likelihood of additional purchases.
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Lighting and Its Psychological Effects
The Role of Lighting in Creating Ambiance and Influencing Guest Behavior
Lighting is a crucial aspect of dining space design, affecting the ambiance and guest experience significantly. Different types of lighting can evoke various moods, and influence how guests perceive the space and their meals.
Natural lighting enhances mood, and makes spaces feel more open and inviting. Restaurants with ample natural light are often perceived as more comfortable and welcoming. Ambient lighting sets the overall tone of the space. Soft, warm lighting can create an intimate and cozy atmosphere, while bright, cool lighting can energize the space. Task lighting focuses on specific areas, such as tables or bars, enhancing functionality and highlighting key features.
Differences Between Natural, Ambient, and Task Lighting
Natural lighting is best for creating a connection with the outdoors, and making spaces feel airy and fresh, often achieved through large windows and skylights.
Ambient lighting provides overall illumination, setting the mood and ensuring guests feel comfortable. Typically, ambient lighting is provided via ceiling lights, chandeliers, and wall sconces.
Task lighting is used for specific purposes, such as illuminating dining tables or highlighting menu boards, typically achieved with pendant lights and under-cabinet lighting.
How Lighting Affects the Perception of Space, Food, and Time Spent Dining
Bright lighting can make a small space feel larger, while dim lighting can create a more intimate and enclosed atmosphere.
Proper lighting enhances the visual appeal of food , making it look more appetizing. Warm, soft lighting is often used in fine dining to highlight the colors and textures of dishes.
Lighting can also influence how long guests stay. Dim, cozy lighting encourages lingering, while bright lighting can make people eat faster and leave sooner.
Head over to KRGHospitality.com to continue reading.
Program for Unique Holidays: October 2024
Do you want to stand out from from other restaurants and bars in your area? Change how you think about your October holiday programming.
Several holidays are set against every date on the calendar, and this month is no exception. These holidays range from mainstream to esoteric.
Pay attention to the “weird” or unique holidays to raise eyebrows, carve out a niche for your restaurant or bar, and attract more guests. Why do what everyone else is already doing? Why program only around the same holidays as everyone else?
To provide a handful of examples, October boasts celebrations of the cheeseburger, the double cheeseburger, cheese pizza, pepperoni pizza, beer, and guacamole. Those are fantastic F&B holidays sure to appeal to your guests. However, you can still celebrate some “out there” holidays to get people’s attention and draw them to your business.
Of course, you shouldn’t try to celebrate every holiday, strange or otherwise. Focus on the days that are authentic to your brand; resonate with your guests; and help you grab attention on social media.
You’ll find suggestions for promotions below. However, the idea behind our monthly holiday promotions roundup is to inspire you and your team to get creative and come up with unique programming ideas.
For our September 2024 holidays list, click here .
October 1: The New National Taco Day
That’s right; National Taco Day has changed! You can read my article addressing this change here for more details, but what you need to know is that from today onward, National Taco Day will always fall on a Taco Tuesday.
October 2: Walk Your Dog Week
If your venue is dog friendly, and you operate in at least a decently walkable city or town, this is a great week to invite your guests to pop in for a dog treat, a bite, and a drink with their best friends.
October 4: Plaidurday
This day is dedicated to plaid. Plaid shirts, plaid pants, plaid shoes, plaid hats, plaid coats, plaid scarves, kilts featuring a tartan… If it’s plaid, encourage your guests to come by your place while they’re wearing it.
Continue reading on KRGHospitality.com for more holiday promotions inspiration.
5 Books to Read this Month: October 2024
Our October book selections focus on restaurant and bar interior design, developing leadership skills, an infamous liqueur, and themed cocktails.
To review the book recommendations from September 2024, click here.
Let’s jump in!
Dining Out: The New Restaurant Interior Design
Impactful bar, restaurant, and hotel design is paramount. Your space is how your guests interact with your brand in person and online. It’s much more than just four walls; your venue is the physical manifestation and representation of your concept. Therefore, it’s important that you nail your design details. I think you’ll find Dining Out inspiring.
From Amazon: “The book takes the reader on a journey to some of the most cutting-edge examples in restaurant design and architecture from around the world. With a descriptive text for each project, it focuses on the craftmanship, color schemes, decorative details, lighting and furnishings that form the identity of the space, serving as a source of inspiration and reference for professional designers, foodies and other people involved in the restaurant business. Interior and exterior photographs, as well as blueprints of each design, present the reader with a rich range of styles, from modern minimalist spaces to ones defined by bold contemporary colors, a sleek industrial look or designs that look to the past for inspiration.”
Reset: How to Change What’s Not Working
Part of being an entrepreneur or member of a leadership team is implementing new initiatives. And sometimes, after monitoring these new initiatives for a set amount of time, we find out that they’re just not working. So, what do you do? This book will help you take decisive, timely action.
From Amazon: “Changing how we work can feel overwhelming. Like trying to budge an enormous boulder. We’re stifled by the gravity of the way we’ve always done things. And we spend so much time fighting fires—and fighting colleagues—that we lack the energy to shift direction.
“But with the right strategy, we can move the boulder. In Reset, Heath explores a framework for getting unstuck and making the changes that matter. The secret is to find ‘leverage points’: places where a little bit of effort can yield a disproportionate return. Then, we can thoughtfully rearrange our resources to push on those points.”
Continue reading on KRGHospitality.com .