Restaurant business

Do some research first.  Then just buy an off-the-shelf company, rent the premises and then get your licences and hygiene certification. The process is explained here: 

malaysiabizadvisory.com/how-to-start-restaurant-business-in-malaysia/

Thanks for your value able answer, pls also let me know what type of food is the most demanding.
As I mentioned we are more expert in BBQ items including deep fried n grilled.

There are thousands of restaurants - usually 10-20 in one street.  All types are represented in KL and Klang Valley, Penang and Langkawi and no doubt everywhere else. The expat and fine dining market earns the most money, but the overheads are high as well.  Joining a food court for office workers can also be good if the right location is chosen e.g. enquire about The Weld on Jalan Raja Chulan 50200 KL.

People shop with their eyes - so the food has to be perfectly cooked and presented - no oil or animal fatty foods. Kebabs (large meat that is carved) are not popular because of lack of hygiene and many cafes close down.  Lots of people make the mistake of thinking all types of food will be popular, but that is not always the case.

I think your first step should be checking out some costings.  i.e. what will it cost for you to rent premises - cost of setting up company (RM500,000 without local partner) - etc.  You may find it is much higher than you imagined. New restaurants open nearly every week, but struggle and close after about 6 months.  Lots of them use Groupon, LivingSocial etc. (discount vouchers) to get known and try and generate trade.

It's not an easy business to run and succeed in unless you have a large investment to make.

Thanks for your quick reply. Would you please let me know how n from where to get the exact costing?

You will need to do some research yourself:

http://www.propwall.my/kuala_lumpur/cla … g=For+Renthttp://kualalumpur.locanto.my/ID_181112 … -rent.htmlhttp://www.donkiz-my.com/real-estate/re … ot_for.htm

Just Google what you want to find - like the rest of us.

A simple calculation as follows:
Assumption:-
Walk in customer  X daily
Average spending per person RM X
Monthly turnover RM X

Less your expenditure
Rental RM X,XXX
Staff RM X,XXX
Material RM X,XXX

If you research the above missing figures, you get a rough idea of how a business will function.

Add to the above the investment of RM500 000 plus fees for work permits, renovation of premises to required standard e.g. half tiled walls, furniture and fittings, licences etc. then you will get a picture of what you need to succeed.  In short - $$$$$$$$

There are lots of Franchises and you should investigate in this area as well. You pay a fee, they set up the business, you run it and pay them rent and possibly sales commission.....

This makes interesting reading:

http://www.diomorestaurant.com/?m_a=1263&p=62

Quote:
According to industry statistics, 90% of restaurants that change hands fail in the first year.

Ouch

As we say - when the going gets tough / the tough get going.....

Yes, but I am not looking to buy a running restaurant but I want to start a new one, 2nd this report is baed on more US market

Problems are industry and worldwide.  Gordon Ramsey earned millions on his TV show about failing restaurants.

I guess the person before the buyer set up the restaurant, it failed and he managed to sell on the failure to someone else.....

The latest development here seems to be condos that are being built with restaurants on the ground floor facing the street e.g. St Mary. That may be a place to look for an interesting location. My personal belief is that it is possible to make a good living for a Malaysian to open a restaurant but difficult nowadays for foreigners.  In fact some people we know started a Mexican one last year (it took them ages to get their licences).  They have good support and a reasonable location, but even they struggle to attract sufficient diners - because there is so much on offer and it is very very price sensitive if attracting local Malaysians (hence the Groupons, LivingSocial deals etc.) A revisit to one of their food reviews shows they have had to adapt their dishes so they feature a mound of rice - i.e. local palets still expect traditional foods, regardless of the style of cuisine on offer.......

Aha, so your suggestion is that it can run better way if we go with good price or deals on the meals.
What about menu? Which type of foods are in more demands?

Strangely - so called "western" food or oriental style food would be my guess. Join Groupon for KL and take a look at how many purchases are made for each style of food - it is good research. Those two styles attract a good cross-section of diners.

Groupon prices are even higher, we can sell with more better price n very good quality.

But the style of food you are suggesting is not that popular - or rather there are already too many selling it and low prices attract the lowest paid people - who don't want to spend much - the average would be say RM6-9 per visit.  Put that into the forumula above and you will see that it is only a viable proposition if you get a lot of footfall (customers). Too cheap and people aren't interested either as they will doubt the quality.

There are lots of mobile food stalls and they do a very good trade. Those people do not have many overheads - just a licence to operate and costs of packaging and preparing foods.

I think it sounds as if you are looking to open in a KL suburb so you should understand the market there. Failed businesses are everywhere and those are people who just had to pay rent and prepare food.  If you are a foreigner you have so many more overheads just to legally operate.

The surroundings of a restaurant are very important and people can choose from the large range on offer.  People have money in Malaysia and even if it is not a huge amount, they use a lot on enjoying good food in nice surroundings. For example in one street a cafe put table cloths on the tables and that increased their trade.  I was supposed to go for a dinner on Saturday night in a suburb.  The area was so dirty and nasty - we just drove past the restaurant and went somewhere else. 

So its got to be in a reasonable neighbourhood to be successful financially. People tend to mainly eat the ethnic food that is closest to their own style of eating. If you want to rely on tourists, many will probably want Halal food.

Western food is the exception as most people in Malaysia like that as well as their own ethnic meals.

You guys make me laugh - you ask for an opinion and when you get it you dont believe it and dont like it.  I really suggest you just go ahead and see what happens - as you are really determined to be probably parted from a lot of money.....

To be very honest I like this discussion with you as it is giving me a lot of information. I appreciate it.
Offcourse I will never go for a lower standard and to a bad location. I am doing the same business in Dubai since couple of years so I know there are many ways to attract customer.
After having a view I realize that the prices are higher than Dubai n all I know is that Malaysia is cheaper in the prices compare to Dubai, that's why I told you the prices looks expensive on groupon.

There are all kinds of prices on Groupon etc.  They change daily, so just a one day snap shot is not a real investigation. However, if followed it would show what food is most popular - I buy these coupons from time to time to try out a new restaurant which I otherwise would not bother to visit.

I think the most popular item I have seen was a voucher for food and drink at one of the German Bar chains, followed by chinese banquet.  They are not Halal in anyway, but the expats and those who eat Pork are very happy to visit. They had good locations as well - mainly in the shopping malls or in the KLCC area - I used mine sitting by the sea at Straits Quay in Penang.  I am not suggesting Penang is a good business option - I see all too many lovely quaint places empty, struggling and closing, while the Makan (Food) stalls thrive.

The large hotels also suck up quite a bit of food trade here as they have buffets which are very popular as people love the idea of being able to eat as much as they want - in reality they pay more and eat less as mixing all sorts of food can kill the appetite.

Still you will find successful street level restaurants will offer buffets and charge maybe RM2 per dish taken and RM1 for rice. I mentioned The Weld - I used to eat there at a food court at lunchtime for Rm7 for big portion of chicken rice. Portions have to be generous as appetites are big....

The story about the Mexican restaurant is interesting - meals without rice are often considered incomplete. However, expats like meals that have salad/veggies, chips/potatoes or bread in them - plus dippy exciting sauces that are not poured all over the food.  Its just the way Western food differs.

You may have read about the latest debacle on the Shisha - it has been declared inappropriate for Muslims and many pipes have disappeared from outside businesses. However two restaurants that have just opened 50 metres away from each other have rows of them outside - it will be interesting to watch what happens.  One of the restaurants is actually another Mexican so the Shisha does not fit in at all - in fact I predict that they will fail very badly as anyone who knows and likes Mexican food will probably be put off by the shishas and not think it is going to be "original" flavours.  For me the marketing is crazy and I will be watching what happens over the coming months.  The other place 50 metres away has already cut their beer price three times to try and attract custom.  There are nothing but restaurants in the area (BB Park) and so they thought they could charge more as they think they are more exclusive...... fact of the matter is the place is empty every time I walk by.

I have another italian friend who opened a restaurant about 4 months ago, but that is right in the middle of the city near to the offices that house the oil and gas boys. The investment is quite high but so far he is beginning to build some trade.  Problem being that it needs to be increased in the evening and at weekends.  I am not sure he will succeed although there is a nightlife street nearby - he has had break-even events there to get known.

At the moment there is a little bit of a scare about safety at night in Malaysia and I have noticed that this has changed some people's habits. I used to frequent a very successful place which had music. It was packed every night.  Then they started to change things.  First drinks prices went up in steps, then they changed the evening format and the music was too loud. Next a quiz ruined the trade on a Friday night, then they changed all their good staff and the place had terrible service and miserable faces.  A lesson in how not to run a business.  I heard their takings went down by 50%. So the customer is very fickle.

The best mark up is on alcohol in Malaysia, so it is almost essential to offer it in a restaurant. e.g. it costs about RM3.50 to buy one pint in a can and this can sell for RM10.

I am not interested with alcohol n pork business because I am Muslim.
But rest of your details are really good. I appreciate.

Regards

So have you investigated Putrajaya or Shah Alam?

mudah.my/Runing+restaurant+-22784027.htm

Whole section:

mudah.my/li?fs=1&ca=9_s&q=&cg=6040&w=3&st=a

Not yet. I am travelling at this moment n will return by 3rd week of this month n look for a good location.

Baloushi wrote:

I am not interested with alcohol n pork business because I am Muslim.
But rest of your details are really good. I appreciate.

Regards

That don't stop a lot of Muslims in Malaysia owning bars

Basically the trend is alcohol and entertainment to get margins. As you are basically going down market in effect makes no sense to go for Malaysia. Dubai is a totally different market place and in Malaysia Chinese have the money to spend. And they want booze and pork.

Dubai btw has loads of expats. Malaysia doesn't so can't go high end Halal as small market lots of competition. Low end means volume chain business and there are lots of those now.

Nemodot is right..... you will waste money and opportunity by sticking to your concept.

Thanks guys, if the alcohol is the only key of success in Malaysia then maybe I need to change my mind to think of some other business. Every person has some own principals of the life so i am following mine one.
Alcohol is not my item though. Many of my friends drinks as well,

Respect your choice completely - but perhaps surprisingly for you, as Nemodot writes, the Chinese Malaysians are probably the biggest spenders in the entertainment and hospitality market and then expats and tourists. Providing an offering to attract their patronage is the key to a successful business - plus having a lot of cash to set up in the very best locations.

Hi
I'm interested in this business please tell me more about this.

Thanks