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Maximize Returns by Remodeling your Restaurant

Sep 25, 2018

The first challenge in starting a restaurant is ignorance, the end challenge is hubris. Like most businesses, it’s pretty tempting to rest on your laurels once your restaurant proves a success. But according to Perry Group and the Restaurant Brokers, 70% of restaurants that make it past the first year, shut down within three to five years.

So how do some restaurants keep milking the cash cow beyond the five-year term? They stay updated with the latest trends- applying and reapplying changes to the restaurant and constantly research their customers’ preferences. Several restaurant owners lose out when they ignore the need to remodel or uplift their restaurants. These are the restaurants that can’t afford to stay in business.

Of course, it’s not the easiest decision to take. But it’s best for you to take the proactive step, rather than simply reacting when the poor customer feedback and the bad ‘Yelp!’ Ratings hit. When your restaurant has already proven to be a success, it becomes the best place for you to reinvest your profits in.

And why wouldn’t you? Delaget data revealed that sales after a remodel generally increase between 15% and 40%. So let’s get started with these simple steps.

Who’s coming to eat?

When your restaurant is serving fresh looks along with fresh food, it’s time to re-analyze your target market. It’s important to remember your target market chooses you, and you don’t choose them. It includes the people who are the most probable to eat at your restaurant, not the people who you want to come to eat at your restaurant.

For a start, analyze which generations your restaurant would attract, and strategize your marketing to reel them in. Our infographic below indicates the food preferences of each generation to help you identify your customer base easier.

What’s the Plan?

Now that the customer base has been targeted, everything else is just about fitting things into a framework. Here’s what you should focus on.

High Demand Areas:

Figure out the places where you generate more revenue. You may have noticed instances when a family of four walks through your doors only to be seated at two tops which isn’t really convenient. It’s time to fix that. If you serve alcohol, build a bigger bar because alcohol can bring in the most money. Focus on high demand and short supply to get the best returns on your renovation.

Ambience and Theme:

Isn’t this the best part? The customer’s restaurant experience is based on what they directly interact with or see. A walk through your restaurant can show you the focus lies on the door, front counter, furniture, menu boards and the overall ambience of the dining room. Take these into account to plan out colors and a theme that’s complementary to the food you’re serving. Half the consumer market, especially millennials consciously factor updated decor and appropriate music choices into their decision-making.

Deep Clean: Wait, you didn’t think ambience was all about new curtains, did you? Take this opportunity to clean every nook and corner you couldn’t reach before, and scrub the kitchen down so clean it looks like magical forest creatures helped you.

Colors and style: It always does well to play into color psychology and fall back on safe warmer colors like reds and yellows. Studies show young people prefer bright, strong colors, whereas adults mostly enjoy their meals in weak, unobtrusively colored environments (Grunert 1993, according to Stroebele & De Castro, 2004). It’s important to keep a balance and not get carried away with the color scheme, so try balancing with some darker wood colors. An example of the influence of colors on mindset was an experiment performed based on coffee served from different colored pots. The coffee drinkers judged the same coffee served from a blue pot as mild and from a brown pot as too strong. The best judgment of “aromatic and strong” was given to coffee served in a red pot (Favre & November 1979, according to Stroebele & De Castro, 2004).


The decor of the restaurant can actually influence the customer’s mood in the restaurant. In fact, customers in a more pleasant ambience and surrounded by a calming atmosphere were more likely to dismiss service failures as a one-time only, non-recurring event. Sticking to a classy look rather than one that’s just currently in the trends can keep your restaurant evergreen, rather than in a couple of years’ time be dismissed as “so last year”.

Lighting: There’s a reason why fast food chains have bright colors- it influences the mood to eat more and faster, while dimmer colors influence people to (you guessed it), eat less. But as great as it sounds to have customers who spend more, make sure the lighting suits the theme of the restaurant.

Music: You may have handpicked those tunes yourself but customers tend to rate a restaurant higher if they knew the songs played there, rather than the tempo of the song. Make sure the music played is relevant to the customers that walk through your doors and suits the theme of your restaurant. I know the new Drake song is amazing but your Gen X customers may not appreciate it.

Structural enhancements: In addition to the ambience and theme, structural enhancements can also increase the revenue of your restaurant. This is one of the bigger things, which might require you to take a loan, but it certainly pays off. Including a storage space for wine bottles or including an ambience wall gets the maximum bang with the least effort. However, it’s best to avoid changes in the infrastructure itself such as plumbing or mechanical changes as this can take the budget out of hand.

Timing: Timing is the most crucial aspect to customer satisfaction. Youngsters and parents with small children believe that slower service is one of the bigger problems. If ever there’s a time to revamp your service style and methods, it’s now. Restaurants these days are even including engaging activities like plate painting or a play area for small children to keep the customers engaged during their waiting time.


Yes! Although it really doesn’t strike one often, the menu is actually the critical point of connecting between the customer and the restaurant. Nowadays, customers tend to check the menu online before they even reach the restaurant so check how your menu looks in a virtual format as well. Don’t over-complicate the names or description, and ensure your menu provides clarity to customers before they even reach the restaurant

Initially, try adding new dishes as “specials” to see how they fare with your customer base and once they do well, add them permanently to the menu.

Kitchen efficiency: Changes in the back-end are sure to reflect in the front-end. Set up a plan to increase your kitchen efficiency by talking to your chefs and staffs to focus on re-organizing your kitchen to serve better. Stock your kitchen with better equipment and new utensils. Replace the blenders that have served your restaurants before the Clintons took office with upgraded models. All this won’t be cheap but an equipment finance could help.

Closing month:

What about the time that’s gone when you’re closed for renovations? You can expect to see a decline in sales during the remodel. In fact, you may even need to close down completely if there’s a full renovation.

But we have great news. As much as these stores saw the largest sales during the renovation, they also saw the largest increases post construction according to this data by Delaget. In fact, some operators saw a 50% sale increase, especially if the construction included easing access or increasing capacity. That being said, it might be better to close during slower months like January or April, a time when your staff can take a vacation.

Cost Research:

Remodeling is definitely the time to explore options and grasp opportunities. However, it’s easier to plan a budget once you chart out the non-negotiable and the ones that aren’t an urgent requirement, simply because no one has the budget to achieve all their goals. Once you’ve listed down your plan, allot costs to each of the items above including the payment of the contractor to do the work. Leave a buffer in the budget, to be prepared for any surprises.

Customer Feedback:

Before implementing the changes, try to get a customer feedback on the outlay of your plans and prioritize feedback from your target demographic. After all, beauty is in the beholder’s eye so why not ask the beholder themselves? Also, include friends and family in case you need the honest opinion you’re worried you’re not getting.

Funding Options:

Be prepared with a reliable source of financing to make your restaurant goals a reality. Taking money from friends and family has always been a tried and tested source of money for most small businesses but always restricts the amount you seek and tends to put people in awkward situations. Banks have always been another source but it could take forever to get an approval and what if you’re stuck with a bad credit score? So let’s explore other funding solutions to meet your renovation budget.

The alternate funding industry has revolutionized with a variety of loan products tailor-made to each entrepreneur with shorter application processes and faster working capital.

SBA Loans: This is a good option for those highly experienced in the food industry (not many others have an opportunity to be considered) and guarantees 80% of the loan principal for term loans. The SBA approval is a sign to other lenders as a positive recommendation but the steps to procure one involves lengthy paperwork and several months of processing. An SBA loan would also require an excellent credit score. The SBA loan terms and interest rates vary based on the type of loans (working capital, equipment purchases, real estate purchases etc.) and the loan term taken. Longer loan terms mean a lower interest rate and lower regular payments.

Term Loans: Term loans are pretty fixed. They have a fixed number of payments, a fixed repayment time and their interest rate can be either fixed or variable. Term loans are generally classified into two types, even principal payments, and even total payments. Term loans can vary between one and ten years and can even go up to 30 years in some cases. However, term loans may require an additional balance to be repaid.

Short term loans: are like a messiah to short-term businesses. They provide almost immediate working capital suited to almost any requirement a small business has. These loans are immediate and almost no hassle to paperwork. Some short-term loans can even meet the needs of those with bad credit scores. Short term loans let you make rent, pay manufacturers, hire new employees, pay taxes and payroll, buy new equipment and even handle other overhead expenses in slower times.

One of the most reliable sources of funding is Reliant Funding’s short-term funding solutions. As a greater advantage, the money is directly deposited within 48 hours to your bank, giving you full control to spend it on your business needs.

Keep the Staff in the Loop:

The medium between you and your customers are your staff so it’s always crucial to keep them in the loop. Most of your customers will inquire about your renovations and opening to your staff to make sure they’re up to date on the changes, so they can reassure your customers and tell them how awesome your restaurant will be post-renovation.

Marketing Strategy:

Honestly, what’s the point of renovating if you can’t brag about it? The most important part of the plan is marketing your renovations, second to only the renovation itself. Building your marketing strategy is crucial, and determines the returns you get from renovating. The main reason why restaurants don’t get the attention they deserve is that of a poor marketing strategy that doesn’t reach the target demographic. Only if you can understand the customer base you wish to attract, you can build a marketing strategy based on them. For example, email and social media marketing reached out to most of the millennials and Gen X but might be lost on any generation older than that. And there’s no way any marketing done on a radio can reach out to the younger generations. It’s also better to analyze the offers you lay out to target customers, because if your offer doesn’t grab their attention, neither will your restaurant.

On a final note, clear communication with your customers is just as important as communication with your staff. Keeping your restaurant desirable to your customers shows an effort to mean as much to them as much as they mean to you. And once you’ve done that, you’re headed to success!


$3,098,641,569 dollars funded