Do you want to start a Mexican restaurant? If YES, here is a detailed guide on how to start a Mexican restaurant business with no money and no experience.
Okay, so we have provided you an in-depth sample Mexican restaurant business plan template. We also took it further by analyzing and drafting a sample Mexican restaurant marketing plan backed up by actionable guerrilla marketing ideas for Mexican restaurants.
Table of Content
- Why Start a Mexican Restaurant?
- Industry Overview
- Market Research and Feasibility Studies
- List of Well – Known Brands in the Industry
- Economic Analysis
- Buying a Franchise vs Starting a Mexican Restaurant Business from Scratch
- Possible Threats and Challenges You Will Face
- Best Legal Entity to Use for This Type of Business
- Catchy Business Name ideas Suitable for a Mexican Restaurant Business
- Insurance Policies
- Is Professional Certification Needed to Run a Mexican Restaurant?
- List of Legal Documents You Need to Run a Mexican Restaurant Business
- Financing Your Restaurant Business
- Choosing a Location for a Mexican Restaurant Business
- Technical and Manpower Details
- Marketing ideas and Strategies
- Factors That Will Help You Get the Right Product Pricing
- Possible Competitive Strategies for Winning your Competitors
- Possible Ways to Increase Customer Retention
- Strategies to Boost Your Brand Awareness and Create Your Corporate Identity
Why Start a Mexican Restaurant?
It is a known fact that Mexicans who happen to be the neighbors of United States of America down South, have a growing migrant population hence the reason why it is easier to find Mexican restaurants in the United States when compared to other countries.
If you are a Mexican living in the United States and you are looking towards leveraging on the vast population of Mexicans in the US to generate revenue, then one of your best options is to start a Mexican Restaurant. The truth is that if you can successfully start a Mexican restaurant in the United States, your clients aren’t going to be just Mexicans but every other person within your location who loves exploring delicacies from different parts of the world.
Before starting this type of business, it will pay you to carry out your due diligence as it relates to market research, economic and cost analysis and of course feasibility studies. If you get things right before launching your restaurant business, it will not take you long before you break even and start smiling to the bank.
So, if you want to start your own Mexican restaurant business, all you need do is to read this article and you will be well equipped. You can start your Mexican restaurant business from a small town in the United States and if you are consistent and creative, it won’t be too long before your brand becomes a nationally recognized brand.
How to Start a Mexican Restaurant Business – A Detailed Guide
Mexican restaurants are restaurants that mainly prepare and sell Mexican-style food to their customers. The Mexican Restaurant industry accommodates single-location, chain and franchised enterprises, as well as full-service and fast-food operators whose major delicacies are Mexican inspired.
Players in this industry also sell alcoholic and other beverages as a means of generating more revenue and maximizing profits. A close watch of the Mexican Restaurant industry shows that the industry has benefited greatly from the increased acceptance of Mexican cuisine in the mainstream American food industry.
In addition, an increasing immigrant population from Mexico and Spanish speaking countries coupled with domestic adaptations of Mexican food has also aided the rise of the Mexican Restaurants industry over the last five years. As a result of these major trends, industry revenue is expected to continue growing going forward.
The Mexican Restaurants industry is a thriving sector of the economy of the United States. Statistics has it that in the United States of America, the Mexican Restaurants industry generates over $38 billion annually from more than 34,061 registered and licensed Mexican Restaurants and franchises scattered all around the United States of America.
The industry is responsible for the employment of over 877,619 people. Experts project the Mexican Restaurants industry to grow at a 2.9 percent annual rate within the next five years. Taco Bell and Chipotle Mexican Grill are the leaders in The Mexican Restaurants industry; they have the lion market share in the industry.
A report published by IBISWORLD pointed to the obvious fact that the Mexican Restaurants industry is in the growth phase of its life cycle.
That over the 10 years to 2020, industry value added, which measures an industry’s contribution to US GDP, is forecast to grow at an average rate of 3.1 percent per year, compared with estimated annualized GDP growth of 2.5 percent over the same period. Thus, the industry is exhibiting consistent, long-term growth at a faster rate than the economy as a whole.
The report also stated that the number of industry establishments is expected to grow at an average rate of 3.0 percent per year over the ten years to 2020. The industry is comfortably outpacing the broader foodservice sector. Mexican restaurants are benefiting from an increasing consumer base for Mexican-style food.
The Mexican restaurant business will continue to blossom and good enough, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own Mexican restaurant businesses in the United States of America.
Over and above, the Mexican restaurants line of business is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business; you can choose to start on a small scale in a street corner like the average mom and pop business or you can choose to start on a large scale with several outlets in key cities.
Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who eat food served in Mexican restaurants cut across all genders and age group. Adults and children all eat meals that are sold by Mexican restaurants hence the demographic composition for a Mexican restaurant business is all encompassing.
The truth is that when it comes to selling Mexican foods, there is indeed a wide range of available customers. In essence, your target market can’t be restricted to just migrants from Mexico, but to all those that resides around the locations where you have your Mexican restaurant and who have purchasing power.
So, if you are thinking of opening your own Mexican restaurant in the United States, then you should make your target demographics all encompassing. It should include families, bachelors, spinsters, corporate executives, students, migrants, entrepreneurs, business people, celebrities, military men and women, sports men and women, tourists and every adult in the neighborhood where you have your Mexican restaurant.
Niche ideas Within This Business That You Can Specialize in
It is important to state that there is no niche idea in this industry and it is common to find Mexican Restaurants engage in the sale of Mexican delicacies such as; Chile Verde – Pork in a Green Chile Sauce, Cochinillo Asado a la Segoviana – Roast Suckling Duck, El Frite – Fried Lamb flavored with Garlic, Onion, Lemon, and Paprika, Enchiladas Verdes – Shredded Chicken, Green Salsa, and Crema wrapped in Corn Tortillas et al.
The Level of Competition in the Mexican Restaurants Industry
The competition that exist in the Mexican restaurants industry goes beyond competitions amongst Mexican restaurants in your location; you are expected to compete with other restaurants such as intercontinental restaurants and any other outlets that also sell Mexican inspired meals. So, it will be right to say the competition in the Mexican restaurants industry is tough.
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you are good at preparing the varieties of Mexican inspired meals you have on your menu, you can deliver excellent customer care services and you know how to reach out to your target market.
List of Well – Known Brands in the Industry
In every industry, there are always brands that perform better or are better regarded by customers and general public than others. Some of these brands have been in the industry for a long time, while others are best known for how they conduct their businesses and the results they have achieved over the years.
These are some of the leading Mexican restaurants in the United States of America and in the globe;
- Taco Bell
- Chipotle Mexican Grill
- Riviera Maya Mexican Restaurant
- Nuestra Cocina
- El Coyote Mexican Restaurant
- Oyamel Cocina Mexicana
- Don Jose Mexican Restaurant
- Nopalito Mexican Restaurant
- Mayito’s Mexican Restaurant
- La Taqueria Mexican Restaurant
- Hugo’s Mexican Restaurant
- Barrio Café
- La Galera Mexican Restaurant
- Las Cuatro Milpas
- Fonda San Miguel
- Cantina La Veinte
- Carnitas Uruapan Restaurant
- La Choza Restaurant
- Margaritas Mexican Restaurant
- On The Border Mexican Grill & Cantina
When it comes to successfully launching a business and maximizing profits, you need to ensure that you get your economic and cost analysis right and try as much as possible to adopt best practices in the industry you choose to build a business in.
Mexican restaurant business in the United States is not a green business, as a matter of fact; you will come across a couple of Mexican restaurants when you drive through town.
So, if you are mapping out your economic and cost analysis, you should carry out thorough market survey of the amount needed to rent a space where you are expected to build a standard Mexican restaurant, and the amount required to purchase furniture, flat screen TVs, sound systems, gas cookers, microwave oven, bread toaster, cooking utensils and serving wares, food ingredients and other supplies and also the cost to successfully run the business.
The bottom line is that, if you are considering starting a Mexican restaurant business in the United States, then your concern should also be on branding and on how to build a robust clientele base. The truth is that if you are able to build a robust clientele base, you are sure going to maximize profits in the business.
Buying a Franchise vs Starting a Mexican Restaurant Business from Scratch
When it comes to starting a business of this nature, it will pay you to buy the franchise of a successful Mexican restaurant as against starting from the scratch. Even though it is relatively expensive buying the franchise of an established Mexican restaurant brand, but it will definitely pay you in the long run.
But if you truly want to build your own brand after you must have proved your worth in the industry, then you might just want to start your own Mexican restaurant business from the scratch. Starting from the scratch will afford you the opportunity to conduct thorough market survey and feasibility studies before choosing a location to launch the business.
Please note that most of the successful Mexican restaurants in the United States started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
Possible Threats and Challenges You Will Face
If you decide to start your own Mexican restaurant business today, one of the major challenges you are likely going to face is the presence of well – established Mexican restaurants and other food retail outlets that also sell Mexican inspired meals. The only way to avoid this challenge is to create your own market.
Some other challenges you are likely going to face is economic downturn; if the economy is in bad shape, Mexican and niche restaurants usually struggle to maintain their old customers or even welcome new ones. Unfavorable government policies can also hamper the growth of your Mexican restaurant business. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.
Best Legal Entity to Use for This Type of Business
The legal entity you choose will go a long way to determine how big your business can grow. You have the option of choosing a general partnership, limited liability company, or even a sole proprietorship for your Mexican restaurant business.
Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale Mexican restaurant business especially if you are just starting out with a moderate startup capital in a small neighborhood and with just one outlet.
But if your intention is to grow the business and open chains of Mexican restaurants across the United States of America and other countries of the world via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your Mexican restaurant business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to study the various legal entities to use for your Mexican restaurant business with the ability to sell franchise, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or ‘S’ corporation especially when you have the plans of going public.
Upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to grow your Mexican restaurant business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company
Catchy Business Name ideas Suitable for a Mexican Restaurant Business
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own Mexican restaurant business, here are some catchy names that you can choose from;
- Pedro Vela® Mexican Restaurant, LLC
- Hugo Hernández™ Mexican Restaurant, LLC
- El Classico© Mexican Restaurant, Inc.
- Carlos Santos® Mexican Restaurant, Inc.
- Rosa & Elena™ Mexican Restaurant, Inc.
- Tasty Tanya™ Mexican Restaurant, Inc.
- New Mexico© Restaurant, Inc.
- Mexican Sisters® Restaurants, LLC
- Andres Jemez© Mexican Restaurant, Inc.
- Chef© Mexican Restaurant, Inc.
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your Mexican restaurant business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own Mexican restaurant business in the United States of America;
- General insurance
- Health / Medical insurance
- Liability insurance
- Workers compensation
- Building / Property insurance
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
Intellectual Property Protection/Trademark
If you are considering starting your own Mexican restaurant business, usually you may not have any need to file for intellectual property protection because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your unique recipe, company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
Is Professional Certification Needed to Run a Mexican Restaurant?
Aside from preparing varieties of tasty Mexican inspired dishes, professional certification is one of the main reasons why most Mexican restaurant brands stand out. If you want to make an impact in the Mexican restaurant industry, you should work towards acquiring all the needed certifications in your area of specialization.
Certification validates your competency and shows that you are highly skilled, committed to your career, and up-to-date in the market. These are some of the certifications you can work towards achieving if you want to run your own Mexican restaurant;
- Clean Health Certificate
- Food handler Certification
- Catering Training Certificate
Please note that you can successfully run a Mexican restaurant in the United States and in most countries of the world without necessarily acquiring professional certifications as long as you have adequate experience cum background in the restaurants industry.
List of Legal Documents You Need to Run a Mexican Restaurant Business
Having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations.
If you do, it won’t be too long before the long hand of the law catches up with you. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own Mexican restaurant business in the United States of America;
- Certificate of Incorporation
- Business License
- Tax Payer’s ID/Tax Identification Number
- Foods and drinks handler certificate
- Health inspection Certificate
- Proof of district-issued food and drinks manager identification card
- Copy of license for the service support facility and/or a recent inspection report
- Business Plan
- Employee Handbook
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Company Bylaws
- Memorandum of Understanding (MoU)
- Building License
- Franchise or Trademark License (optional)
Financing Your Restaurant Business
Starting a Mexican restaurant business can be cost effective especially if you choose to start on a small scale by running a Mexican restaurant business in a street corner. Securing a standard and well located facility and purchasing gas cooker, microwave oven, bread toaster, cooking utensils and equipment, food supplies and serving wares et al are part of what will consume a large chunk of your startup capital.
If you choose to start the business on a large scale, you would need to source for fund to finance the business because it is expensive to start a standard large scale Mexican restaurant business.
When it comes to financing a business, one of the first things you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your Mexican restaurant business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank
- Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
- Source for soft loans from your family members and your friends
Choosing a Location for a Mexican Restaurant Business
When it comes to choosing a location for your business, you should be guided by the demand for Mexican inspired meals and easy access to farmers, food hubs or wholesale food distributors. Of course, if you are able to secure a central location for your Mexican restaurant business, it will give people easy access to locate you.
It cannot be overemphasized that the location you chose to start your Mexican restaurant business is key to the success of the business, hence entrepreneurs are willing to rent or lease a facility in a visible location; a location where the demography consists of people with the require purchasing power and lifestyle.
It is important to note that a business facility in a good location does not come cheap, hence you should be able to allocate enough fund for leasing/renting in your budget. If you are new to the dynamics of choosing a location your business, then you should feel free to talk to a business consultant or a realtor.
Before choosing a location for your Mexican restaurant business, ensure that you first conduct a thorough feasibility studies and market survey. The possibility of you coming across similar business that just closed shop in the location you want to open yours can’t be ruled out.
These are some of the key factors that you should consider before choosing a location for your Mexican restaurant business;
- The demography of the location
- The demand for Mexican inspired meals in the location
- The purchasing power of residents of the location
- Accessibility of the location and the road network
- The number of Mexican restaurants and any other outlets that also sell Mexican inspired meals and drinks in the location
- The local laws and regulations in the community
- Traffic, parking and security
Technical and Manpower Details
There are no special equipment needed to run this type of business except for gas cooker, bread toaster, cooking utensils, serving wares, food service equipment (microwave, toasters, dishwasher, refrigerator, blender, etc.), Storage hardware (bins, utensil rack, shelves, food case), Counter area equipment (counter top, sink, ice machine, etc.), Computers and receipt issuing machines, Sound System (For playing music), and Point of Sale Machines (POS Machines).
So also, you will need computers/laptops, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves) amongst others and all these can be gotten as fairly used.
As regard leasing or outright purchase of a restaurant facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent / lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property but if not, then move on and source for other ideal location for such business.
When it comes to hiring employees for a standard Mexican restaurant business, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Merchandize Manager, Cook/Chef, Restaurant Manager, Sales and Marketing Officer/Sales Girls and Sales Boys, Accounting Clerk, and Cleaners.
On the average, you will need a minimum of 10 to 15 key staff members to run a small – scale but Mexican restaurant business.
The Service Delivery Process Involved in a Mexican Restaurant Business
It is the duty of the merchandise manager to help the organization purchase food ingredients and packaging/serving materials et al. They go out there to source for good purchasing deals and they also ensure that they only purchase at the right prices that will guarantee them good profits.
Once the Mexican restaurant business is in full operation, Mexican delicacies such as; Chile Verde – Pork in a Green Chile Sauce, Cochinillo Asado a la Segoviana – Roast Suckling Duck, El Frite – Fried Lamb flavored with Garlic, Onion, Lemon, and Paprika, Enchiladas Verdes – Shredded Chicken, Green Salsa, and Crema Wrapped in Corn Tortillas et al are prepared and they are listed on the menu. Food purchased from a Mexican restaurant can be eaten in the restaurant or can be taken away.
It is important to state that a Mexican restaurant business may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated Mexican restaurant business process is not cast on stone.
Marketing ideas and Strategies
Running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a Mexican restaurant business, then you must go all out to employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the restaurant industry.
Businesses these days are aware of the power of the internet, which is why they will do all they can to maximize the internet to market their services and products. These are some of the marketing ideas and strategies that you can adopt for your Mexican restaurant business;
- Introduce your Mexican restaurant by sending introductory letters alongside your brochure to residents and other key stake holders throughout the city where your Mexican restaurant is located.
- Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
- Create a basic website for your business, so as to give your business an online presence
- Directly market your products.
- Engage in road shows in targeted communities from time to time to promote your Mexican restaurant business
- Join local fast food restaurant business associations for industry trends and tips
- Provide discount days for your customers
- Advertise our business in community based newspapers, local TV and radio stations
- List your business on yellow pages ads (local directories)
- Encourage the use of word of mouth marketing (referrals)
Factors That Will Help You Get the Right Product Pricing
One key factor that will help you sell your Mexican inspired meals at rock bottom prices is to purchase your food ingredients directly from farmers or from food ingredient wholesalers in pretty large quantities. The truth is the higher the quantity of items that you purchase directly from farmers, food hubs and wholesalers, the cheaper you tend to get them.
Another strategy that will help you retail your Mexican inspired meals at the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name.
Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products. You can also try as much as possible to work with independent contractors and marketers; it will help you save cost for paying sales and marketing executives and also purchase.
Possible Competitive Strategies for Winning your Competitors
The availability of varieties of tasty Mexican inspired meals in you restaurant, your business process and of course your pricing model are part of what you need to stay competitive in the industry. Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base.
Over and above, ensure that your organization is well positioned, key members of your team are highly qualified and Mexican inspired meals listed on your menu can favorably compete with the some of the best in the fast food restaurants industry and street food industry.
Possible Ways to Increase Customer Retention
When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps attract new customers is to produce results and satisfy your customers always.
If your customers are satisfied with your products and services delivery, they can hardly source for alternative service providers. Statistics has it that one of the major reasons why clients’ source for alternative service provider or product is when there is a drop in quality. Another reason is poor customer service.
If you can continue to make available varieties of tasty Mexican inspired meals in your restaurant at every moment, and your customer service delivery is top notch, then you won’t struggle to maintain loyal customers. When it comes to managing your customers and building loyal clientele base, you should purchase a customized CRM software.
With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).
Strategies to Boost Your Brand Awareness and Create Your Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them.
If your intention of starting a Mexican restaurant business is to grow the business beyond the city where you are going to be operating from to become a national and international brand by franchising, then you must be ready to spend money on promotion and advertisement of your brand.
Here are the platforms you can leverage on to boost your brand awareness and a create corporate identity for your Mexican restaurant business;
- Place adverts on both print (newspapers and food magazines) and electronic media platforms
- Sponsor relevant community based events/programs
- Leverage on the internet and social media platforms like Instagram, Facebook, Twitter, YouTube, Google + et al to promote your Mexican restaurant business
- Install your Billboards in strategic locations all around your city or state
- Engage in roadshows from time to time in targeted neighborhoods to create awareness of your Mexican restaurant business
- Distribute your fliers and handbills in target areas
- List your Mexican restaurant business in local directories / yellow pages
- Advertise your Mexican restaurant business in your official website and employ strategies that will help you pull traffic to the site.
- Position your Flexi Banners at strategic positions in the location where your Mexican restaurant business is located.
- Ensure that all your staff members wear your branded shirts and all your vehicles, trucks and vans are branded with your company logo.