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[pnamajck]

am new to this community . . . and have aspirations in opening small hamburger shack. honestly . . . seems i have been plodding ahead like a blind man . . . probably doing everything backwards. i just wanna' open small hamburger shack . . . sell a hundred burgers daily . . . if possible.

i have read jack's post on the ten most important steps in opening restaurant . . . and thanks for the insight.

(10 Steps to opening a restaurant)

"accountant, F & B consultant and lawyer" . . . really, i had not considered any of this.

• lawyer . . . one needs lawyer, i guess . . . for issues such as trade-marks 'n service-marks. incorporation . . . think that could be done myself ?
  
• f&b consultant . . . this sounds helluva expensive.
  
• accountant . . . can't i rely, solely, on quicken software to do that ?

my plan would entail leasing small space in strip-mall here in dallas. selling burgers 'n fries (counter service) . . . priced at $7 or thereabouts. couple tables . . . but mostly carry-out. delivery possible in future.

guess i really do need an accountant . . . 'cause my most profound question in this post is regarding taxes. question . . . the revenue that the restaurant generates . . . it is taxable, correct ?

i have created small list of expenses . . . and, frankly, cannot understand how the owner can survive . . . and i would not even be borrowing any money. how much worse if i borrowed money for start-up . . . yikes !

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daily intake :

• 100 burgers a day = $700
• sales tax = $57.75 (8.25%)
• total gross income = $757.75

daily outtake :

• lease = $60 (1800mo)
• labor = $75 [2emp@7.25x5hr]
• util = $85
• inv * = $180
• sales tax = $57.75
• income tax = $189 (27%)
• insurance (prop/liab) = $20 (600mo)
• sub-total exp = $666
• (my own wage) $34
• total expenses = $700

as you can see . . . i have only two part-timers on payroll and i will take on role as owner / working-manager (no money for manager). there also is no money for marketing.

would someone be willing to "guestimate" as to where my figures are wrong ?

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* if it helps . . . here is break-down of my above inv outtake :
inv-calc (insert from above / based on 90% carryout) :

• 50lb beef (½lb @ ord) $100 ($2lb)
• 50lb potato (½lb @ ord) $20 ($2@5lb)
• 20ct tomato (2sl @ ord) $10 (87¢@lb)
• 5ct lettuce $4 (80¢@un)
• .3un pickels $3
• buns $20 (20¢un)
• 90ct pkg $20
• misc $3
• inv total $180

[npwachob]

Hi jack,

Your figures may not be wrong, they may be completely right! It is difficult to say not having the specifics needed to come up with better numbers however there are several things that you need to look at:

1) Food Cost: Your costs on all food should be no more than 32% of total sales. With a burger joint such as yours, it will probably be lower.

2) Labor Cost: Your labor should run also no more than 32%, and as a starter this should include your pay, if you decide to pay yourself at all in the beginning.

3) Rent: You need to find a place that will only deduct about 8% at most of your sales.

4) Utilities: Your utilities for the space you have seem like they would be a little high. I would assume that utilities will be lower than your total rent.

Now looking at your sales:

Gross Sales - $700.00
Net Sales (after tax) - 642.25


FC (32%) - 436.73
LC (32%) - 231.21
Rent (8%) - 179.83
Utilities (8%) - 128.45
Insurance - 100.45

Now looking at this, you would have 100.45 left over, however not all costs are in this. You do not have an income tax because you are only taxed on your profit and it all depends on how you set your company up. If you are a sole-proprietor you will be taxed a lot more haevily than if you set up as an LLC or an S-Corp.

Here are other costs that come into play that you will have to investigate further:

- Worker's Compensation
- Maintenance
- Chemical, Paper, Etc.
- Accounting
- Marketing and Advertising (as you have pointed out)
- etc. etc etc.

It adds up. In reality, you could make it on $700/day in sales as I have seen it done, but it always depends on how low all your other costs are. Keeping your costs low and negotiating with your food service providers, your landlord, etc. to get the lowest possible deal is key but also remember that the number one reason restaurants fail is due to lack of startup money as you may not do $700/day right away. It may take time to get to this point, or you may blow it out of the water and do $1400/day. you never know.

[pnamajck]

thanks for the add'l notations / concerns, npwachob . . . will try keepin' that in proper perspective.

[Robiccon]

There are so many variables you left out, drinks, sides, equipment. Plan on being in the red for a couple of years. Its a very profitable industry and upscale burger joints are the up and coming market in the industry today, smash burger, bagger daves, five guys to name a few. Your menu pricing is a whole different story than food costing. email me at kcarrithers@robiccon.com and i will go into this in more detail.