[mattm]

If you had a friend that was starting a restaurant next month, what advice would you give him?

[Damon]

Right now, I'd advise them not to as it is my expectation that we're in for a minimum of poor economic times through 2010. If they were still determined I'd recommend buying an existing one over a new start up. With a purchase you at least have a history to work off of, with a start up all you really have is a mix of hope and best guesses.

[Psychlone]

AAARRRRG! Don't do it!

Just kidding, but really, the economy is so poor right now that it probably wouldn't hit the break-even point for several extra years beyond the norm.

Think about it this way:
If you're trying to hold onto your money during any type of recession (like this one) - what's the *first* thing you stop doing? - Eating out. It's dispensable. On the other hand, if you're wealthy and live in an area that is generally financially unaffected (due to the area being 'rich') then it may not matter, and you could charge what you want, but I'm betting that those places are getting scarcer by the minute!

Good luck to your friend(s) - but my better judgment says I wouldn't do it for anything right now.

Psychlone

[mojito]

Psychlone, you speak of the "break-even point" ...how many years typically is that if we weren't in this dire economic market... for a new restaurant?

[Psychlone]

Originally Posted by mojito

Psychlone, you speak of the "break-even point" ...how many years typically is that if we weren't in this dire economic market... for a new restaurant?

That depends on too many factors to even begin to 'estimate'...personal $ investment, lease/rent/mortgage/etc., number of seats, type/style and cost of menu items, what type of service, labor, standard overhead (insurance, licenses, utilities, etc.) as well as 'incidentals' among other things.

It could take anywhere from 2 years to 10 depending on what kind of restaurant you're talking about, taking all the above into consideration.

My personal restaurant has 86 seats with banquet facilities for 130 upstairs, my menu is an average of $8 per plate, we are full-service with alcohol sales (full restaurant alcohol license), we run an average of 30% labor including all salaries, and pump roughly $1500 in just natural-gas per month (to give a rough idea of utilities expenditures) - and we met our break-even after year 3...but I think we were lucky. And, considering the state of the economy now, I would either bet the same restaurant opening right now would take 10+ years, or that it would simply fail within the first year.

Anyway, good luck to whomever is contemplating this - as I've said before, when people begin drawing in the reigns of their expenditures, eating out is the *FIRST* thing to get dropped!

Psychlone