The Restaurant Community » Forums » Restaurant Business

[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

[Jack]

So you are thinking about opening a restaurant?

Before you start, there are many things to consider, both personal and professional. This is not meant to scare you away, but to alert you to all that this endeavor encompasses. While working for yourself is rewarding it is also going to take a big commitment from you and your family
On the personal side you will work long hours, work while others are playing or during holidays, and spend your life’s savings. And on the professional side you will worry about guest satisfaction, employees showing up for their shifts, making sure that your deliveries are correct, and of course pilferage. These are just a few of the problems starting your own restaurant business.
There are some*questions that will be asked of you. What is H.A.C.C.P? What are controls? What are*my food and*labor costs? What is my profit? These are some of the things that you will need to know and we will talk about in future blogs.**
However with proper planning and help from professionals, the traps and headaches of opening a restaurant can be eliminated. Consultants can help you with your menu design, training, controls;*will help design your kitchen, along with getting you the correct equipment, all other aspects of your business.*

[npwachob]

Simply put, the number one reason restaurants fail is due to not having enough capital behind them at the beginning. The second reason is that the person opening the restaurant may not have the right experience or support behind the to succeed. Make sure this person has both. If he is new at the resaturant game, make sure he has a seasoned consultant who has had the experience behind him help your friend. This does cost money, however, the consultant will also save him money in areas that your friend may not have thought of or save him from mistakes he will make because he may not know any better. Also, make sure he has enough money stored away for a tleast the first four - six months that will cover all his expenses as if he didn't have one person come in the restaurant. It takes quite a bit of money to start a restaurant and it also takes time and energy for guests to come in and keep coming in.

[Robiccon]

shop around look for a small company not a cooperate giant. The reporting software will save him hours of calculations alone, of course i will recommend Robiccon Point of Sale (POS) since im a sales rep but also look into Halo and Midwest ordering solutions, im pretty sure that both of these companies also offer the online style reporting that we do.

[fina]

make sure you purchase a shelf corporation if you are not going to purchase an existing one. the banks will lend on a lot of factors but the company having at least the history of an operating company will be one of the primary factors in getting a line of credit which you will need. also according to bank underwriting a restaurant is risky business so aged history with established tradelines will help.