If you’re planning to open a restaurant, there are several things you need to consider before starting your business. These include budgeting, choosing a location, hiring staff, and the equipment you will need to get started. Here are some tips to help you make the best possible business decision. Regardless of your level of experience, these tips can help you get started on the right foot!
Budgeting for a restaurant start-up
A restaurant start-up can be expensive, and you need to know how much to budget for the start-up costs. There are two types of costs: fixed and variable. Fixed costs are those that can be predicted, such as the cost of hiring employees and paying rent or utilities. Variable costs, on the other hand, include supplies and repairs.
The average cost for a restaurant start-up can range from twenty to thirty percent of gross annual revenue. However, these figures will vary based on the type of establishment you open. For example, a food truck may have lower worker expenses than a table-service restaurant. For this reason, you should set aside a contingency fund in your business plan to cover any unexpected costs or cash deficits. Also, make sure to do your market research – studying your competitors, analyzing their business model, and analyzing successful and unsuccessful restaurants in your area. You can also conduct focus groups to find out what your target market wants and needs, as well as how to differentiate menu items and attract more customers.
Payroll expenses are one of the highest expenses for a restaurant. They can quickly spiral out of control if not carefully monitored. Restaurant payroll expenses should be about fifteen to twenty percent of the restaurant’s gross sales. The cost of hiring new employees is another expense. Make sure to keep exceptional employees and conduct a daily audit to keep payroll costs in proportion to current revenue.
Choosing a location
Location is an important factor to consider when opening a restaurant. You want to be in a place where people can find you easily, but it is also important to understand your target market. Identify the paths your potential customers will take to get to your establishment. You can do this with free tools provided by the US Small Business Administration.
The location you choose must be big enough to accommodate the concept of your restaurant. This is a vital consideration, because health and safety laws will dictate the number of people allowed to be in the building. You may want to research local zoning laws to see if there are any restrictions.
Another factor to consider when choosing a location for a restaurant is the demographics of the area. If your restaurant targets business professionals, make sure to choose a location where these customers are likely to be found. Try to choose a location within three kilometers of your target market. In addition to demographics, you should also consider psychographics. This will tell you which types of customers will frequent your establishment and how they might feel about it.
The size of your restaurant’s physical space is another important factor. High-end restaurants often have more space between tables, while low-end restaurants tend to pack their customers close together. Make sure that the size of the space is appropriate for your restaurant’s size, and don’t overlook the competition in the neighborhood.
Hiring staff
Hiring staff for your restaurant is a major step in the start-up process. Depending on the size and style of your restaurant, you’ll need a chef, a manager, and a variety of other positions. While this can be challenging, it is essential to your financial success. Here are some tips to help you find the right people to join your team. Recruiting from job boards is a great way to find top candidates.
Hiring staff for your restaurant start-up can make or break your business, so you need to be selective when selecting the best candidates. You can ask for recommendations from your friends or colleagues, use industry-specific job boards, and even hire from a hospitality training platform. The key is to be selective, and advertise for the positions you need.
Hiring staff is a significant expense, so you must not cut corners. A restaurant should not pay more than 25 to 35 percent of its gross sales to employees. If the payroll is more than that, you need to consider ways to cut costs or increase sales. For many restaurants, the most important person on staff is the manager, who handles many of the duties of the business and helps the owners perform their duties. For example, if you’re absent, your manager can handle the duties of the restaurant.
Hiring staff for your restaurant start-up can be challenging and time-consuming, but it can be done successfully. To make the process easier, you can ask other restaurant owners for recommendations. In fact, the industry is a close-knit community and people in the industry will know someone who can help you. You can also check out local culinary schools, which often have placement programs for aspiring chefs.
Equipment costs
Restaurant start-up costs are usually large, but there are some things that can be purchased with startup funds. Investing in restaurant equipment, bookkeeping and point-of-sale systems can be an excellent way to increase revenue, but not at the expense of other costs. When planning your budget, prioritize which equipment will help you serve your customers better. Also consider whether you will need to hire an outside restaurant marketing or advertising agency. If your business is small, you can handle some of these activities on your own.
While the restaurant equipment you buy is critical to a successful business, it is easy to overspend. The easiest way to go over budget on kitchen equipment is to purchase too much of it, but if you know your budget, you’ll be able to make your restaurant’s start-up costs much more affordable in the long run. For instance, you can consider buying second-hand equipment or searching for sales to save money.
A big part of the restaurant start-up budget will go towards restaurant equipment. This includes stoves, fryers, refrigerators, coffee machines, cooking utensils, and more. A big outdoor sign will help tell people where you’re located and when you’re open for business. A basic outdoor sign will set you back about $5,000, and a more fancy sign may cost thousands of dollars.
Insurance
Running a restaurant involves more risks than most businesses, but there are ways to minimize them and protect yourself against them. You can reduce the risks by saving your money, identifying potential problems, and taking out insurance coverage. The type of insurance you purchase will depend on your needs and budget. Learn about the types of policies and how much they cost to determine the right coverage for your business.
The cost of restaurant insurance will vary depending on the type of business and location. It is important to understand that some insurance policies do not apply to restaurants, and the cost will depend on your specific location and sales volume. A broker can provide you with an accurate quote. Choosing the right policy is essential to protect your assets and minimize losses.
In addition to liability coverage, restaurant owners should also consider getting Employment Practices Liability Insurance. This insurance will protect you from lawsuits that may arise from employee misbehavior. If an employee is injured or sued, you could be held personally liable for a significant amount of money. This uninsured liability could force your business into bankruptcy.
Restaurant insurance is one of the most important ingredients to a successful establishment. It will protect you from business losses and allow you to deal with problems as they arise. Commercial property insurance covers physical damage to your business, such as a fire, while general liability insurance covers bodily injury, property damage, and food-borne illness. Most city ordinances require restaurant owners to have liability insurance. Many landlords and banks also require you to purchase this type of insurance for your restaurant.
Crowdfunding
Before crowdfunding a restaurant start-up, you must have a solid business plan. Also, you should consider the needs of the typical crowdfunding investor, who may not have any business experience. It is also a good idea to share mock-ups and designs, especially for a new concept.
Traditionally, people raising startup funds for a new restaurant use their own money or a high-cost loan. But such risks discourage some people from following their dreams, so crowdfunding is becoming a popular new way to raise funds quickly. Crowdfunding involves collecting small donations from many backers, usually via an online platform. This model, originally popular with musicians and artists in the mid-2000s, has since expanded to include personal projects and charitable causes.
Restaurant crowdfunding is a simple concept, but it takes some effort to make a successful campaign. Taking time to film your restaurant’s concept, preparing detailed business plans, and posting on social media can go a long way. The average individual contribution to a crowdfunding campaign is low, so the challenge is in finding the right investors. However, with a solid business plan and a slick concept, crowdfunding can be a great way to secure investment for your new restaurant.
A common risk with crowdfunding is disgruntled investors. It is important to note that individual investors are more volatile than traditional lenders. They will have a personal stake in the restaurant, so it’s possible for them to become angry if the venture doesn’t reach its goals.