Opening a restaurant on paper does not make sense. Restaurant owners are notoriously willing to sacrifice a lot to make their business succeed, and it’s an industry with famously low margins. The bare facts are not what it’s about, but there is a desire to open a restaurant. It is a life goal for many people. But they are fuelled by their love of food, by the pleasure it affords and the pleasure of good hospitality.
How much does it cost to open a restaurant
There are many variables when it comes to the cost of opening a restaurant. They can run anywhere from five figures to eight figures, or more, if your restaurant is particularly high-end. Usually, your biggest expense will be your premises.
Firstly, in addition to the rent or mortgage, you’ll also want to factor in some extra fees, such as for the selling or letting agent and legal professionals. It’s a good idea to save out sums for other professional advice services, such as further solicitor or lawyer fees (you could need planning permission, architects, engineers, designers, tradespeople or your accountant, and fees for permits, fire certs and licences).
Where to secure funding to open a restaurant
Very few restaurants start profitably. The first year can be pretty tight, and it can take a long time to make your upfront investment back. Contingency funds are vital for at least six months, and you will be setting out sales growth and targets in your business plan for investors to view. Here are typical ways to obtain funding:
Self-funding
Many people have more assets, including savings, retirement funds, property and vehicles, than they realise. If you need to self-fund, then you may have to sell an asset, or it may be able to be used to secure a loan. Starting, some smaller businesses can cost anywhere from around £10,000 to £30,000, so it may be achievable for you.
Family and friends
This can be a tricky one, and if you do go ahead and do this, you want to have firm professional contracts and social agreements about what this means in place first. Now, business disputes are not worth losing family or friends over, but they happen often.
Business partners
If you’ve got the dream but not the cash, is there someone in your network who does and would make a good partner? Or vice versa. It’s not easy to find a good partner, but if you do and you agree on what your individual responsibilities are, this model can really work.
State supports
There are many supports for small businesses and start-ups, administered through various organisations and authorities. There is often additional support for women, minorities and veterans in business as well. If you are in the US, your SBA (US Small Business Administration) will be a good person to contact, in Ireland, it’s your Local Enterprise Office, and in the UK, try the FSB (National Federation of Self-Employed & Small Businesses).
Advertise for and hire staff
With labour shortages making headlines across the world, any restaurant owner or manager will know it’s never been harder to get staff. So it’s a competitive market, and first, you need to firm up an attractive package and proposition.
Create your menu
One of the most joyful parts of opening a restaurant is developing a memorable menu. If you’re already in the dreaming stage, you may have a general idea of the direction you want your food and beverage offering to go and who your local suppliers will be. So now you have to define it for yourself by cooking and costing dishes to appear on your first ever menu.
Knowing your menu concept will inform your architect or interior designer’s brief for food prep, storage and service, so don’t leave this too late.
Schedule in time for regular menu engineering
It’s unlikely that you will nail your first menu for the two Ps: Profitability and Popularity. Tweaking a menu to get to this point takes time and a few iterations, and it’s never a closed book.
Draft your restaurant marketing plan
If people don’t know, then it’s no use serving the best food and the best drinks. Unfortunately, build it and they will come is the exception, not the rule. In the beginning, you need marketing to get new customers and then to keep getting new customers with regular, but not too regular, communication.
Launch your website and social media channels
Building a website can be costly and time-consuming. However, it does not need to be so. Securing your social media handles is an important step and should not be left to the last. Once you’ve confirmed your restaurant’s name, do a virtual land grab on the key channels: Facebook, Instagram, Twitter, LinkedIn, TikTok & YouTube. You may not use them all, but you should have them rather than a stranger using the same name as you. Of course, there are a million and one ways you can do social media marketing for your restaurant or takeaway.
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