When you are running a restaurant there are many things that you have to keep a track of in terms of costing. The costs of running a restaurant are what surprises most people, and staying on top of the first year's worth of bills is what will keep you in business for the next few years. Most restaurants will end up trading insolvent within the first year because some of the costs of running a business get out of control. Here are some of the costs you will face as a start up restaurant. One of the key things most successful restaurant owners say is "Start-up costs are always far beyond what you imagined."
If you are looking for success the best thing to do is come up with a unique enough concept, with food that tastes great at a reasonable price.
Rent
The second you put your name down to open a restaurant is the second you start paying rent. This will include all the down time your business has while you are renovating the fit out, when you are sleeping, when your staff don't turn up on time. The best ways to avoid down time is a) get into your premises as fast as possible and b) try to run the restaurant 7 days a week for as many hours as you can. Rent is also one of the largest portions of a business' fixed costs, so you should be looking to minimise this as much as possible. See if you can negotiate better rent in return for renovating the place.
Food Supplies
When you start a restaurant, you have to buy all of your food supplies up front without selling anything. The key here is to not order all of the most expensive freshest ingredients first. You or your chef may want to start serving Asparagus Tips, but they are one of the most expensive vegetables, and they can spoil easily. Look for suppliers who are local who you can buy from regularly with small orders at first. If you can order frequently, the food will stay fresh, and you can order what you need for that short period of time. Once you get a feel for the food that will keep and is regularly a best seller, then you can start looking at discounts for bigger orders.
Fit out.
Everyone wants to have the best looking restaurant with the most expensive equipment. In most cases, however, a $50 pan will do the same job as a $500 pan, and when your chef chucks a tantrum and hurls the pan across the room at the sous-chef, you won't lost as much money. Try to keep the equipment purchases down, and aim for things that don't need a lot of maintenance. For chairs and other fixtures, the nicest equipment will always cost the most, so aim for something affordable. Make the place feel comfortable, but not the ritz. In the end people will remember your food, not if the bar stools were made from suede.
Licensing
There are a lot of regulatory hoops to jump through when you are running a restaurant, and most are unavoidable. Each local jurisdiction will have their own rules as to what you need. In the least you will need your health and safety certification.
Staff
Your second biggest marginal cost after supplies is going to be salaries. Each area has their own rules about paying staff. However your biggest task is going to be to make sure you have enough staff on to cover tables, but not so many that they are standing around. Also you should be looking to have as many junior staff as one or two manager can handle, but having an experience chef and front of house manager standing around during quiet times is crazy. You may have to get in and become a key member of the team yourself.
Marketing
The thing that you should look at allocating at least some budget for is marketing/advertising. In the least you should spend your time looking in the local papers to find journalists that would be interested in coming in for the grand opening. Take the time to work out if you want to place an ad in the local paper, or invite some local groups like the Rotary Club to an exclusive night in. You could spend the first week prior to opening just hosting small dinner parties, this would give you the chance to get your staff up to speed.
Creative Development is a cafe marketing agency based in Sydney. We develop a wide range of business growth strategies in multiple industries. We won't just build you a website, we will create a way for your business to grow. We created this article for our restaurant supplies partner.
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