Sunday, August 19, 2012

How Much Does It Cost To Start A Restaurant?

This is the number one question I get asked. Unfortunately, there is no easy answer. It’s just like asking a car dealer, "How much does it cost to buy a car?" The answer is…it depends…

There are many different types of restaurants; quick casual, full service, take-out only, you get the picture. Are you going to lease or purchase? Are you building from the ground up? Is the space you are considering "restaurant ready" (that is, was it previously a restaurant?) Is the landlord offering a TI allowance?

The major expenses in any tenant improvement on a leased space includes, HVAC, exhaust hood, electrical, plumbing, and grease interceptor/trap. Next you need to consider the interior finishes that are available. This includes counter tops, flooring, wall coverings, furniture, ceiling treatments, etc. All of these can increase the cost of construction considerably. Another cost to consider is furniture.

What about equipment? Are you purchasing or leasing? Are you purchasing new or used? What about the POS system? Are you going to purchase or lease?

What is the size of the space you are considering? Does it meet your seating requirements?

You also need to factor in a contingency (construction cost overrun), working capital, initial food and beverage order, uniforms, insurance, workers comp binder, payroll training expensess, and many other miscellaneous expenses such as office equipment and supplies.

Don’t forget about lease and utility deposits.

You will also need to allocate funds for interior and exterioe signage.

Marketing expense is smoething you also don't want to overlook. You will marketing expenses prior to opening, and you should also develop a comprehensive marketing plan for the first 12 months of operation.

These are just a few of the questions you need to ask yourself and have answered before you can determine, "How much does it cost to start a restaurant?"

Based on my 30 plus years in the restaurant industry, I would estimate start-up costs to range between $50.00 to $225.00 per sq. ft. Once again, let me reiterate that these costs can vary greatly based on many factors. An average 1,500 sq. ft. restaurant can cost upwards of $275,000.00.

Before you start any restaurant development project, you must complete a comprehensive Feasibility Study. Our studies include Start-Up Capital Requirements and a complete financial projection package

Be sure to read our booklet, “How to Start a Restaurant.”


Thursday, August 16, 2012

Knowledgeable Suggestions


Skillful salesmanship helps your customers know what great choices your restaurant has to offer. Selling should never be considered a dirty word if your intent is to help ensure your customers have a great dining experience. Remember, people don’t go out to save money; they go out to have a good time. They certainly won’t take you up on every suggestion. Still, you want to make sure they are aware of everything the restaurant has to offer. If you know what your customers want, you can go a long way to ensuring they have a memorable dining experience.
RETURN TO RESTAURANT EXPERTS

Thursday, August 9, 2012

Too Many Choices


An enjoyable and effortless dining experience creates the good time your guests want. Logic says that the more choices you give a guest, the more likely they are to get exactly what they want. This could be true, but the process of making all the choices can be cruel and unusual punishment. Giving people unlimited choices does not enhance their dining experience. In fact, it may allow them to eat what they would eat at home and restaurants ought to be more special than that.

Even limiting choices leaves a lot for your servers to recommend; a unique house dressing, signature soups, and distinctive side dishes, Minimizing the menu makes it easier on the kitchen, faster for the service staff, and more enjoyable for the guest.

Tuesday, August 7, 2012

What! No Signature Items On Your Menu?


What are you going to be famous for? What are your guests going to tell their friends about? Signature items create an identity for your restaurant in the minds of your market. Advertising bombards people with hundreds of slick advertising messages every minute of every day. Not surprisingly, they tune most of them out. Signature items help you create an image in people’s minds and help them remember you when they make a dining decision.

Signature items do not have to be your most expensive menu offering. They do not even have to be related to your main menu theme. They just have to be special preparations that you do better than anyone else…..and that your guests will rave about.

What are you famous for?

Monday, August 6, 2012

Ten Steps - Taking Inventory


1.      Organize the storeroom

2.      Use pre-printed inventory forms

3.      Inventory Forms should be arranged in the same sequence as the storeroom

4.      It is easier for two individuals to take inventory together

5.      Food inventory should be taken at least once a month

6.      Bar inventory should be taken at least once a month

7.      In some smaller operations, you can inventory major items and estimate the rest

8.      Inventory the back bar in tenths of a bottle

9.      Inventory expendable items quarterly, or when expenses are high

10.  The more you take inventory:

·         The quicker you become

·         The easier it is for the chef and kitchen staff to find items

·         Purchasing becomes easier

·         You can better reduce/control thievery.

Return To Restaurant Experts

The Pricing Decision

Of all the business decisions a restaurateur must make once a operation is up and running, pricing the menu can be the most difficult. Rational pricing methodologies traditionally have employed quantitative factors to mark up food and beverage costs. But what seems at first to be a quantitatively based process actually requires consideration of a number of subjective factors, turning the pricing process into more of an art than a science. If pricing were a simple markup over cost, any calculator or computer program could set menu prices. Logically, price must cover your cost and return a profit.

There is a tendency to rationalize price as a means of returning an amount that will reflect a fair profit for the time, effort, and risk involved. Costs serve only as a starting point for the pricing decision. In order to remain in business, you must cover your costs. So if an item costs $3 to prepare and serve, your selling price must cover that cost.

The task of menu pricing is marked by doubts and uncertainties. Pricing decisions will be determined, in part, the clientele and the amount of business the restaurant will generate. Charging too much for a product or service will discourage purchases, while charging too little will reduce profit. The consumer sometimes sees price as an indication of quality of the product or service. A high price tends to imply quality, while a low price may be inferred, not as a bargain, but as low quality.

Business people are more comfortable using logical and objective criteria in the pricing decision, which is why we always want to begin by determining our cost to produce a product or service. While the cost process is objective and absolute, the pricing decision is not. Many indirect cost factors influence the price you can charge and how much the customer is willing to pay.