For many, opening a restaurant is full of practical considerations, dollars and credit, spreadsheets and projected earnings. For others, it’s purely an exercise in creative vision, cabinetry and fixtures, dress codes and award-winning dishes. The ideal restaurateur will be able to straddle a line between the two; better yet, she’ll be able to hire the right people to manage each side of that line throughout conception and, equally as important, implementation.
Building a restaurant with a beautiful dining room without the ability to recover your investment is only asking for heartbreak. According to a report by CNBC, 60 percent of restaurants don’t make it past their first anniversary and 80 percent fail before five years. How can you avoid the pitfalls?
Have the Right Mindset From the Start
Go into your first restaurant venture knowing that you have your work cut out for you. Read books by people who have worked in the restaurant business to see what you’re up against. Too many aspiring restaurant owners fail because they want to run a vanity project. The story is worn: You love to entertain, you love to dine out, and your friends have always told you that you should open a restaurant of your own. You want to waltz around the dining room on a busy night, schmoozing with the clientele and popping (comped) bottles. The reality is that, if you’re not working during the busy times, you probably won’t want to be anywhere near the dining room; it would stress you out too much. And you certainly wouldn’t want to give away alcohol by the bottle. You’ll need to watch your incredibly tight margins so the restaurant will stay afloat another week. This isn’t to scare you off. Many restaurateurs find their lives rewarding beyond imagination. Just be prepared to work hard and to always have an eye on the ridiculously narrow profit margin that successful restaurants provide.
Consider Labor Costs
Your labor costs will vary depending on which state you’re in and what type of service you provide. In many states, the hourly wage for front of house staff is under $3/hour. They make the rest of their wages in tips. In other states, you must pay a higher minimum wage; servers and bartenders still make tips. Do you want to open a full-service restaurant or do you prefer the counter service model? It’s easier to work with less staff when you run with counter service than full service, but many restaurant owners want the prestige of the sit-down framework. With the back of house staff, you’ll want to pay competitive salaries to attract better talent.
All Ages or Over 21?
This is less for restaurants and more for bars, brewpubs, and the like. Often, the best way to make this consideration is to base it upon whether you have children or not. (Or: Do you plan to have children?) A restaurateur will spend most of their life (especially during the early years) at the bar or restaurant. Do you want to be able to see your children? They won’t be able to come see you if you work in an over-21 venue.
The new test for your restaurant design is: Will your customers want to take pictures of your space and post it on their social media? (And not because they’re disgusted, either.) Use rigorous selection for the people who help you with this part of the restaurant; it might be advisable to hold out for a designer with an interior architecture degree. Sometimes it’s not simply enough for the food to be good. If the space doesn’t look good, too, people won’t want to spend time there.
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