Starting a Restaurant: Cost & Tips

Instructor: Brianna Whiting
Have you ever wanted to start your own restaurant? Well if so, you are in luck. In this lesson we will learn some tips to starting a restaurant as well as some costs you may encounter along the way.

Starting a Restaurant

Meet Steve! Steve has decided to fulfill his lifelong dream of opening up his own restaurant. While he has the determination and the motivation, Steve does not know the first thing about really starting a restaurant. Luckily for Steve, he has a good friend that owns his own restaurant and has agreed to share some tips and explain what costs he may encounter along the way.

Where to Begin

1. The first thing Steve's friend told him, is that he needs a plan. He needs to know everything about his business. What will he serve? When does he want to open? What will he buy for his restaurant? The key to a good business plan is making sure you address who you will market your restaurant to, decide what your budget will be, and know and understand your competition.

2. The next step is to determine where the restaurant will be located. Obviously the better the location the bigger the crowd. The location is the key to success because it can decide whether anyone actually eats there. Steve knows that he has a large chunk of funding to spend on the location, so he will take his time finding that perfect place.

3. Steve's friend also told him he needed to not only decide his menu, but have it tested. A great way to accomplish this is inviting friends and family to taste your food and let you know what they think. This is also a great time to discuss what they might pay for the food so you can get a better understanding of what to charge.

4. Consider who will work at your restaurant is the next step Steve should take. Steve knows that he has very little knowledge about the industry, so the best place to start is finding a manager that can help him find the best employees and staff.

5. Steve will then need to finalize his funding. Because it can be costly to start a new restaurant, Steve will need to make sure he has enough money to cover any initial expenses like his equipment, money to cover the expenses generated by the restaurant, and lastly enough money to still cover any of his own personal expenses. When Steve knows he has enough financing to cover his expenses, he can then move on to marketing.

6. No one will come to a restaurant if they do not know it exists. The key to bring in a crowd is to market. Steve has decided to advertise on the radio, hand out flyers, and even incorporated the help of his family and friends to spread the word.

7. Equip employees and staff and make sure they know what their job is. This means providing training, handbooks, and making sure there is a recipe for every meal. This will help the staff to do their job efficiently and help Steve's restaurant succeed.

Costs for Starting a Restaurant

So what does it cost to start a restaurant? How much money should Steve allocate to his new business venture? Well, a recent survey suggested that the average cost of opening a restaurant was around $275,000 without owning the building and $425,000 if you did own the building. But what is included in that costs? Besides the building there are five essential costs:

1. Equipment Steve can't run a business without equipment. While the equipment can be pricey, looking for used pieces or pieces that might be on sale, can help keep the cost under control. Steve will also need to consider any technology equipment as well because a restaurant needs a system that will allow a customer to pay for their food, and he will need a booking system.

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