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Start up costs for a restaurant are considerable when compared to other businesses and it can be difficult to start up for under $ 100,000. Let's look at some of the start up costs that you could be facing as you plan to open your restaurant and how you should go about carefully budgeting to make the most of your start up funds.
One of the main reasons for restaurant failure is lack of capital six months to a year down the track. The fact is that for most businesses revenue growth will be slower than expected and you therefore must keep capital in reserve to support yourself until you become established.
Set out a budgeting schedule for buying only what you need as your business grows and look into used options for better value.
The main expense are to do with getting set up in a suitable location. Costs can vary dramatically here depending on whether you rent, buy or even build your own place from scratch. Then you will have decorating costs as well as ongoing utility expenses to think about.
If you are looking to lease a space for your business then now is a great time to do so and you should be able to negotiate a good deal.
Compliance costs can be surprisingly high so it is important to do some preliminary research so that you know how much it will costs to get the licenses and permits that local authorities require.
You will also require several insurance policies, health and safety equipment and you may need the services of a number of professionals and consultants.
The list of equipment requirements for a restaurant is extensive and ranges from commercial cooking and ventilation equipment, freezers, refrigerators and other kitchen supplies.
Outside of the kitchen you will need to kit out a full dining room with tables, linen, plates and cutlery just to name a few items.
Profitable restaurants usually implement computer systems that maintain efficiency and owner control. From payment collection and processing, to security systems, you should anticipate costs in advance.
Marketing costs can be considerable if you want to hit the ground running. Think about brand development, menu design, advertising options and signage for your building and what they will cost you.
Visit a few restaurants and make some notes of all the little things that you see that you may have overlooked.
From toilet paper to staff uniforms, your list of expected restaurant startup costs will depend on the size of your operation, your theme, seating capacity and your target market.
Calculating startup costs is one thing but you should also think about the ongoing operating costs which involve purchases of food and supplies, rent, payroll and advertising expenses. These costs will be incurred whether your tables are full or not so you need to have capital set aside to cover them if cash takings are lower than expected.
Look into a range of financing options and make sure that you have secured lines of credit well in advance for when you need them.
Get you business off to a great start by ensuring that you are fully aware of all the restaurant startup costs that you will be facing and by making sure that you have a plan in place to budget for them.
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