Restaurant Opening: StartUp Costs
The numerous cost-variables at play when opening a new restaurant can be daunting. The first step in effectively budgeting for a successful launch is identifying the “essential costs” vs the “non-essential” costs. Those words might seem general and ambiguous, but take the time to write them down on a piece of paper and walk through this preliminary process.
Within those two broad categories, there are three main areas to consider: Infrastructure, staff, and equipment. There are other variables that should also be considered, such as location, local culture, suppliers, etc; however, the three identified are the most fundamental. You must conduct a thorough cost analysis for each of these three categories and rigorously evaluate whether or not each particular falls in the “essential” or “non-essential” category.
A vital thing to remember when evaluating infrastructure-related costs is sustainability. You need to analyze what building situation will optimize your profits and limit unnecessary overhead. It may seem as though re-purposing an existing structure is always cost-effective; however, this will not be the case if there are hidden defects in the infrastructure or if the space does not allow your kitchen staff to keep up with demand. Important questions to consider are: does this property give my staff the requisite space it needs to work effectively? Is there seating capacity to meet the demands of our overhead? Has the structural integrity (plumbing, roof, flooring, etc) been rigorously verified? A safe rule of thumb when acquiring any property is to plan for unexpected expenses. Buildings decay, pipes burst and you don’t want to hold up your launch indefinitely because you did not have a contingency fund. Once you have identified something as an essential cost, cushion your estimation of its value with an extra amount of money to ensure you are prepared for unexpected expenses.
Competent staff are invaluable. No matter how amazing the food or venue are, unprepared or uncongenial staff can cause irreparable damage. The best way to ensure that your staff is up to the demands of the job is to offer them clear direction and respectful wages. A happy staff is an effective staff. To this end, it is paramount that your management team has exceptional interpersonal and administrative skills. They set the tone of your restaurant, and it is very hard to establish a positive atmosphere once a negative one has taken root. Put a substantial amount of energy into identifying leaders who will see you through to success.
Lastly, but in many ways most crucial, you must be discriminate about choosing what equipment to acquire. And it is important to note that “equipment” extends beyond the kitchen to every inch of your establishment. A dangerous mistake many new restaurateurs make is investing large sums of money in unnecessary items while undercutting those which are vital. In terms of kitchen hardware, your staff needs the essentials, not the frilly gadgets. Keep things simple to start with and add on as time and experience allow. In terms of front of the house, take the necessary time to identify the most economic means of acquiring and maintaining necessary resources. Everything from furniture and decor to menus and children’s crayons must be evaluated on sustainability and value. Particularly in the launch phase, each item needs to be evaluated on its degree of sustainability. Linens are an essential component to any decor, and there are means of acquiring the proper linens and maintaining their upkeep without investing in a huge inventory and means of laundering, such as linen services. When millionaire artist and curator Damien Hirst decided to sell one of his restaurants, he managed every detail of the sale, from the building to the matchboxes; he was thus able to recoup an amount well beyond the estimated sale of the building alone. No detail is too small within your restaurant to warrant less than your full scrutiny.
Use these steps to ensure a successful launch of your restaurant as well as means of preserving it.
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