How To Open Your Own Restaurant

How To Open Your Own Restaurant

Many people have asked me over the years, "what do you think Nick, I would like to open a restaurant." I would reply, what do you know about the restaurant business? Almost all of them said they knew nothing about the business but they knew that they could make a lot of money owning and running a restaurant.

This is one of the biggest myths that have been circulating in the restaurant industry for years. Okay, you don't have to know anything about restaurant startup or buying a restaurant or restaurant food cost, but you can hire a restaurant guru who knows how, and he can hire employees, hire a bookkeeper and manage everybody and everything. Voila! Now you're in business. This is great if you have a lot of money to spend like Donald Trump. But if you have the passion to get your hands dirty and operate it yourself and maybe with a family member who is enthused about it as you are, then you must begin with "restaurant planning."

You might think that opening a restaurant is an easy task. Such thinking may account for the reason that so many people try to turn their dreams into reality every year. But dreams can become reality only for those who are willing to acknowledge that along with reality comes hard work! It takes hard work not only to run the new restaurant, but also to plan a successful new venture.

The National Restaurant Association keeps no statistics but in some states like New York's Restaurant Association reports that in their state 75 percent of all restaurants fail or change ownership within five years of opening. Thus, many dreams are shattered, perhaps because prospective restaurateurs are uninformed about what they are getting themselves into. Many hear and believe only the myths about the restaurant industry. Somehow, the realities of the business remain unexplained or ignored.

First and foremost! Like they say in real estate. Location, location, location. Do your homework. Research the demographics. Is your area a suitable location for your restaurant to be a success?

Planned construction and renovation. Call your local zoning commission, village, city or county and ask them if there is going to be any planned construction or renovation in your area for the next two years. If they say yes, find another location because your first two years in business are crucial to your business surviving. You don't want to start off broke.

Consider what will be your menu. Will you be serving full course meals in a casual dining restaurant, or hot and cold sandwiches like in an art café restaurant? In other words, what type of restaurant do you want to operate? A full service restaurant that serves steaks and seafood, is going to be a more difficult venture because there's a lot of preparation to be done like preparing salads, soups, entrees, etc. Whereas a restaurant that serves portion control meals like hamburgers, hot dogs, hot and cold sandwiches, will have less preparation and its food cost will be lower.

Just because you're a cook or a chef does not mean you're going to be a success in this business. Make sure you have a good CPA and an attorney to take care of the business that you do not want to do yourself. After all, you are busy in the kitchen, bartending and greeting your guests. Bookkeeping and legal work should be assigned to someone else you trust. I just said "trust". Keep that in mind. I had a successful restaurant and bar business for 17 years that I bought from my father. I was young and didn't question my father's choice of a CPA because my father owned several restaurants, and that his CPA was his friend also. Lo and behold, after I took over the business, I was getting billed every month for a balance sheet fee that I didn't need. I was a small operation and didn't need this extra expense.

Also, it's important to keep your operating expenses at a minimum. You're always going to have your fixed operation expenses such as your electric and telephone bills, but other expenses like advertising can be very costly. There are always salesmen that will be calling on you especially when they find out you're the new kid on the block. They will try to sell you snake oil, even though it's not on the menu. Try advertising in your local newspaper if you are operating in a suburb or village. Join your chamber of commerce and get involved meeting other business people in your town. Word of mouth is your best advertising. Hope this helped. Good luck.