3 Things to Know Before Starting a Restaurant

The restaurant industry is notorious for its high failure rate for new restaurants. However that should not completely discourage you from opening one. While it is tough to start, a successful restaurant can be both rewarding and lucrative for the owner. With that in mind, there are a few things you should know before opening a restaurant.  

The Costs Involved

The opening capital required to open a restaurant is often underestimated. While many appliances can be bought second hand rather than new, there can still be expenses in refurbishment and renovations. According to restaurantowner.com the average cost is $494,888. This investment can be hard to acquire, and if the restaurant is unsuccessful can personally bankrupt you. 

Additionally even if the funding is acquired, there is an on-going cost of operation. With wages to pay, inventory to acquire, rent, licenses to obtain and marketing costs involved, if you don't have a steady stream of people coming through the door, financial trouble can creep up very quickly. Due to the range of unavoidable costs, it is crucial to have a solid understanding of what needs to be paid. Through proper planning and budgeting, as well as a cash reserve, the risk can be mitigated. 

The Experience Needed

As a restaurant owner, you will undoubtedly find yourself having to help out in all aspects of the business to ensure it is running smoothly. Outside of the core of the business, preparing and delivering good food, there are more multiple tasks that have to be managed. Taking care of the books and dealing with management issues may feel tedious, but they are essential to any successful business.  

If you have never worked in a restaurant, it can be hard to grasp how many things must be done correctly without fail. This includes ensuring it passes sanitary and health inspections, refining the cooking and serving process, and the long hours you need to work (open to close is not 11 am-10 pm when you have to prepare before opening and clean after closing). 
Without knowing the demands that come with the restaurant industry, owners can get burnt out, lose their drive, or become overwhelmed by the problems that inevitably come up. If you have no experience it’s highly recommended to work in a restaurant or partner up with someone with extensive experience.

The Social Effects

Since this industry is so demanding, many owners suffer from the social pressures that can arise from owning a restaurant. Relationships with family and partners can be pushed to the limit because of the long hours.  This can cause additional stress and frustration. Without understanding the sacrifice you’re giving before starting, you will most likely fail. The amount of devotion required for a restaurant to be successful is significant, and no matter how much you love the idea beforehand, reality can come crashing down.

However, if you are successful, a lot of profit can be made in addition to feeling a sense of accomplishment and pride. 

“Although we all love it, this business is very difficult. It’s a wonderful business, a great business, a satisfying business. It’s a lucrative business. But there are a thousand moving parts, and you need to be knowledgeable of all of them.

— Paul Mangiamele, president and CEO of Bennigan's