Are you thinking about opening up a restaurant? You are in good company, as many people have a dream of owning their own restaurant or bar. Are you not aware where to start? You aren’t alone there, either.
The truth of the matter is: unless you have owned a bar or a restaurant before, you have no idea of the multitude of things that you will learn after you sail the choppy seas of the dining industry. Here are a few basic things to think about if you are among the many who believe that they have what it takes to own a restaurant.
Have A Working Knowledge of All Positions
There are folks out there who truly believe that because they enjoy eating at restaurants, that they could easily run a restaurant and make it successful.
There are other folks out there who believe that because they have been successful at other endeavors in life, and they like to eat food, that they could easily run a restaurant that will be successful, get a Michelin star rating, and have its own show on cable TV. Both of these kinds of people are usually dead wrong.
The idea that “anybody can work in foodservice” might be true of some particular jobs that are beginning rung jobs, but even then, not just “anybody” can do those jobs very well, usually.
This is the sort of thinking that is the basis for the “I could run a restaurant with one arm tied behind my back” way of thinking by someone who has never even worked in the dishroom of a restaurant in their lifetime.
Start Off Small, Work Your Way Up
If you truly want to be good at running a restaurant, small or large, you will work at some restaurants and get a working knowledge of both the back of the house (the kitchen) and the front of the house (the dining room).
These are two drastically different kinds of jobs that require hard work and finesse to master, on both sides of the table. A good restaurant owner, who really understands his restaurant and how it functions, knows how to do every single job on the premises, from dishwasher to bartender to head chef.
If you have enough money to hire a general manager that can say they have a working knowledge of all of the positions in the restaurant, then that is the next best option to knowing those positions yourself.
That said, even a good general manager won’t have the same kind of monetary interest that you will have as an owner of a restaurant, and they might decide to walk out at any point, leaving the owner in charge of the ship.
Another issue is: those kinds of managers, especially knowledgeable managers who are tremendously loyal and willing to sacrifice their personal life to make someone else’s business flourish, are incredibly difficult to find, and are also usually very expensive to keep on board.
Decide On Your Cuisine
You would think this is the easy part, but not necessarily. If you have previously been working as a chef, you probably have a better idea of what kind of food will be the best fit and will best showcase your own knowledge base or cuisine.
That said, depending on your restaurant’s location, this can become heartbreaking as you discover that your beloved favorite cuisine does not sell in a particular part of the country, or to a demographic that happens to make up the majority of your customers.
Finding a good menu combines the working knowledge of you and your kitchen staff, the kinds of dining establishment that will fit in to the area you will be opening up, the price points that will give you a competitive profit margin (while also fostering a vigorous amount of sales), as well as a well-rounded understanding of the people that you will be trying to sell your food to.
This is a complicated mixture that usually requires some trial and error to get right in that critical first year of operation. If you are too far off base on opening day, you might well end up another statistic in a sea of broken-dream restaurants that exist in the history of the USA.
Although putting your own personal best foot forward to the fickle public can be very scary, the most reliable kind of food to sell is usually the kind that you have the absolute best knowledge of making and serving.
If you have personal pride in your recipes, and you have the kind of self esteem that can handle armchair food critics, then you should be able to judge best what food goes on the menu of your restaurant without second guessing yourself, and making menu changes to constantly try to please everyone.
Secure Your Credit
Securing money to open is often the worst part of all, as it is in most creative endeavors. Finding out how to borrow money for your restaurant might be the one thing that is completely foreign to you, so it’s a good idea to employ the help of professionals to guide you on the very expensive road to making a restaurant up from scratch.
If you have been planning to make the leap from restaurant employee to owner for a long while, then you are probably very well vested in just how hard it is to scrape up the money to get started. If not, then you are in for a rude awakening (unless you happen to have a rich, generous patron in the wings somewhere).
If you are opening a fine dining restaurant with a full bar, the cost can average around $450,000 to open a “typically nice” establishment in the major cities around the United States.
You can choose a downscale dining restaurant, which will likely cost less, but no matter what, opening up a restaurant from scratch is an expensive business move, and will require significant capital to pull off.
Cover Your Legal Bases
The other scary and expensive part of opening a restaurant is the part that requires meeting public health codes, obtaining licenses and insurance to operate a place that sells liquor, and all of the multitude of different agencies that pop up and seemingly need to have their palms greased in order to even think about opening your doors.
Some parts of the US are easier than others to obtain all of the different licenses and inspections in order to operate a food and beverage business. For instance, Chicago is notoriously expensive to open a place in, (at one point in the past 20 years, it was reported that opening a place with a full bar in the city of Chicago required over 50 different license fulfillments in order to open your doors) but no matter where you go, there will be lots of licenses, certificates, and inspections that will need to be obtained, all at a cost. Here are some typical licensing fees for opening a restaurant:
- A business license
- An Employer Identification Number (EIN)
- Certificate of Occupancy
- A foodservice license or licenses
- A music license
- A resale permit
- A building health permit
- An employee health permit
- A seller’s permit
- A liquor license
- A dumpster placement permit
- A live entertainment license
and if you want to have a pool table…
- A pool table license
These licenses don’t cover things like getting the fire department to rate your building, getting dram shop insurance for selling liquor, and many other common hoops that new restaurateurs must learn to jump through in order to be in compliance, legally, in the state and city of operation. Of course, you can get a lawyer to help you be compliant, but that will be another fee you will need to pay, as well.
By visiting the federal government’s small business help website, SBA.gov, you can find a lot of helpful information on staying compliant with various laws, and on staying out of jail for tax fraud somewhere down the road, as well as other pretty essential things to know.
If you keep plugging away at it, and learning how to do it, and securing the cash to do it, you too can be the owner of a restaurant. Before you know it, all of these stressful things to worry about will be behind you, and you’ll be taking bookings from OpenTable, worrying about having enough salad forks for an upcoming banquet, picking up the payroll from the accountant’s office, and a myriad of other things that happen during a day in the life of a restaurant owner.