Originally Posted on FoodableTV - By Doug Radkey 07/12/2016
Going through the motions of starting your first restaurant requires an incredible amount of time and financial management. Discovering opportunities to save on both will effectively result in less stress and a generous opening day budget.
Before officially getting ‘started’, ensure that you complete a feasibility study, concept development plan, and business development plan. Although developing these can be time consuming (approximately 30-45 days) it will allow you and your potential investor to avoid financial burden.
Feasibility study | This study informs you whether to move forward with your dream restaurant / bar or if you should re-evaluate your idea to fit and support the specific market space and start-up budget.
Concept development | This plan gives your proposed venue an identity with visual design components and a list of potential suppliers and contractors that can execute your vision in addition to the framework for your menu and the equipment that's going to be required.
Business development | Outlines your action plan; including the details of your restaurant, the permits you will need, the time-frame for completion, operational strategies, marketing strategies, and the project’s overall budget and financial projections.
During start-up you want to save time, but you don’t want to cut corners or take uneducated shortcuts leading to future complications. Utilize and trust your developed plans and any expert advice.
Supporting Cast | First and foremost, don’t try to do everything yourself. Whether you’re building a small bistro or a large full-service 150 seat restaurant, you want to build a supporting cast and delegate tasks based on each individual’s strengths and weaknesses. Pro Tip: Work with someone who has ‘been there, done that’ in terms of starting a restaurant, for example a consultant, development agency, or close friend to be used as a mentor.
Checklists | Complete a start-up milestone checklist with S.M.A.R.T time-frames for completion, in addition to listing who is responsible, and the budget for each task. Pro Tip: Hold weekly meetings and consider using an online project management dashboard to promote effective communication within your start-up team.
Money management during start-up is vital. Numerous start-up restaurants overspend during this stage leading to a delay in opening, zero to minimal funds for marketing & advertising, minimal funds for training (paying) staff, or a combination of the three.
Hire an Accountant | Prior to signing a lease or hiring a contractor, build a relationship with a trusted accountant. This is your opportunity to stay on-top of budgets and control your spending. Pro Tip: Hold weekly meetings with your accountant to review, adjust, and then communicate the financial status with the entire start-up team.
Lease negotiations | First, always review your lease with a lawyer. Look for additional concessions, for example: ‘free rent’ opportunities (for renovation period + first operating month), lease transfer opportunities (in case the restaurant fails), and negotiate other property maintenance & fixture costs (ex. air ventilation systems). Pro Tip: When seeking a new location, ensure it is feasible to be zoned for food service operations prior to signing.
Permits & licenses | Receive all of your permits and city requirements by visiting your municipal clerks’ office. Review federal, regional, and municipal requirements for operating a commercial food service business. Receiving a surprise infraction two weeks prior to opening can be costly and detrimental to your start-up. Receive each permit’s time-frame for approval, its initial fees, and any ongoing or future fees. Pro Tip: Work with a trusted architect who understands commercial food service requirements and building codes to complete drawings that will be quickly approved by your municipality.
Contractors & vendors | Ask nearly all experienced restaurateurs and most will say their largest headache was contractors. The most ideal situation is to hire an experienced general contractor that will lead a team of plumbers, electricians, mill-workers, HVAC professionals, and fire safety specialists through the project while managing the renovation budget. The best practice is to receive 2-3 or more quotes based on a specific and similar 'job scope' while measuring their level of experience, value, references, and overall cost. Pro Tip: Though you're likely on a tight budget, don't always go with the least expensive option. Sometimes, it will lead to higher costs or project delays later on.
Kitchen & Bar Equipment | A key tip to remember is that not all of your equipment needs to be brand new. Consider used prep tables, deep fryers, and lightly used refrigeration & freezer units. Depending on your start-up budget, consider equipment leasing opportunities versus purchasing upfront. There are pros and cons to this strategy in terms of assets, depreciation, and tax write-offs so it is best to work with your accountant. Pro Tip: Ensure your menu concept is developed and a chef is part of the kitchen & bar development process to ensure maximum efficiency in terms of food & beverage production.
Menu Development | Customers today are seeking smaller menus; ensure that you engineer a small menu with re-purposed raw ingredients; leading to less waste, easier training, and reduced start-up inventory costs. Pro Tip: Discuss payment terms with your food & beverage suppliers and don’t be afraid to ask for samples to reduce start-up training costs.
HR Management | Refrain from hiring your entire kitchen and front-of-house team until you have a very clear start date. This is likely 3-4 weeks prior, allowing for effective training, and for administrative tasks to be completed. Hiring your team too early will lead to increased administrative costs and time in potentially needing to re-hire. Pro Tip: Holding a job fair not only assists in time management, but if you execute it in an organized manner, it also works as a marketing tool to develop community awareness for your new restaurant.
POS Systems | Ensure you set aside a budget for a point-of-sale system prior to opening. It is surprising how often this is overlooked. Pro Tip: Look for speed and user friendliness plus a detailed revenue, staffing, & inventory report system, customer service support, and hidden costs for future POS updates.
Effectively using this list will undoubtedly save you and your start-up team hundreds of hours and thousands of dollars in unexpected costs; leading to a larger and speedier return on investment.