What do you know about Starting and operating a restaurant

Reply Tue 17 Feb, 2009 06:46 am

When you begin your competition will not like it because every customer you get is a financial loss to them. If, say, there are 200 couples dining out on average per night @ $100 and there are five restaurants sharing this $20,000 and thus taking $4,ooo each then a sixth restaurant causes the take to become $3,333 each. That is not something they will accept with a gracious smile.

That doesn't tell the whole story. There is "gearing" to think about. If you don't think about gearing gearing will think about you.

If the fixed overheads are, say, 80% of the $4000 you are left with $800 profit (taxable). If the take goes down to $3,333 the profit goes down to $133. Negative leverage.

Investing your own money is not strictly business. It is betting. Ideal you borrow the lot from the bank. Thus you take your business plan to the bank and the manager will lend you all the money if he thinks it will work. With enthusiasm. It is what banks are for. Or what they are supposed to be for. If he doesn't think it will work he will tell you why and he will have the experience to know. You should take notice of what he says and if it's a she you should switch banks.

The ladies on here are using your question as an excuse to parade their delicate sensibilites and refined sophistication and they are fickle creatures on whom it is a grave mistake to base your plans.

It is a very difficult task to enter an established market at the best of times.

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Reply Tue 17 Feb, 2009 08:44 am
Spendius said:
"It is a very difficult task to enter an established market at the best of times."

I disagree. Feel free to open a bakery or coffee shop next to a pizza parlor. BUT don't open another pizza shop. Riding coattails with cosumer traffic in an area that brings in people looking for places to eat is a tried and true method. Hence, the successful food courts. Notice the exclusive offerings. No duplicate foods offered.

The big question today is IN THIS ECONOMY, should anyone open a business that relies on people having extra spending money? True, people are eating out - but for very cheap. Can you complete with $2.99 breakfasts? Many of the moderate and upscale restaurants are going out of business around here. It's sad.

Catering is sounding better and better . . .
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Reply Tue 17 Feb, 2009 06:31 pm
What about hunkering down?
Reply Tue 17 Feb, 2009 07:00 pm
being a kind of "chef-at-home" would require very little capital to start - of course , you'd have to be more than a short-order cook .
i understand that particularly in larger cities , some people now prefer to invite their friends over for dinner rather than taking them to an expensive restaurant - less expensive and more intimate .

see for more information :

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Green Witch
Reply Tue 17 Feb, 2009 07:07 pm
Have you read Kitchen Confidential by Anthony Bourdain? He can be rather vulgar, but he really understands the business. See his list about who should or shouldn't open a restaurant.

I briefly entertained the idea of being a sou chef and took a few restaurant business courses. This is what I remember: Most restaurants don't turn a profit until their third year. It takes that long to build up a steady following and for word of mouth to work. You need a core clientele to support you and not just newbies trying you out. Have three years worth of living expenses in the bank for personal and business use or...
find a venture capitalist who already has a few successful restaurants and wants to make an investment in your ideas and abilities. Gamble with his (or her) money as he will gamble on your talents. Don't borrow from friends and relatives. They will expect free food in return.

In the 1980's in was considered realistic to invest between $250,000 and $500,000 in the first year to get a restaurant off the ground. That's was assuming you were in a major city and paying an average rent. High end restaurants cost considerably more and a little cafe or a bakery might cost a little less.

There are probably websites devoted to this topic.
Reply Tue 17 Feb, 2009 07:13 pm
@Green Witch,
Nods to GW. but does this make sense in a very small town?

Some of it might.

(fan of kitchen confidential)
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Reply Tue 17 Feb, 2009 07:56 pm
FLASH! HELL FREEZES OVER! Johnboy not only understands one of Spendious' posts but also agrees. Hunker down. You have a lot of research to do, General, and the ecomomy now sucks. Figure on the end of 2010 to get this going if it goes at all.
Reply Wed 18 Feb, 2009 04:41 pm
realjohnboy wrote:

FLASH! HELL FREEZES OVER! Johnboy not only understands one of Spendious' posts but also agrees. Hunker down. You have a lot of research to do, General, and the ecomomy now sucks. Figure on the end of 2010 to get this going if it goes at all.

Thank you. I'm not in a hurry, but I do recognize that's sound advice, the research and all. That's why I'm here.

Everyone, thank you! I'll keep watching this thread for further inputs.

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Reply Thu 19 Feb, 2009 09:23 am
Having grown up in and lived quite a bit of my life in really small town America, the culture of the small town should be the starting point. If you are in a primarily agricultural area, your breakfast clientele will be mostly farmers looking for a place to congregate, have coffee and a doughnut or perhaps breakfast. Lunch should be of excellent quality re taste/appearance/presentation but will need to be very affordable--another argument for a very limited but popular menu. The clientele will be mostly shopkeepers, etc. who just don't feel like going home for lunch that day or bored housewives who just want a break from the daily routine. Of course if the wife doesn't stay home to cook, the farmer will eat out too.

If you have any kind of industry in your town where people drive in from neighboring communities to work, those folks will be your primary clientele but again the menu must be attractive and affordable or they'll just keep bringing their lunches.

Another real life example. Stinnett TX , population 1200, is the county seat of Hutchinson County TX and is 10 miles north of Borger TX, population 14000. There is a Dairy Queen in Stinnett that does pretty well selling ice cream specialities and an occasional burger, but everything is carry out. I've never seen anybody at the tables.

But the thing is, other than the few jobs at the courthouse, there is no business district and no jobs in Stinnett--everybody works elsewhere, mostly in Borger and that is also where they do most of their grocery shopping, etc. So the folks in Stinnett relate to Borger as their 'cultural and economic center', but folks in Borger don't think of Stinnett as theirs. People in Stinnett will drive the 10 miles to a restaurant in Borger, but folks in Borger won't drive the 10 miles to a restaurant in Stinnett. So the few attempts at a sit down to eat cafe in Stinnett have never made it.

Catering for a steady income would likely not be as successful in really small town America either. People look to their churches for big group occasions (family reunions, 50th anniversaries, weddings, funerals, etc.) and friends and neighbors pitch in to cook for such occasions.

In other words advice to do one's homework is essential. It could very possibly be do-able and profitable if somebody's is really motivated in that direction. A small town cafe would not be a good choice for somebody who needed a lot of mobility or freedom to do their own thing.

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