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12 Tips to Opening a Restaurant or Bar
12 Practical Tips on Opening a Restaurant or Bar
Dear potential independent restauant owner. Here is 50 + years of accumulated experience handling thousands of restaurant and bar operations talking to you:
I’ve seen the successes and I’ve seen the failures. I’ll never tell someone they cannot make it in the restaurant/bar business. There is always the person who opened under-funded at the worst time and at the wrong location who now has 15 stores in 5 states. But these are the rare exceptions.
What I will tell you is that the following tips will increase your chances of success.
1) Look for a deal.
There are plenty of opportunities out there. There are under-utilized operations, near failures due to mismanagement and new places being built all the time. Some landlords are difficult and others are helpful. You increase your chances of success when you shop for a good opportunity.
2) Don’t pay too much.
It sounds simplistic but I see all too often people who pay more than the proposed operation can ever support. Or people who underestimate the cost to build or do not stay within budget. This can doom an operation before it starts.
3) Have enough start up money.
Banks get queasy when they see any business venture that is overly leveraged. You should have adaquate capital of your own to fund both business purchase and working capital at the beginning of operations. By mortgaging everything and being under-funded you increase the risk of failure.
4) If it is your first restaurant, start small and build up.
I would much rather see a line out the door of a successful little Bistro than empty tables at a 250 seat restaurant. You can always expand, sell, or open more locations. What you learn in that small operation will increase the chances of success in your next endeavor.
5) Have a business plan.
You should have a good estimate of what your expected sales will be. You should know what your food and beverage cost will be. You should know what fixed costs such as utilities, note payments, insurances etc. will be. What is the seating? How many times do you expect tables to turn for lunch? For dinner? What will the average lunch ticket be? Dinner ticket? It is not unusual to take a new owners projected estimated sales and show him or her that their projections are unrealistically high or sales too low to make a profit.
6) Know your customer.
Know the market you will be appealing to. What can they afford. What kind of food do they like. Does the intended decor match your markets expectations. Don’t build a Cadillac and expect Chevy owners to buy.
7) Don’t expect to buy a restaurant or bar and then sit back and let the managers handle everything.
It rarely works that way. In addition to spending many hours overseeing everything, you will need to know enough about food and/or bar operations to keep managers and other employees honest. Once they realize that they know more than you – you become vulnerable.
8) Don’t expect all your drinking buddies to show up every night at your new bar.
Even all your casual acquaintances will come to your opening but after that you will probably be on your own.
9) Iron out all your problems and procedures before your grand opening.
Stay low key as the new owner until you have a firm grip on how your new restaurant or bar will operate. Go through some dry-runs, how to serve properly, how to handle complaints, etc. One of the worst things you can do is to have a grand opening in disarray. People may never come back.
10) Be careful when buying into a national or regional franchise.
Many times the franchise agreements are heavily weighted towards the franchisor and some franchise concepts do not make as much money as you may think.
11) Get set up properly for tax purposes and meet with your accountant well before you sign any purchase agreements.
12) And the best tip of all – get an advisor-accountant that knows the restaurant/bar industry.
Someone who works exclusively in the restaurant/bar industry is the best choice. That person will save you time, trouble and big $$$.
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