Nervous prospective new restaurant owners. Help!!!

Discussion in 'General Business Forum' started by Ceri Unwin-Springett, Jan 9, 2019.

  1. dotcomdude

    dotcomdude UKBF Regular Full Member

    249 31
    You've had lots of suggestions and advice in your two threads about this today. Do you mean you don't like the advice and suggestions given?
    Posted: Jan 10, 2019 By: dotcomdude Member since: Jul 27, 2018
  2. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    10,267 2,079
    Scan the accounts and email Byre who has a lot of business skills and he will advise you on what he makes of them

    Can you confirm you are talking to commercial solicitors and not family ones who tend to undertake all things apart from commercial. you need experts in commercial law
    Posted: Jan 10, 2019 By: Chris Ashdown Member since: Dec 7, 2003
  3. WeddingsInWales

    WeddingsInWales UKBF Contributor Full Member

    43 20
    I run a castle B&B and it struggles to make a profit because the expenses are rather large relative to its size (rooms etc). It employs about 30 people - up to 40 in busy periods. Renovation work is high (it was a derelict castle and is still being brought back to life). It needsd to gross about £4100 day (inc VAT) to break even. Yes, my VAT bill is about £200k! After 18 years it just about makes a profit after all staff costs (I just deal with the marketing aspect so am not 'hands-on', I do not now meet customers asa I live in England and the Castle is in Wales, and I have never worked in the bar or kitchens etc. The one element that became large, without which it would not work at all, was weddings. Over 100 a year now. Sounds great, but turnover is vanity as they say and the marketing aspect takes up a lot of my own and team members' attention to keep it all going.

    When you are hands-on and busy-busy in the business doing all the relevant tasks yourself, you are not so able to stand above the business and work out what needs doing to make it work. Michael Gerber's E-Myth is an essential book to read before you start up your own business.

    Marketing and knowing your market is key. Also if in a coastal town, how seasonal is the trade? You could have periods when it is slack. Our own Jan Feb March period in the snow covered mojuntains of the Brecon Beacons used to be a real killer (tax bills and VAT payments delayed etc), until I devised a Winter Wedding package to fill these months better.

    A press article I read recently commented how restaurants now are struggling, different ones opening and closing all the time. If Jamie Oliver is struggling, be careful. Wage increases, Business rates, all going up (our business rates doubled last yr, literally doubled). Caution is advised. You are likely to end up working all hours, doing all the work yourselves to make it pay, not so good if looking after a young family also, and then overlook 'working on the business' opportunities because you are too busy working IN it to see what needs doing TO it.

    If you go for it, take a day away from the place for one day a week and use this for strategising and marketing!
    Posted: Jan 11, 2019 By: WeddingsInWales Member since: Dec 13, 2018
  4. Ground Investigator

    Ground Investigator UKBF Newcomer Free Member

    26 5
    I'm a Ground Investigator just reading this thread to get a flavour of how different businesses stack up in terms of costs and I am intrigued by your post, The Byre. My interpretation of your analysis would be that £80k net profit + £20k fixed and variable costs + £50k total wage bill would total £150k gross profit. Taking your assumption of food & drink costs being 1/3 of cover price I therefore interpret that as meaning that gross turnover inc VAT would be (£150k) x 1.5 x 1.2 = £270k which would then equate to £30 per cover per day. Please do shoot me down in flames if I have misunderstood the calculations but this would be a little nearer to reality wouldn't it?
    Posted: Jan 13, 2019 By: Ground Investigator Member since: Jan 4, 2019
  5. Newchodge

    Newchodge UKBF Big Shot Free Member

    11,920 3,091
    This means that you should get your own professional report on the current state of repair and an agreed schedule of what needs doing before you take over. Taking it on then finding the whole building needs a new roof and re-wiring would be annoying!
    Posted: Jan 13, 2019 By: Newchodge Member since: Nov 8, 2012
  6. The Byre

    The Byre UKBF Ace Free Member

    8,522 3,296
    You are of course quite right! I did it in my head and obviously my head needs a pencil and paper!

    Though the gross turnover with VAT would be 360, so £36 cover price TO per table. So that's over £1000 TO every day, to come anywhere near that £80k net profit.
    Posted: Jan 13, 2019 By: The Byre Member since: Aug 13, 2013
  7. Ground Investigator

    Ground Investigator UKBF Newcomer Free Member

    26 5
    I allowed for the VAT - that was the x 1.2. So £270k includes the VAT. It's about £900 per day on the basis of the 300 days assumption.
    I've been amazed by what I am reading on this thread, particularly from Weddings in Wales and the general lack of profitability for restaurants.
    The industry seems to offer a 'hit or miss' type of opportunity - get it right and there is profit to be made or get it wrong, or even just have some bad luck and you don't make it.
    My advice to Ceri would be don't feel you have to make a decision until you are satisfied that you have been provided with all the facts and accurate evidence regarding the past performance of the establishment in question.
    Posted: Jan 14, 2019 By: Ground Investigator Member since: Jan 4, 2019
  8. Noah

    Noah UKBF Ace Free Member

    1,127 282
    This is all too true in the retail-food-and-drink business these days. The punitive effect of increased rates implemented by an incompetent and possibly crooked VOA have been that piece of "bad luck" for many establishments.
    Posted: Jan 14, 2019 By: Noah Member since: Sep 1, 2009
  9. Mark T Jones

    Mark T Jones UKBF Big Shot Full Member

    3,025 858
    Whilst these are considerations, the truth is that little has fundamentally changed. The majority of indie restaurant owners enter what is a capital intensive and fickle sector with no understanding of the industry and a set of well-intentioned but ultimately flawed ideals.

    'We'll employ a top-quality chef' is typical of the terrifyingly naive start-up claims we see. OK - how will you find/train/retain/motivate said chef? What will happen when he/she is on holiday/in rehab/has stormed out after kicking the dishwasher?
    Posted: Jan 14, 2019 By: Mark T Jones Member since: Nov 4, 2015
  10. Noah

    Noah UKBF Ace Free Member

    1,127 282
    Yes, you're right there too - see it with depressing regularity from both customer and supplier perspectives.

    However, problems caused by bodies like the VOA should not be part of the burden that such businesses have to shoulder, because businesses are effectively powerless to do anything about such agencies.
    Posted: Jan 14, 2019 By: Noah Member since: Sep 1, 2009
  11. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    10,267 2,079
    What exact problems are you saying are caused by the VOA (Valuation Office Agency), the rateable values are set by standard calculations to all commercial premises and normally defined clearly on the first page of any advert for a building

    Agreed there have been some tremendous adjustments over the last few years but how does that effect a new company where its presumably settled
    Posted: Jan 15, 2019 By: Chris Ashdown Member since: Dec 7, 2003
  12. Noah

    Noah UKBF Ace Free Member

    1,127 282
    It's complicated, but in a nutshell, for licensed premises :

    . Rateable value is based on "fair maintainable value" (FMT) which is calculated from annual turnover, "etc."

    . The VOA does not employ qualified property surveyors itself, instead relying on such bodies as RICS and BBPA to tell it how to calculate FMT

    . The BBPA is run by the big pubcos (Punch, Enterprise, etc.) to their benefit, and possibly entirely accidentally, to the detriment of non-pubco (i.e. freehold) pubs.

    . Plenty of evidence that the BBPA and RICS have been in cahoots for many years to "fix" valuations and rents of pubco pubs.

    . Plenty of evidence that the "advice" given to the VOA has resulted in much higher FMT valuations for freehold pubs than pubco pubs.

    In summary, the VOA has been used by the pub chains to stitch up freehold pubs.

    My post was in response to a general observation about the challenge of running a food-and-drink retail business.
    Posted: Jan 15, 2019 By: Noah Member since: Sep 1, 2009