Restaurant Start up costs - Realistic?

[Mr D]

12.07% holiday pay, 12% (approx) Emp NI, 3% pension cost of payroll approx £100 per month if outsourced and paid weekly etc...

That's 12% emp NI over the lower earning limit?

 

[Mark Laurie]

That's 12% emp NI over the lower earning limit?

It is, anything over £162 pw.

 

[sminter1st]

You need to think about your opening stock costs. Are you going to be licensed for alcohol? If so you need a personal licence etc. I would say we invested the same amount again that we invested in the first year, and are just starting to not lose money after 2 years of being open, so you need to have money to fall back on, or another profitable business to support yourself/family until you start to make a profit. Make sure you include your own wage in your costings, even if you might not be able to physically take it for some time.

 

[Furqan721]

too much for a resturant business!

 

[Newchodge]

That's 12% emp NI over the lower earning limit?

12% is the employEE rate. EmployER rate is 13.8% on anything over £162 pe rweek per employee, subject to £3,000 annual employer NI allowance.

 

[Mr D]

Then that is a massive underestimate. Reckon that staff costs add at least 25% to hourly rate, more if you have to pay into pensions.

12% is the employEE rate. EmployER rate is 13.8% on anything over £162 pe rweek per employee, subject to £3,000 annual employer NI allowance.

So likely not as high as 25% to hourly rate then. The 13.8% only applies to effectively half or so of the wage of a full timer, lower for part timers. Possible that some part timers (say working weekends only) could be zero employer NI. ​

 

[Newchodge]

25% is a rule of thumb. It is not 12.07% holiday pay, 13.8% NI. It is intended to cover all the likely costs of emplloying someone, including sick pay, holiday cover, training, employer liability, and unexpoected costs. Add 25% and you have a rough guide to the cost and should not hit any nasty surprises.

 

[Mark T Jones]

If possible could you outline where you feel my costs are optimistic.

My knowledge here comes from the perspective of funding restaurant fit outs rather than operating or fitting them

However, all of your assets, from furniture to equipment seem to be on the low side, even for a small unit

I appreciate that there are low cost alternatives, from your point of view I would say you must look beyond the visual and into durability anD reliability (you might well have done this, which is great)

 

[Zuber Ali]

Not convinced 2 people in a café in busy times would suffice, local one where I pop in and isn't massively busy always got 10/15 sitting eating and one serving people in sit down area. 1/2 people cooking and cleaning, dishes etc One serving on counter, That's 4 and they always look rushed off feet. Never seen less than 3 in though even when quiet. People get half hour lunches, 45 mins or maybe even hour they want to be in and out asap and wont in my experience wait
Just my penneth worth, least you realistic with things some people have no idea.
No advertising budget either? Are you going to rely on traffic to come? Always worth mail drop do it yourself, put special offer on even if you don't make much once you get them in look after them and they wont go elsewhere

Thanks for the reply. It would be 2 paid staff plus myself and a buisness partner so 4 in total. no advertising budget will rely on traffic, in my experience i have found things like mail drop do not work in the area i am looking at.

 

[sminter1st]

You still need to count yourself and business partner as needing a wage at some point.

 

[Zuber Ali]

12.07% holiday pay, 12% (approx) Emp NI, 3% pension cost of payroll approx £100 per month if outsourced and paid weekly etc...

how does this work if i am employing part time staff working no more than 20hrs per week. presumably i have to pay holiday pay and pension, but dont need to pay emploters NI.

 

[Zuber Ali]

You still need to count yourself and business partner as needing a wage at some point.

why? - we have steady passive income from another investment

 

[Mr D]

Thanks for the reply. It would be 2 paid staff plus myself and a buisness partner so 4 in total. no advertising budget will rely on traffic, in my experience i have found things like mail drop do not work in the area i am looking at.

So 4 of you are going to cover the 77 hours a week between you.
Tight, may be very tight. May want to consider a couple of part timers too.

 

[Mr D]

how does this work if i am employing part time staff working no more than 20hrs per week. presumably i have to pay holiday pay and pension, but dont need to pay emploters NI.

You pay employers NI if they earn over that lower earnings level. £162 a week.
Subject to the NI £3k allowance mentioned earlier.
You pay pension if they sign up to the workplace pension scheme, which you have to offer all staff earning over a certain figure (£10k?).

 

[Mark T Jones]

why? - we have steady passive income from another investment

If you start giving free resource to your business, it wont be a business. Ultimately you will become slaves to a hobby

Whether you draw money or not, your business plan should reflect remuneration

 

[sminter1st]

It won't be a profitable business if you don't account for your working time/input, either for future income or trying to sell..

 

[Chris Ashdown]

oop's

 

[Root 66 Woodshop]

I can't believe you've not even factored in any form of Security!

Everything but the kitchen sink as they say...

 

[Tom Waits]

Yes, you'll need to pay employers national insurance at 13.8% and holiday pay at 12.07% and compulsory pension contributions (which go up annually). Don't forget to take 20% off your sales for VAT. Bare in mind business rates are going up aggressively over the next few years. Welcome to the business friendly Conservative government . Don't worry, the opposition will be even worse

Please also think about maintenance costs. Machines can and always do break down. Drains can and always do get blocked (you should think about getting a drain survey done especially since you say you're gonna have a deep fat fryer since inadequate drainage will cost you A LOT down the line).

You have quoted £1k for an accountant - that sounds really really low. For them to help with VAT returns, management accounts, company accounts, pension admin, payroll I would think at the very very least, 5-6x times that number.

Solicitor at £800 looks really low. If you are going to take on a lease, would have thought at least £2-3k for basic conveyancing.

Waste disposal £500? (could easily be £1-2k a year as, depending on your council, you have to pay separately for cardboard, recycling, food waste, other waste)

Will you play music? Music license.
Will you sell alcohol? Alcohol licence.
Will you train your staff in food hygiene? Please remember to allow that most staff will leave every 6 months and you'll have to start again with training.
Female toilet? Sanitary towel 'duty of care' disposal cost.
FOG duty of care disposal?

Will you accept card payments? Account for 1% of all sales to cover card machine rental/PCI/processing fees. Even if you take cash only, allow for up to 1% for banks to process cash deposits for businesses.

So sorry to be depressing.. this business is brutal... but think of that as a barrier to entry! If you have a good product and the will to work very very very hard... you can make it.

 

[Mr D]

Don't forget to take 20% off your sales for VAT.

Take 1/6th off your sales for VAT.
Its an added tax, add 20% to your pricing - what the buyer pays in VAT is 1/6th of the total price paid.

 

[Tom Waits]

Indeed, If the market allows, add 20% (or much more!) to your pricing. I already assumed they would charge the max price the market allows for the product.

 

[roxanneus]

Congratulations on your new business. It all looks good but 2 staff only? what if one gets sick? and 11 hours a day will be a bit difficult to find good good people to work that much.

 

[Hayley Woods]

if you are looking for the cheapest option for card payment facilities please drop me a message.

i work independently and hold partnerships with all the major providers, as i do not work on comms on the rates it means i can offer much lower prices than going direct.

i would love to help you out where possible.