Thinking of opening a restaurant, where do I start?

[Jwan]

Hello everyone

I'm thinking of opening a restaurant in partnership with Mum. We've got around £50K.

The building we're looking at isn't currently a restaurant, so planning permissions need to be submitted, new kitchen needs to be fitted, new seating area ...etc ...etc.

I'm a little overwhlemd at the moment. What would be the best place to start? Do I start with filling in the Change of Use form for the building to get permission to turn it to a restaurant? Or are there more useful points to start from?

We have the concept of the restaurant pinned down, but it is the other stuff we're new to.

Any pointers would be greatly appreciated.

 

[Chris Ashdown]

Don't do anything or sign any contracts until you have talked to the local planning department for a informal talk about the project and found out if they see any problems

To fit out a new restaurant is a very expensive thing even if you lease secondhand kitchen equipment

It's not something anyone without experience should ever attempt, you need in depth knowledge of the trade before you consider running a restaurant

If you must go ahead then read as many books about it as possible before you do anything, and make a spreadsheet of all the items you would need to buy for cash including things like Phones, Tills, Insurance as well as the rest, you will be surprised how much it costs

 

[Jwan]

Thanks Chris, that is good advice. Yes I'll book a session with the local council and discuss it with them.

Any good books you'd recommend?

 

[Chris Ashdown]

You should find your local council will run a enterprise agency where you meet with mentors who talk through your projects and help in many ways for free to start-ups

 

[Deleted member 283937]

Good advice from Chris above.
Make sure you can get A3 planning before you go ahead with anything. Let the landlord know your intensions.
Putting in a kitchen and extraction is very expensive. Extraction is a planning issue so speak to the council about this.
Make sure you really understand how the business stacks up financially.
My concern is 50k is nowhere near enough of a budget.
One pitfall I see a lot is people who sign the lease but run out of money before they open their doors. The worst possible scenario as you could loose all your money and never have a restaurant.
Proceed with extreme caution.
Best of luck with it.

 

[The Byre]

It's not something anyone without experience should ever attempt, you need in depth knowledge of the trade before you consider running a restaurant.

Running a restaurant is not the same as being the head chef. It is not the same as running front-of-house and it sure as hell ain't the same as busting tables.

12 random tips in no special order -

1. Get a good chef and a good number two.

2. A restaurant stands and falls with the quality of the food. If a chef thinks it's OK to serve frozen, tinned, ready-made anything (including such things as sauces, mayonnaises and bread) "let him not darken thy doorway, nor violate the threshold."

3. Never hire a chef that drinks heavily or smokes.

4. If the menu cannot fit on one piece of paper, it's too long.

5. Buy the value ranges from Nisbets and avoid Cater-Quick.

6. Old equipment is usually at the end of its life.

7. Work in the trade first - as Chris says, experience is everything.

8. If you decide to run a restaurant, then running a restaurant is your job. That means you cannot be busting tables, sticking your nose into cooking pots, plating-up salads, or cleaning the kitchen.

9. Where you buy your food decides how good the food you serve is going to be. That means no Brakes, no Cash & Carry and lots of visits to farmers, farm markets, small holdings and specialists who carry such items as live crabs, fresh poultry - stuff like that.

10. Lunch is also a meal and a great way to get rid of stuff you failed to sell the night before.

11. Stainless steel prep bowls - dozens and dozens of them! They double as pots (even for induction hobs) and as lids, as well as for prepping!

12. Gas means having to have a larger air extraction system and that leads to expense, and noise and smells for the neighbours - who may complain and put you out of business. Many chefs consider induction to be the work of the devil, but it works and costs far, far less to run than gas. But get them with knobs and not touch-fields or nudge-buttons!

 

[Paul Norman]

As above, you have to have clarity on the planning issues before you commit to the property - and that will not just be the change of use, it will include matters such as Byre has mentioned. Extraction, for example, is going to have limitations, as your neighbours may have something to say about it.

£50k is going to be marginal for a good restaurant fit out. But you need also to consider working capital for the first few weeks, during which you may not be making a profit. You need also to consider some budget for marketing.

 

[Jwan]

Thanks guys, a lot of good advice. We have £50K, but we can get our hands on something around £80K, do you think that would cut it @ Cafe Course?

 

[The Byre]

For how many covers/seats?

 

[Jwan]

15 to 20 tables.

 

[The Byre]

One measures restaurants in covers - or bums if you prefer! Tables can be 2, 4 or 6 seaters, so tables is not really a meaningful measure.

If you DIY everything and just use an electrician and a plumber to sign off the work, you might be able to get away with £2,000 per bum. The trouble with DIY is that it takes time and time is money and rent money in particular. It also means that you have to have the skills for plastering, ducting, kitchen design, restaurant design, systems design (ePOS etc.) and so on.

The very first step everyone advises, is to work in the restaurant trade first! £100k is unlikely to cover a new build for 40-bums. If you go to the Nisbets site and start adding up 200 plates, 80 cups, 80 glasses, 40 chairs, ten tables, ePoS, table cloths and then add all the kitchen equipment and the installation of 400V three-phase, air extraction, a walk-in cooler, fridge, Salamander, hobs, ovens, fryer, through-put dishwasher, carpentry, bar, decorations and on and on.

Then come the up-front costs for rent+deposit, liability insurance, wages, promotion and advertising and food.

http://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1132&context=articles

https://www.slideshare.net/gerard99/start-upquickguide/4-Get_some_experience_working_in

http://www.wikihow.com/Start-a-Small-Restaurant-or-Coffee-Shop

 

[Jwan]

If £80K isn't enough, then is it possible to get bussiness loans from banks?

 

[Ian J]

We have £50K, but we can get our hands on something around £80K, do you think that would cut it

Can you not find existing restaurant premises as that will be much cheaper than starting from scratch.

 

[The Byre]

They will ask this question.

Have you got any experience in running a restaurant?

 

[Jwan]

My uncle has a restaurant, and Mum was there when he started out. Helping him get on his feet. Would that count?

 

[Jwan]

Can you not find existing restaurant premises as that will be much cheaper than starting from scratch.

Not in the location we want

 

[Scott-Copywriter]

I don't even think £100k would be anywhere near enough.

It's not just the up-front costs you have to worry about (although they are expensive). Another big issue is cash flow from the moment you open the doors.

It takes time to make a restaurant busy on a regular basis. You need to be on-point with your marketing efforts, but even then, you won't fill the restaurant until word of mouth and reviews start to spread.

It could be months before you break-even on day-to-day running costs, so you must have enough capital to cover that gap. You need money to keep paying bills, wages, rent etc until your sales are at a high enough level to take over.

Personally, I wouldn't consider opening a restaurant unless I had enough cash in the bank to cover all of the running costs for a full year. With that, there's sufficient leeway to get to grips with everything and grow the restaurant's popularity without worrying about costs.

It's certainly possible to succeed without doing this, but the risk increases exponentially. If sales grow slower than you expect (which they usually do), and you have no back-up funds, you could very quickly find yourself unable to pay staff wages and rent. It could even occur within a month or two of opening.

If it did, it would be a rapid downward spiral as you try to inject more funds (possibly by getting into debt) just to keep the restaurant afloat long enough in the desperate hope that business picks up.

This happens all over the country on a regular basis. I've lost count of the amount of shops, restaurants and cafes I've seen opening and then closing within 1-3 months. Maybe the establishment could have succeeded with more time, but they just don't have the funds to cover that time.

And as Cafe Course mentioned, some owners start paying rent when they sign the lease, but take so long to get everything ready that they run out of money before they've even opened the doors. It does happen.

 

[Jwan]

Thanks @Scott. This will be a family run restaurant. Mum will be the head chef. Sister will manage, and wife will be a waiter. Until we get on our feet, then we'll hire more people.

 

[Chris Ashdown]

Talk to that uncle and see if he would go partners with you and open a copy of his restaurant with him running it for the first year

 

[Jwan]

Hehe aye if only they were on good terms

 

[Ian J]

I
It takes time to make a restaurant busy on a regular basis. You need to be on-point with your marketing efforts, but even then, you won't fill the restaurant until word of mouth and reviews start to spread.

It could be months before you break-even on day-to-day running costs, so you must have enough capital to cover that gap. You need money to keep paying bills, wages, rent etc until your sales are at a high enough level to take over.

Thirty five years ago when I opened a restaurant (incidentally in your neck of the woods) I had a media night and invited people from the local radios and television stations and managed to get a mention from most of them on the following day

 

[Jwan]

Thirty five years ago when I opened a restaurant (incidentally in your neck of the woods) I had a media night and invited people from the local radios and television stations and managed to get a mention from most of them on the following day

Brilliant idea!

 

[Chris Ashdown]

In that case just bite the bullet and make up

 

[Scott-Copywriter]

Thirty five years ago when I opened a restaurant (incidentally in your neck of the woods) I had a media night and invited people from the local radios and television stations and managed to get a mention from most of them on the following day

Indeed. There are loads of ways to create mass exposure quite early on with some smart thinking.

However, having these ideas, and applying them effectively, can be different stories. Such methods do seem obvious, but there are still hundreds of establishments every year that open up and close down just as quickly.

The biggest mistake many seem to make is the assumption that, if they have an open shop, people will come in. It's a bit like those who have a website built and then expect traffic to appear.

But hey, that's often the difference between success and failure. Some think outside the box and do what needs to be done. Others don't.

 

[The Byre]

http://www.businessinsider.com/why-restaurants-fail-so-often-2014-2

https://www.quora.com/What-percentage-of-new-restaurants-fail-in-the-first-year-Why

https://www.quora.com/How-much-money-do-I-need-to-open-a-small-restaurant

 

[Scalloway]

A guy I know has brought himself up from very little to running a business with a £20 million turnover. He opened two restaurants as part of his empire but had to close them as he couldn't make them work.

 

[UACU]

It will be a good idea to open a restaurant where there is a need. According to your statement, there is no restaurant about the location - that's a great opportunity. However, your budget is quite low and I am sure if you can manage to serve 15 to 20 table capacity restaurant with that money.

 

[UACU]

Sorry, one more think - you can watch Gordon Ramsey's Kitchen Nightmare for the common problems with the restaurants.

 

[Noah]

Sorry, one more think - you can watch Gordon Ramsey's Kitchen Nightmare for the common problems with the restaurants.

Yes, but then one has to watch Gordon Ramsey; opening a restaurant is hard enough without inflicting that sort of suffering on oneself as well.

 

[Newchodge]

You have to ask yourself WHY is there no restaurant in the area you are considering. Perhaps because there are no customers there?

 

[Mike_Cartwright]

It's best if you don't rush into getting this place that you're eyeing as of the moment. If possible, scout for more areas that you can rent where there's already a kitchen in place. Have you ever considered just running a take out counter or starting a food service business where you sell healthy, home-cooked packed lunches? This doesn't require as much space as a restaurant. It's just an idea.

 

[wevet]

If you need to know where to start I would suggest spend a few months working in one.

This is the area of business with the highest failure rate so do a huge amount of research and get some experience first.

 

[Scalloway]

Somebody recommended this course on another thread.

https://www.bl.uk/events/how-to-start-and-run-a-restaurant-or-coffee-bar-july-17

 

[Leon Burton]

Hi

I opened my own restaurant in 2013 and now I'm opening my third this year. You CAN open a restaurant on a minimal amount of money - I opened mine on £20k! The catch is, I took on a former restaurant premises and we had all the necessary planning / extraction etc already in place. Myself and my parents did all the DIY work and I bought all our furniture from Ikea (then stained / painted them all) and bought all second hand catering equipment. We had basic things but made it in to a beautiful bistro setting. So don't let anyone tell you it isn't possible!

However, I didn't take a wage for the first year, I moved back in with my parents so I had no outgoings and I was entirely reliant on a chef as I had no prior experience myself. It was hard, hard work! Often worked 6/7 days per week and I had no personal life as I had no money. I had to get further loans later down the land to fund an expansion and to get us to where we are today.

My advice would be to learn the trade first (particularly the kitchen!) and find a former restaurant premises to make this at all feasible. Make sure you get legal advice on any lease - my first building was ridden with structural problems i.e. leaky roof etc. Don't sign in for too long, get some rent free and ask for break clauses to protect you.

Whilst I did it... I would honestly never recommend anyone to do it as the stress at time was unbearable.

 

[Here&Now]

All great advice on here.

One thing I would do is take a good look at the wage rates because which ever govt gets in the living wage is going up substantially over the next couple of years.

It is essential to have a business plan and know how many meals drinks etc you have to sell to break even. It is also vital to do a cash flow budget to ensure you have enough cash to meet all these upfront costs and running costs.

A rule of thumb I learnt is the rent should be no more than 10% of takings, so if your rent is £10K you need to be taking £100K per annum.

Lastly there is the dreaded VAT to think about.