If you’re an aspiring restaurateur, starting a restaurant can be one of the most difficult and intimidating undertakings you’ll ever experience, requiring substantial hard work and financial investment. Luckily, there is a lot you can do to keep your spending in check as you set up your new restaurant. Keep the following five suggestions in mind to ensure you don’t blow your budget:
1. Have a Business Plan in Place
Before you begin to think about outfitting your restaurant with furniture, décor, equipment and staff, you’ll need to prepare a detailed business plan that outlines your path to success. When starting a restaurant, begin by creating a basic plan that includes research on your local market and your competitors, whom your target audience is, and what your marketing strategy will be. When it comes to your budget projections, start by making a list of what you’ll need to purchase for your restaurant. Include absolutely everything from dining chairs and large pieces of kitchen equipment to napkins and salt shakers. You may feel overwhelmed by this long list of items, but seeing the costs on paper will help you keep your budget in check.
2. Always Over budget
As part of your budget planning process, remember to always overestimate the costs of products and services. It is much safer to assume that something will cost more than it actually does than to budget less for that item. Your budget is the most critical element when starting a restaurant, so always budget carefully. In order to adhere to your budget and save costs where possible, do your research and shop around. While you may think you’re getting an item or service at a great deal, it pays to compare multiple suppliers to find the right price. Just keep in mind that you should always choose quality materials and excellent workmanship, since cutting costs here won’t benefit you later on when you have to re-do work or make repairs.
3. Hire Strategically
When starting your restaurant, you may be eager to hire talented staff to help make your business a success. However, it’s best not to go overboard. Paying a large workforce can cause a strain on your restaurant financially, especially in the first few months of operation when you’re not bringing in a lot of money. Deciding how many team members you need to hire can be difficult, especially if your business is sporadic. Start by hiring for the most crucial positions and try to design a schedule that maximizes each employee’s productivity.
4. Keep an Eye on Food Costs
One of the biggest items owners overlook when starting a restaurant are their food costs. If your food costs get out of hand, you can start losing money very quickly. Ensure you are carefully tracking your inventory, preparing food in a way that avoids waste, and search for the most competitive pricing on the supplies you need. Order food wisely, choosing to buy in bulk for the items you will use in large quantities. Be smart about your menu as well, adjusting it to meet your food cost targets and balancing low cost and high cost menu items.
5. Rent or Lease Used Equipment
One of the largest investments new restaurant owners will have to make involves the purchase of commercial kitchen equipment. Before you start shopping, think about what services you want your restaurant to offer in the future. Will you provide catering services, takeout, or host events? Depending on what you want your kitchen to do, you’ll need different types of equipment. Planning ahead can help you save money down the road. You may also want to consider renting or leasing used restaurant equipment rather than purchasing new to save on up front costs.