Starting your own restaurant is a big undertaking.
Starting your own restaurant is a big undertaking. To build and grow a successful restaurant, it is key to start with a well-rounded budget. To do this, you have to understand your biggest expenses: space, equipment and advertising. These costs, combined with other startup expenses, puts the average price of starting a new restaurant around $495,000. And it's even higher when you have to purchase your own location.
Below is some information to help you understand some of the biggest challenges and costs of a startup restaurant. In addition, we've included our tips on how to keep some of these costs low.
Developing Your Budget
Before you buy anything, it is important to have your budget locked in place. This gives you a strong starting point and saves you money, because you know how much everything should cost before you even begin.
When developing your budget, determine what is most important for getting your restaurant from its current state to opening night; then set aside money for those things. Most of your budget will probably go toward renting or buying your new location and buying equipment. Given that these will be large costs, do not dedicate money to nonessential items or what you "think" you need to get your restaurant running. Keep in mind that customers are showing up for the food, not to see expensive décor.
Obtaining Space and Equipment
One way to save money on some of your big restaurant expenses is to recycle or reuse existing equipment and space. Many new restaurant owners find a space and renovate it to match their new business's needs. While it is nice to have a space that you have designed yourself, this approach is costly.
You can save on startup expenses by hunting for a space that already offers much of what you need for your restaurant and then doing small touchups and repair work to get it in top shape. Former restaurant spaces are ideal: They have an operating and existing kitchen space, which saves you the time and money you would put into renovation.
Advertising Your Restaurant
Advertising is another big, necessary business expense. Using a marketing firm can cost $10,000 or more. If you want to save money on advertising costs, consider employing local artists instead of using a branding agency. A local artist can help you design menus, signage and other branding materials for a fraction of what a design firm would charge. You can then use these images for marketing on social media and in local ads.
Related Article: How to Market Your Restaurant Efficiently and Effectively Online
No matter what route you take, opening a restaurant is expensive. Costs like space, equipment and advertising will take the biggest bite from your budget. However, by having a firm grasp on your budget and shopping wisely, opening your dream restaurant is doable.
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