Frequently Asked Questions

How much does it cost to start a restaurant?

 

The average cost of a start-up is $225k, but it really depends on your concept and location. Was it a former restaurant space, or new construction? Is it quick or full service? Square footage? When we work together on a Start-Up engagement, we will dig into your concept and location, make certain assumptions, and determine financing capability before we dig into financial forecasts.

 

What’s the hardest part of owning a restaurant?

 

Staffing has always been the hardest part of owning a restaurant, and it continues to be a challenge. It used to be hard to retain people. Now it’s hard to find them. Expect to pay more, and don’t forget to budget for benefits and paid time off. Beyond helping you build a realistic budget, I offer Management Coaching. I would work with your team on hiring, onboarding, training, and incentivizing. 

 

How much should I budget for marketing?

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Your start-up marketing budget depends on your concept. Consider this an investment in your success—you would expect to get to breakeven sales faster if you invest in getting the word out. Same if you’re looking at a Marketing and Menu Reboot. As a rule of thumb, budget about 4-5% of sales for ongoing marketing expenditures.

 

I am planning to open a restaurant, but I want to hire a manager to run it. I don’t want to be working “in the business.” How much can I expect to earn?

 

It depends a lot on your concept. The average net profit margin is 7%, before taxes and depreciation. So what are your sales projections? And before you take the plunge, know what your personal income goal is. With my Feasibility and Financing Package, I help my clients get comfortable with the investment and return before moving forward. Sometimes they decide not to, and it was money well spent!

 

How do I know what my sales will be?

 

You’ll need a crystal ball! In all seriousness, it’s a hard thing to predict. I sat at my nearest competitor and counted the number of people walking through the door, and estimated the average sale based on menu pricing. Since then I’ve had a lot more experience with forecasting based on traffic counts, population density, and competition. When I work with a client on their Start-Up Business, I take all of this into consideration. The goal is to

forecast conservatively so that you feel confident moving forward. 

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What is menu engineering?

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Menu engineering is the art and science of how and where to place menu items that will produce the highest gross profits. So, the first step is understanding which menu items make you the most money. At the beginning of a Marketing & Menu Reboot project, I look at sales reports to identify the biggest sellers. We cost out each menu item (which can be fairly time-consuming) to then determine profitability. 

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Now we can analyze what’s working and what’s not. The low sellers with low profitability might come off of the menu, or we might figure out why it’s not selling as well as we had hoped. Based on competitive analysis, can we raise any prices to improve the profit margin? At this point, we have the data to determine which items we want to sell more of. 

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The next step is working with a graphic designer to craft a menu in line with branding while influencing the buying decision. It’s a fun process for me, but usually takes a lot more analysis than independent owners have time for. A professionally “engineered” menu can increase sales by 16% or more. My goal is for this project to pay for itself in under six months, but this varies based on sales volume. 

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What is your restaurant experience?

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My experience as a restaurateur started in 2002 after my second lay-off in two years. I decided to enter a partnership to open Mugshots, a coffeehouse rooted in social and environmental responsibility. We were very strong on the concept and knew exactly where we should open. And we were right! We exceeded sales expectations immediately. Because our sales were so good, we were able to make a lot of operational mistakes without going out of business. But it was a huge learning curve, and it took 18 months to open. We incorporated in December of 2002 and opened for business on June 30, 2004. If we didn’t open at the right place at the right time, I’m not sure we would have survived.

 

The business grew continuously with new locations and/or profit centers every two years. In 2010 I had a dispute with my landlord, which threw the business into turmoil. In 2012 when I relocated our flagship cafe, the landlord dispute got worse instead of better—a mistake that I now help my clients avoid. 

 

But the decision to relocate was sound. The business was more profitable than it had ever been; the fixed costs were lower, the new layout required less staff, and the larger kitchen allowed me to diversify into Farm to Office Catering and wholesale baked goods. So, even with new competition that cut cafe sales by 30%, the business was MORE profitable. 

 

In 2015, I sold the business to my original partner who had been a silent partner at that point for five years. I was happy to move on. I learned a lot, some of it the hard way. I knew from the beginning that the success rate of independent restaurants was abysmal, but I also recognized that small businesses are the heart of the community. Independent restaurants give us a sense of place, and they contribute to a strong local economy. My 12+ year journey of ups and downs as an owner has put me in a unique position to help other independent restaurateurs skip the learning curve and beat the odds, making a positive impact in their lives, and on the local economy. 

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