Starting Out Your Own Restaurant

[Byrdie]

To tell the truth... I haven't a clue how to go about doing it so. If I write a business plan, could I be able to get all the money I need to start a restaurant?

My real question is:
"How did you with own restaurants get started? What did you have to do?"
"What would you do if you were me to start up a restaurant?"

Last question might be a little harder to answer since, so I assume, many of you don't know me.

Well.. I virtually have no capital.. I have a house and two cars which I'm still making payments for. My earnings and expenses are pretty close leaving me with very little money for savings. But I don't want to wait until I'm 65 to open a restaurant. I believe if I open a restaurant, I could make at least what I am making now, if not more. Initial cost is what I'm concerned about.

so I ask again.. How'd you do it?

[Blueicus]

OK, I'm not a restaurant owner, but I have to admit that I fear for you and I've seen bad things happen to perfectly decent owners.

Firstly, how old are you? If you're younger than 40, can you wait 5 or ten years before your debts are paid off and you are starting to save up money? If you have no capital, chances are the banks will laugh at you, and make you put up everything you have up for collateral, which is probably bad.

Secondly, how much restaurant industry experience do you have? Have you been a server? Manager? Bar? Chef? Dishwasher? Having experience in those sorts of things will greatly mitigate the future headaches (and I believe there will be more than enough headaches to spread around).

Thirdly, how are you planning to get money to start up? All businesses (especially food service) will require a very good cash flow to absorb the sorts of unexpected costs that will arise from initial construction and assets (kitchen equipment, tables, chairs, plates, refrigeration units, etc.), salary, repairs and maintenance. If you're having partners (again, typically riskier in terms of alienation than being the sole proprietor unless you really hammer out non-overlapping responsibilities and have a senior owner), find people with experience and ability, not just your best friend or family (you may not be friends with them in a year in the industry). With loans you will definitely need a business plan and assurances that the lender can somehow recoup if you belly up. For a person with so little capital, if you fail you may just be living in a cardboard box riding a bike to work in the near future.

Lastly, I seriously doubt people open a business NOT confident that they won't be able to make wheelbarrows of money. You're going to need more than a simple one statement assurance to convince me (and probably others).

Well, now that I've said my piece, I'm going to defer to experienced restaurant business owners to speak up.

[lebelage]

This isn't what you want to hear:
Don't do it.
Your earning to expense margin is narrow
You have no savings
You have no tangible property owned outright
Don't do it.
The only way a responsible lender would finance you is if you put up whatever equity you have in your assets. Since you have no savings this leaves you homeless if the business isn't a success.

It sounds harsh, and I'm sorry there is no nicer way I can put this- but if you have gone this far in life without accumulating savings and solid property equity you probably do not yet have the financial know how to make such a risky thing viable for you and/or your lenders.

I say this knowing very little about you, only what you've written so please don't take offense.
My advice to you is to seek out a position with a restaurant start up that will allow for a percentage of sweat equity ownership for your position. If you can do that for several years when you go to a lender they will be more inclined to see you as a viable risk. Also, it'll give you a taste of what it is like to only bring home a paycheck when you are profitable without putting your entire future at risk.

[mark1]

Yeah, everything Blueicus said, you need to do a lot more investigation and soul-searching before you start down that road.

[jonesg]

"How did you with own restaurants get started? What did you have to do?"

I had $400.
So, first I got 20 yrs experience.
Then I got a partner with money.

"What would you do if you were me to start up a restaurant?"

I'd acquire the experience and skill required such that people want to invest in you.

I knew how to open a business, having done it with other people several times , I also knew how to research opportunities, negotiate a lease and how to find cheap equipment at auction. I knew the game inside and out.

There are people out there who want to invest and get involved.

[BistroOwner1]

"To tell the truth... I haven't a clue how to go about doing it so."

Get a clue - it is a serious decision to invest all your time, energy and money into a restaurant! You should at least have a clue before you get started.

"If I write a business plan, could I be able to get all the money I need to start a restaurant?"

You have a "1 in a million shot" of getting all the money you need to start a restaurant just by writing a business plan. Most banks will turn you down flat. SBA Loans might cover a small percentage of your needs, but they are very difficult to get - especially if you don't have the experience to back it up. More than likely, you will have to invest a considerable amount of your own money, find a good partner with deep pockets for a bunch more, and beg-borrow & steal the remainder from a bank or your relatives.

My real question is:
"How did you with own restaurants get started? What did you have to do?"
"What would you do if you were me to start up a restaurant?"

Beleive me, we all have different stories about how we went about financing our busineses. We also all work very hard - hands on - to keep them running successfully.

If all else fails - work your butt off in the business for many years like the rest of us,and eventually, you will find a way to live your dream.

Good luck to you!

[Gourmet_Mom]

After reading this the first time, I thought....

Where is Joanna....Sweetpea would be able to answer this well! This and another post about bistros, but we won't go there now....

AND she could offer something no one else could...an established restro for $100!

Well done all!

[Silverfox]

Old joke: "How do you make a million in the restaurant business?"


"Start with four million!"

Older joke (restated, originally about farming): "How do you get into the restaurant business?"

Marry in or inherit it! (bada boom!)

[old man]

You should do it if:
- you can write a business plan - not for money but to know if you can even pay your bills.
- you have a lot of experience in front and back operations.
- you have experience in owning and running a business.
- you are very smart and savvy
- you can walk into an established operation (that is making a profit) and begin paying the lease and the seller will carry most of the nut.
- you are ready to work 12-16 hours a day, 7 days a week for several years to get things going.
- you can find 8 months of operating capital.
- you can fix everything yourself that breaks.

Good luck, not trying to put you down, just trying to be realistic. It takes money and then more money and then you might make a bit, but you will NOT get rich, I guarantee you. But you will get tired, and if you make it you will feel good.

[Byrdie]

First of all, thank you all so much for honest, from heart and from brain advices. I truly appreciate all the comments.

For me, easy part out of this whole thing would be writing the 50 page business plan. So far, I have 12 years cooking experience and have been a server, manager, chef but not a bartender...

I live in a very small town called Perham, MN. And honestly, I can't see myself getting anywhere in this town and at this rate, I'll still be working when I'm 75 for retirement fund.

I live in this town because it's a perfect town to grow a family.. Yet, to me, family is more important than my ambition, so to speak. I could live digging somebody's septic tanks all my life without regret while my passion lies in cooking if it means I can raise my kids and lead them into correct path in their lives. I'm sure I would wonder later on but I would not regret it.

I guess all I'm saying is this isn't the most important thing in my life. It is only second most important thing in my life. Which is the reason why I refuse to sell my house, second car and turn vacation money into business money.

Although rich partner sounds sweet... if they were rich enough to have partner life me, they wouldn't live here~

Thank you all, again, for your replies.

[tspapa]

Like someone else said, if you want to make a small fortune in the restaurant business you better start out with a large one.You should have enough capitol to last at least one year.It is VERY tuff the first year.