How To Launch A New Restaurant Without Overspending
Setting up a restaurant can be challenging. Lots of budding restaurateurs have a vision, which involves creating a wonderful menu served in an eatery with lovely décor and a welcoming ambiance.
That vision needs tempering with a does of reality as well, because the restaurant industry ranks among the most competitive. Your final objective, aside from serving delicious cuisine, is to earn a profit, so you will have to be financially responsible to turn your vision into reality.
Notwithstanding, lots of startups overspend right from the getgo. We are going to talk about some things that startup restaurants usually overspend on, however firstly let us examine average startup expenses.
The average startup expenses for restaurants varies from several thousand to several million dollars. One survey reports that the average cost of opening a restaurant is $3046 per seat ($275,000 overall). Once ownership of the building is taken into account, this average rises to $3734 per seat ($425,000 overall). The majority of survey participants guessed that these average costs were fifteen percent over their expected budget.
Therefore, prior to talking about how startups overspend, it is worth noting that overspending is an extremely common and far reaching issue.
You might believe that you need a large budget to fund a startup restaurant, however let’s talk about the things that startups often overspend on, as well as some methods to control your budget.
1. The Cost of Restaurant Equipment
Purchasing equipment to outfit the kitchen is typically the biggest way that restaurant startups overspend.
All startups ought to try and avoid overspending, when buying equipment. Research second hand products, look on the Internet and only purchase what you require immediately. The downfall of another restaurant could benefit you. Keep your eyes open for this, because you may get equipment for a massively reduced price.
It’s vital to obtain suitable equipment, particularly for your kitchen, and specialist financing might be a way for you to get good quality items without spending too much.
A trustworthy financing firm, with a proven track record, will work with your startup to devise a strategy. The leading firms can offer everything you need, from the dining room to the kitchen. The benefit to you is that you will know your costs each month. You can arrange a manageable payment schedule with the firm, which will fit your budget.
2. The Cost of Technology
Everyone uses technology these days, modern life depends on it. However, how essential is all of it for your startup? An overabundance of tech can damage the financial well being of your restaurant.
Decide on the most crucial things you need. Keep up to date books to reduce your expenses, and invest in a POS (point of sale) system. These are important items of technology.
Can your waiters manage without iPads to take orders? They probably can, particularly if you want to avoid overspending.
Although more restaurants are embracing technology, it is essentially your choice as to how much you spend on it.
Perhaps your business model requires table side iPads for payment and ordering. If so, research different prices. Your establishment might not need the latest model. In all likelihood, you could work with the previous generation. Always haggle for the lowest prices. Research all your options for wifi; do not simply go for the first advert you see.
Once more, we encourage you to have a budget and to stick to it, to avoid overspending on technology.
3. Advertising and Selling
Many startups fall into the trap of overspending on advertising and sales, particularly if they are not experienced in advertising.
Some restaurant owners get roped into a contract with an advertising agency, because they lack marketing knowledge. Alternatively, rather than using other affordable advertising options, startups choose to hire costly sales staff. Startups think that these professionals will launch glossy advertising campaigns, even before researching the market.
Many startups become over excited if they acquire venture capital investment. They believe it is time to start spending big, and marketing appears to be the logical choice. This is a big mistake, if money for repairs is needed at a later date.
Of course, restaurant startups have to advertise their new establishments. Therefore, how can they do this within their budget?
- Use Online Methods
- Register on the social networks.
- Pay for low cost ads on Twitter and Facebook, and think about marketing on other similar platforms.
- Engage with people on your company’s social network account and website blog.
- Give out flyers to local companies. Do some networking to gain referrals.
Although television adverts can work well, they are not necessarily the best thing to begin with – particularly if you wish to refrain from overspending. eMarketer research indicates that seventy percent of people believe television influences brand awareness, however social networks have a similar impact, with sixty percent believing them to be influential.