ok i am starting up a restaurant business. I work for one as i type but i have the knowledge and resources to start my own. I want to start up a burger place. I have a sysco sales rep ready to roll and i have an eye on location. Since i dont have alot of the start up cost this place i have my eye on seems very attractive. The spot it used to be was a mexican restaurant, but when they went under and couldnt afford to pay rent they worked out a deal with the owner of the strip center their business was located to where the strip center would keep all of the cooking equipment and call it even. The strip center only wants $1,000 a month or so for rent with all cooking equipment, tables, chairs, etc. Do you guys think this is do-able?
My question is why do you think your restaurant will succeed at a location where at least one other has failed?
this is the #1 question. location is uber-important....and the fact that another place failed before is an indicator of a problem. you may have a great answer to this question....just make sure it's really a great answer.
I second this, and on top of that, you should've looked at the PNL forms for the previous business that was there. At the point where they weren't utilizing their profits in an equitable way, you MAY be able to make it work. But, for more information, what's the location at?? Do you plan to just do burgers or do you plan to expand your menu beyond that?? Good luck to you!
May not have been a good spot for a TexMex, while it may do better as something else? Just saying, location may not have been the only reason why it went under. It seems to me that Chinese Buffets are probably some of the most successful restaurant ventures here in Houston. It seems like Houstonians prefer quantity over quality when they dine out. Generally speaking, of course.
Tough economy to start a business in right now. Mayn restaurants have been closing or raising their prices because of poor attendance. Houston is already a very difficult restaurant market. Good luck!
Avoiding the initial high costs of equipment and furniture is huge. Just make sure everything is in working order and it's up to code. Obviously there are many other factors that go into a successful restaurant, but this aspect is in your favor.
In the clear lake area is where i plan to start. I definitely want to expand my menu beyond burgers but i would like that to be the focal point. I was informed that there are tons of businesses that are for lease with equipment. I think location is the most important thing. I know that the economy is bad but some one gave me advice that people always put food in their budget. They cutback in other areas. Plus i want to at least give it a shot, i dont want to look back years from now saying what if. Im still young, not married, no kids yet so i think i can afford to take a small chance. Plus i dont plan on taking out big loans that i couldnt pay back. So....we shall see.
Take it from someone who is going through some bad stuff right now, you DEFINITELY want to make sure you have a handle on loans and how you are going to pay them back when running your own business.
i'll play the devil's advocate to this board's advice and say.. a recession is the best time to start a business.. that being said.. you better make sure you have meticulously gone through every possible detail before pulling the trigger.. restaurants are very risky business.
What's going to make the average joe come to your Hamburger joint when there's a million out there? Burger King, Wendys, McDonalds, Jack in the Box, Chili's, Fudruckers, TGIF, etc etc. You should at least have $20-$30k saved up for this venture. You have to factor in that business might be poor the first six+ months and you need the capital to keep you afloat. Word of mouth is great and free advertisement, but if your product is just decent, no one will know about you. I would suggest a little advertising. Hire someone with a big sign, the local coupon mailer and offering free food the first day of business is a great way to spread word of mouth quickly. The rent is great (probably a not so hot location for that price) and you don't have to invest in much equipment. Read the contract on the property and make sure you understand everything. It's a lot of work to get a business started, but once you've went through the motions, it's not that bad and the money can be good.
are you going to cook the burgers yourself? or just hire some cooks? are the burgers really good? or are they just aiite?
the burgers have to be good...im going down to syscos headquarters to meet with their chefs and we are going to do hundreds of trial burgers with different ingredients to get the perfect one...
1. Most restaurants fail in the first year of business. 2. Most fail for lack of sufficient capital. You should have enough cash to bankroll operations for a year without revenue. If you don't plan to take huge loans, I think you'll fail (no offense).
If you didn't spend a couple of thousand on market/location research how could you not be terrified? Its not a guessing game, there is a science to it, data to pour over, etc... Its basically the equivalent of protected vs unprotected sex.
Some advice from someone who went through this in the last few years starting a coffee shop: 1. The rent / equipment setup sounds great on the surface. Equipment is normally your biggest startup cost. Rent and labor are your biggest fixed expenses. I don't know how big your place is, but $1000/mo for two of those three sounds like a great starting set up to reduce your initial investment. This is the beauty of starting in a recession. But find out what other buildings in the area are going for. You need comparison points to know if it's really a good deal. Read your lease agreement extremely carefully. We spent months hammering out an agreement because they will try to squeeze all sorts of stupid stuff in there. Make sure you understand the law or have someone who does helping you with the lease. 2. You have experience in the industry - knowing that part is a huge plus, but don't plan to spend all your time there. The best value you can provide for your business is the business end of things. Market the hell out of the place - don't just sit there expecting customers to show up. Make sure your finances are well-managed. Hire good quality people. Invest your time into getting that kind of stuff right and making things run efficiently instead of flipping burgers or serving customers. It's much better bang for the buck, though it will add to your labor expense upfront. 3. Researching and understanding all your basic costs and break even points is very important. Know all your expenses - everything from labor to pest control to insurance - up front. Know all your revenue sources and margins. This is all stuff you should be able to research for free. The idea of spending money on studies of traffic patterns is all overrated unless you plan to simply be a place where people stop by on their way somewhere. Aim to be a destination - something unique worth visiting - and all those studies become much less valuable. If you want a traffic study, sit out on the street at lunch time to see if it's a busy area. Go to nearby restaurants and see how busy they are at peak hours. 4. Business plans are important, but don't wed yourself to them. Make sure you have plenty of capital because things will be more expensive and take longer than you think, no matter how much you plan for it - but also because things will happen that will change your plans. You want to have the capital to take advantage of opportunities or change your plan as circumstances change. The worst thing that can happen is that your business is on track but you run out of funds before you can quite get to that break even point. Even if you're not taking out loans, I'd make sure you have access to excess capital beyond what you expect to need - whether its your own, credit lines, or whatever. 5. If you're not good with failure, avoid this business. As mentioned earlier, lots of these businesses fail and that sucks. But what really sucks is if you're not capable of dealing with failure and setbacks well. Even if your business succeeds, you're going to have a lot of down moments and challenges. It takes a certain kind of person to handle that. 6. Contact the owner of the previous restaurant if you can. You won't have access to their financials, but they'll probably be willing to talk to you about what happened and how they did and what went wrong. Try to figure out if they failed because of their own mistakes or something more inherent to the location or concept. If it's the latter, be wary. But most businesses fail because of the former. 7. Be unique. The other reason businesses fail is that are just like every other business. If you're starting any business, you need one of two things: either do something different from everyone else, or do the same thing as everyone better than they do it. If you're not doing one of those, you're probably going to fail. Figure out how to stand out and be special.
I suggest opening a Dream Cafe. My friend Babu had great success in opening one of these many years ago.
You don't need to spend thousands on market research. That's great if you have the resources or if you're a major corporate franchise, but that's a big investment for someone trying to start their first business. All of Major's advice is spot on. Spend time at the location, stop by for a drink and casually ask managers or wait staff of nearby restaurants what peak times, days, even seasons are, if applicable. Keep in mind what kind of market they're targeting and if you're targeting the same one. If there are many offices nearby, you may do best going after the lunch office crowd. Are you the kind of restaurant people would only go to once a week, or a few times a week? And as he said, you can estimate all your costs right now. Estimate what kind of menu you'll have, how much you'll charge, what your profits are, how much an average meal would be, and how many customers you'll need to break even on an average day. Then ask yourself if that seems feasible. From my own experience, one of the toughest parts is dealing w/ staff. People will not show up, or call in sick 5 minutes before their shift starts, etc. Imagine if your cook does that! It's not strange for us to go through 3 waitresses in 2 months before finding someone steady. One of the main reasons people like coming to our place is because our staff is so friendly. Our closest competitor (similar prices, food) went out of business for the exact same reason...the manager and waitstaff was rude and unapologetic. And have extra money for repairs. If your walk in cooler, grill, etc goes out, you will need to have that fixed or replaced immediately. Also the advice about having enough bankroll to survive a year was very relevant for us. The first few months were horrible, but we stuck it out and eventually made a reputation for ourselves. All in all, there are many things you'll learn along the way that you never expected, but after facing them seem obvious. But that goes with any business. Just be prepared to work long hours, 7 days a week, especially in the early stages. If you want it to work, it will be worth it. While I've seen more than half of the restaurants in a 2 miles radius go out of business in the past year, I'm thankful mine is still as stable as ever.
