Over 50% of restaurant startups fail within the first 5 years and of those restaurant startups that make it only 5% of them are owned by the same person that started them. When we surveyed over 500 restaurants 3 things kept getting mentioned. We asked them what should new restaurant owners know before opening up their? Here is what they said. Restaurant startups are very challenging to get funding from the bank for. Make sure you have a solid plan to fund your restaurant. There is nothing worst than getting half way through your project and running out of funds. Another thing restaurant startups should know is the time they are going to have to spend at their restaurant. The third comment that got brought up several times was know your restaurants market. This is critical to your success. We will be releasing a full article soon on "What restaurant owners wished they would of known when they opened up their restaurant that would of helped them."
If you are looking into opening a restaurant and you made it this site, congratulations! I wish there would have been a website like this when I was getting started.
Time Commitment for a Restaurant Startup
You are going to work about 70 -80 hours a week. If you are not okay with that you shouldn’t startup a restaurant. Your first year being open you probably won’t get a full day off unless it’s a holiday. Holiday’s were about the only day I took off my first year. I would leave the restaurant for a few hours here and there but that was it. There are things I did wrong that I could have changed looking back on it now that would have allowed me to leave more.
As a restauranteur, you are going to make family sacrifices all the time because you will have to work. Make sure that your family knows how much time is going to be required to run a successful restaurant especially when you are starting out. Done right though it can be very rewarding. Don’t do it for the money but do it because you love it. Like any career, you do it because you love it or you are going to hate it.
As much as you need to be there you need to make time for yourself as well and this website is going to help you do that. That’s one of the many reasons I launched this site to help people like you have more time away from your business.
Funding For Your Restaurant Startup
Finding funding for a startup restaurant isn’t easy, and when you find a company to fund the startup restaurant it usually isn’t a traditional bank unless you have collateral. I started going to banks five years before I actually got my first restaurant open asking them for businesses loans.
I felt like I was never going to get a bank to loan me the money. It was a horrible feeling. Bank after bank I would leave feeling beaten down. You have to remain positive and remember why you're doing this. Why you want to open your business.
A good thing to do before you start on your journey is to make a list of Whys. Why you want to own your own restaurant or business. Every day you're going to have to look at why’s keep them with you so you can review them before and after every meeting you go to. This will help you stay motivated to open your first restaurant. When banks turn you down time after time you will have something there to keep you moving forward.
If you don’t have collateral more than likely your never going to get a loan to startup your first restaurant or business. Each bank representative is going to tell you the same thing. Do you have a relative or a parent that has collateral or will loan you the money. I asked my mom and my aunt if they would back me in my restaurant startup. My mom tried but she couldn’t and my aunt who could have wouldn’t.
It wasn’t until I found someone willing to sell me the equipment on a land contract that I was able to startup my first restaurant. My second one was started the same way. It is the easiest way to go. Banks hate startups but hate restaurant startups even more. I always said if I owned a bank I would get to know the person and not look at them on paper to decide if I was going to loan them the money for their business.
YOU MIGHT FIND THIS POST INTERESTING AS WELL : Restaurant Startup Business Loans
Importance of an Experenced Crew for your Restaurant Startup
If you choose to lease your equipment with a $1 buyout they are going to want you to submit a resume of all your managers and yourself. They are looking to make sure you have the experience needed for your restaurant startup to be successful.
There was a point where I thought this was the road I was going to go down. I thought I was going to lease my equipment with a $1 buyout then I saw how much I was going to have to pay back vs how much the equipment actually cost, and the payment I was going to have each month I decided this was not an option for me. These aren’t normal banks, a lot of times you are dealing with lending companies that deal with high-risk borrowers have to go to.
Places like this know you want the money and you don’t have many options left at this point. This isn’t the first place anyone starts at that is looking to open a restaurant. This is usually their last resort.
Making sure you surround yourself with knowledgeable people from your industry. This is going to help ensure that you get the loan you need to get your equipment to get open. I surrounded myself with over 60 years of knowledge. This helped me not only get approved for a loan but also succeed in my industry.
Restaurant Startup Location
No matter where you are trying to get a loan from you are going to need to show them a demographic study of the area. You are going to need the basics population, average household income, competition, and how many people on average live in each house.
This is going to give you a good idea if you should open a restaurant in that area. You might realize that you shouldn’t open your restaurant there but maybe a mile down the road would be better.
Restaurant Startup Concept
You should also be able to say how your restaurant is going to be different than your competitors. You should also have an idea of what your strengths and weaknesses are going to be and what your competitor's weaknesses and strengths are.
You should talk to an account before opening or even approaching a bank for a loan. Make sure you have a basic understanding of what taxes you will be required to pay and when you will be required to pay them. Some taxes your will have to file quarterly and others monthly.
Through our research, we have found this is one of the biggest complaints when it comes to restaurant startups. The owner doesn't realize all the taxes that he or she need to pay or when they need to be paid.
Where Should You Start?
We suggest visiting our services page to see all the options we offer to help you succeed.
A great place to start is with our Restaurant Startup Checklist