Author: Mario Churchill
There are over 900,000 restaurants and eateries in the United
States, and they serve more than 70 billion snacks and meals
every year. You know a bit about food and wine, and you like
people. Could you start a restaurant?
While it is a romantic idea, starting a restaurant is hard
work. Do you know what permits you need? How much cash will you
need to start a restaurant business? Where should you buy your
supplies? How will you form your corporate structure? You need
to learn the fundamentals of starting a restaurant.
Here are some answers to some pertinent questions about
starting a restaurant.
• What Corporate Structure Should You Choose?
There are 5 choices to choose from for corporate structure: a
partnership, sole proprietorship, limited liability company, or
a C corporation.
Setting up an LLC will protect you from personal liability, if
you are sued by someone who has visited your restaurant, your
personal property (house, cars etc.) cannot be touched. This is
the best corporate structure for your restaurant and any small
business.
• A Lack of Qualified Labor.
This is one of the biggest challenges facing the restaurant
business today. As the restaurant business continues to grow,
the demand for qualified workers in a sparse labor pool is ever
increasing. The rising labor costs and finding qualified workers
are two of the biggest concerns for restaurant owners. You will
need to decide the exact job description for each level of
employee. You will need to define and outline clearly the duties
and responsibilities for all jobs. You will need to list any
special skills and other credentials for each job. You will need
to establish a reasonable pay scale. Research what other,
similar businesses are paying and go from there. There should be
a minimum and maximum pay rate for each position. Waitresses are
usually given a bit more than minimum wage, as they make tips in
addition to their paycheck.
• Startup Costs and Ongoing Expenses.
You will need to decide whether to start from scratch, or take
on the remodeling of an existing restaurant. If you decide to
start from scratch, you will spend anywhere from $100,000 to
$300,000 to purchase cooking and ventilation equipment,
freezers, refrigerators, tables, chairs, bar stools, counters
and cutting stations, shelving, and heating and cooling systems.
If you remodel an existing restaurant with the same concept will
cost less. The rent may be a bit higher, but in the long run you
will realize significant savings.
• Managing Your Startup Budget.
Make sure you have enough money to purchase everything you need
and get you through the first months after starting a
restaurant, until you have a good positive cash flow. Shop
around for your equipment and get the best possible prices. You
may also want to check into used equipment or leasing your
equipment. The cost of food will be about 25% to 40% of your
revenue, depending on the concept of your restaurant. Payroll
will be an additional 20% to 25%, and rent another 8%. You will
probably come out with about 5% of the profits for yourself, if
you are lucky. Even if you don't think you will need it, open a
line of credit with your bank. You need to establish a good
credit record, this will help if you decide to open another
restaurant in the future.
About The Author: Mario Churchill is a freelance author and has
written over 200 articles on various subjects. For more
information about starting a small restaurant checkout
http://www.restaurantpitfallsa
