Restaurateurs make running a restaurant look so easy and fun. However, they have been in this business for some time, and they have the routine of operations nailed down. Not to be discouraging, but running a restaurant is definitely not as easy as it looks. Yet if you can multitask and manage money well, you may be able to run a restaurant with few hiccups. Understanding what is involved in running a restaurant before deciding to open one yourself is key.
Labor and Employees
How big is your restaurant and what kind of food will you be serving? This determines how many employees you will need. A small bistro or sandwich shop may get by with ten or fewer employees, but a family sit-down restaurant will need double the employees. Additionally, will you be open 24/7, only open for a particular meal or closed on certain days of the week? This decision also impacts the number of employees you will need and need to manage.
For starters, you will need a cook and a line chef for anything other than a full bistro or cafe. You will need at least 5-7 servers for table or counter service so that no one is working too many shifts in a row or in a week. You will also need two dishwashers even if you don’t use any dishes in the dining room of your restaurant. Are you financially prepared to pay the wages of this many people on a weekly or biweekly basis?
That is just the basic employee/labor requirements for a restaurant. A bigger restaurant requires even more staff. If you serve alcohol, then you need bartenders and cocktail waitstaff. Weigh your options carefully or you won’t be open for very long.
Price of Goods and Cost to Customers
Another issue, particularly one of interest during periods of high economic inflation, is the cost of goods. You can’t make food without paying for ingredients and supplies first. You also have to decide how much to charge your customers in order to recoup the costs of goods. If you charge too little, you will go bankrupt feeding customers. You charge too much, you won’t have enough customers to pay the bills. Finding the middle ground is key.
What is the average profit margin for restaurants in your area? Location of your restaurant is as important as managing your overhead costs. Do you know how to calculate the average profit margin?
Calculating your profit margin tells you what you need to make to A) make a reasonable profit, and B) stay in business and pay all your employees and vendors. If you can’t make at or above this average margin monthly, your restaurant will suffer. Be sure you have done the math several times over to account for factors out of your control and ensure that you can still make this entrepreneurial endeavor work.
Lastly, it is extremely hard work trying to run a restaurant and be on top of everything. If you can do it, you will find it very rewarding.