How To Open A Restaurant
So You Want to Open a Restaurant?
Simon Binder, Chairman of hospitality accountancy, Paperchase, with 40 years of running restaurants, offers some sound advice to would-be new restaurateurs.
As soon as you make that decision to sink your life savings, or someone else’s life savings for that matter, into a business that only has a 20% chance of success, you are waiting to see which side of the coin comes down in your favour on that random toss. That is the success rate when opening a restaurant, with 80% failing in their first three years.
Will your friends and peers tell you that you’re mad, regardless of the fact that they secretly will want to come for free food and drinks to ‘support you’? Take stock now, before you embark on this venture. When operational, it will feel just like driving an F1 racing car whilst offering a food service, and when things go wrong, it will be at great speed, and when the wheels do come off, as they may, how can you be a survivor? The survivors are not just the nice guys, who love cooking food. The survivors are the strong, the well prepared and the lucky. So, to quote that great film line, ‘Do you feel lucky’?
Now that is off my chest, if you are still intent on opening a restaurant, how can you mitigate to be one of the 20% and not one of the 80%? You can’t, but what you can do is to try and change the odds and stack them in your favour. During my 40 years in the industry, I have opened and closed many restaurants, and I am prepared to share my six elements to developing a hospitality business. Making it a success is another matter, as you cannot do this alone. You will need help and what I am going to do now is to explain what you need to do, and then you can decide how to proceed.
Paperchase supports its clients throughout these six elements, providing hand-holding at every step of the journey, a thought you may wish to bear in mind.
Key stages of opening a restaurant
- Business Planning
- Staying on Track
- Finding a Site
- Day-to-Day Operations
- Building a Group
To a budding restaurateur you may feel that you can manage all these elements yourself, and you may well be capable however, once you open, and your business is operational, best intentions can often fall by the wayside and expert support may be welcome. So, lets now understand a little more about setting up that hospitality business.
Every new business venture needs a plan and a pathway that the business will follow. Paperchase works with its clients to create sound business plans for their hospitality business, which will include financial planning, sales projections that are realistic, P&L projections, engaging with banks for funding, engaging with prospective investors, supporting applications for asset-based finance, costing internal site fit-outs, in addition to planning staffing costs.
Staying on Track
Acting as Finance Director, Paperchase can ensure the plans of the business are achieved, helping the business to stay on track. By implementing financial disciplines and monitoring momentum and direction against the agreed plan, Paperchase can monitor results, measured against the projected plan. This is a crucial element, especially when using someone else’s money.
Finding a Site
Now you need a site. Finding the right site is one of the most important considerations to the success of a restaurant, however restaurant critic AA Gill once said, “Location means little or nothing and restaurants with views and outdoor tables have terrible food and dreadful service”. A very tongue in cheek comment, however finding the right site and the right cost is crucial, as this will be one of your biggest overheads, and getting it wrong would be a costly exercise.
Paperchase can help you to get it right, with a black book of restaurant specialists and property agents who are able to introduce you to a number of potential locations. We can help you to find a site, analysing that site for location and suitability, whilst understanding the known history of the site. As part of the business plan, we can model the numbers on an ideal site, even if the site has not yet presented itself. When finding a suitable site Paperchase can assess the potential of that site, assessing costs of the fit-out, and seeing the potential of that site meets future financial aspirations.
The big day is looming. Whilst the kitchen is ordering produce and stocking chillers and walk-ins, front of house will be ensuring linen, glassware and cutlery is spot on. In the background Paperchase would be focusing on staff contracts, payroll, Tronc, setting up supplier accounts, registering for credit cards, setting up Epos, and ordering from new suppliers. Paperchase manages the bits that restaurateurs do not really enjoy doing, but that is what Paperchase does best.
You open, and you appear to be a great success. This is where the real work starts and where Paperchase can be pivotal to your operation. Our systems can help you to: maintain PAR stock levels, control cash, manage your expenditure, manage, control payroll and Tronc payments, and forecast weekly sales helping you to better manage staffing needs and food and drink supplies.
Building a Group
You are now an operator in the hospitality sector with a successful business. You are ambitious and you want to build a group, or at the very least, open site #2. Building a group is like going back to the start, with some of the knowledge that you gained through your operational experience and repeating the process. Again, Paperchase can help with business planning, investor relations, raising funding, or corporate finance, be that by private equity, venture capital, bank borrowing, IPO or the Government backed EIS and SEIS schemes.