Getting into the restaurant business is tricky. The entrepreneurial world we now find ourselves in has tempted countless people to try their hand at starting their own restaurant, making competition all the more fierce.
If you’re about to make that leap yourself, we bet there’s one thing on your mind…
How much is it going to cost?
In certain industries, some startups are able to get going with minimal or zero funds, but in the restaurant trade, there is no getting away from the fact that you will need a relatively decent budget to help you get up and running.
But where does all that money go? What do you have no choice but to invest in during the early stages?
In this post, we’re going to list what we believe to be the 4 main costs new restaurant businesses will need to cover.
1. The premises
The cost of your restaurant’s home is influenced by the same two things house-hunters have to contend with: size and location.
If you’re just starting out, it is advisable to look at leasehold as opposed to freehold and you should expect prices to start from £40,000.
2. Letting agent fees
You’ll need help finding those premises, which is where estate or letting agent fees will come in. Much like house-hunting, you’ll also need to pay for things like surveys and energy efficiency reports.
For the purpose of your budget and depending on the type of property, you’ll most likely need up to £5,000 set aside to cover the above.
3. The legal stuff
The boring bit. Unfortunately, often the most expensive bit, too (if you take out the cost of the premises, obviously).
You’ll need a solicitor and must also take into account fees for the exchanging of contracts, licence applications to the local council and, potentially, a partnership agreement if your restaurant is part of a franchise.
This is the hardest bit to budget for, but find a decent solicitor and you can expect to pay around £100 per hour for their services. Ask them for an honest assessment of the time and additional fees required and work it all into your startup budget.
4. A website and online restaurant booking system
As long ago as 2014, two in five of all diners were beginning to book restaurants on their smartphones and tablets. That number grows every year and if you’re unable to accept online booking bookings via your website from the off, you’ll be missing out on a significant amount of initial trade.
Make your last task before opening to invest in a decent website and online restaurant booking system. Budget around £1,000 for the former (find a decent freelancer!) and bank on the latter costing you a minimal monthly fee (don’t pay commission!).
The above guide is non-exhaustive, but encapsulates the costs you simply cannot avoid when opening a new restaurant. If there’s money left in the bank, hire a decent accountant and ensure you take some advice from them on the costs you’ll need to budget going forward.
Good luck in your new venture!
Note: all figures quoted are estimated guidelines and may not be reflected during your startup phase.