There is a saying that a good way to lose money is by opening a restaurant. While it is a good line, it is not necessarily true. You can make good money, and even enjoy yourself, by opening a restaurant. That being said, you will be more likely to be successful if you know what to expect.
By understanding that the first year can be difficult and what challenges await you, you can weather those storms and build your restaurant to what you want it to be. Here are some things you can expect to happen to your business in your first year.
It may be a little cliché, but the best thing you can do is prepare yourself to expect the unexpected. There will be things that happen during the first year that you will not expect, and many of them will cost you money. It can be anything, from broken dishes to broken equipment. You may also have a dispute with a customer that leads to negative online reviews. There are a million things that might happen, and while you can’t prepare for them all, you can roll with the punches and deal with problems as they arise.
Of course, you should also make sure that you have the right protections in place. For one, you can get tailored restaurant insurance so that if anything happens that will cost you big money, your business will be protected. Not only will a comprehensive policy cover you in cases of property damage, bodily injury, and accidents, but it will also cover things like product liability. An example of this in the restaurant industry would be a foodborne illness.
Another way to protect your business against the unexpected is to plan to have funds available for these unexpected situations. If you lose a lot of dishes to accidents, for example, you will be covered with your savings.
Trouble With Staffing
One of the trickiest things about running a restaurant is figuring out your staffing needs. The problem is that restaurants, especially new ones, are unpredictable by nature. You might expect a slot night and staff at low levels because of it. Then, because of an event nearby, or for no reason at all, you end up with a huge crowd that your small staff can’t handle.
Conversely, there may be times when you expect a huge crowd and ramp up your staffing for that night, only to end up with a trickle. Instead of being swamped, people are getting paid to sit around and wait for diners to come in. A big part of running a restaurant is figuring out when to staff up and when it is safe to have less staff on hand. The truth is, during your first year, you should err on the side of caution when it comes to your staffing. If customers come to eat and suffer through long waits, they may not come back.
Low to No Profits
One thing about restaurants is that they usually come with high startup costs. You will need to rent or purchase a space, buy equipment, furniture, cutlery, dishes, and about a thousand other things that are necessary for serving diners. This means that there is a good chance you will spend a good portion of your first year paying back those costs before you start earning a true profit. You will also make mistakes when it comes to your operational costs, but you should be able to stabilize those costs at an acceptable level over time.
While not having profits can be stressful, it does not mean your business is in trouble. As long as you see that your revenues are rising throughout the year, and you can confidently say that your projections will continue to rise, then you should be fine.
When you are conceiving of your business, you probably have certain assumptions. You want your restaurant to look and feel a certain way because that is what you think your customers will like. You have certain drinks at the bar and certain items on the menu. Your decor will also reflect whatever theme you have decided to go with.
However, what you thought your customers might like might not be what brings them to your restaurant. For example, you might have the best wine list in town, but you find out that your customers prefer your beer selection. They may not like the decor but like the food. Whatever it is, you need to be able to pivot quickly. It is not bad if your customers do not want to order from the wine list, but you need to be careful about how much you buy in the beginning.
A Change To your Lifestyle
Owning a business means taking all of the responsibilities onto yourself. If your restaurant fails, you will be the one left holding the bag. You need to do everything you can to ensure that your business is viable and can eventually find success. You will put in a lot of work to get up and running, but that is not where it stops. The next step is keeping your business running.
You can expect to have a lot of long days and late nights during that first year. As you are getting your feet under you and making quick decisions, there will be any number of issues that need your attention. You will be unfamiliar with the paperwork, with your staff, and with your vendors. You can’t afford any mistakes, because a mistake could mean that you lose customers and get behind the eight-ball.
After the year has passed, you may be able to go back to a normal schedule, but only if you have hired the right people and gotten the restaurant to a place where you are comfortable. Much like with your profit, you need to have patience and understand that you will not be running ragged forever. At some point, the restaurant will find its groove so that you can be more hands-off.
Great food and drink, lots of people, and big money coming in every night. What more could you ask for? A lot of people have the dream of owning a restaurant at some point in their lives. You can make it happen for yourself, but you need to know what to expect. The first year can be a huge challenge, and many restaurant entrepreneurs are caught by surprise. That does not have to be you. The more prepared you are, the better you will be able to handle the uncertainty that comes with the first year. Keep all of these tips in mind, and you will be in a great position to succeed.
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