Controlling costs in your restaurant is going to be the most daunting aspect you’ll encounter. From the minute your idea starts it’s journey to fruition it’s going to start costing you money. The minute you fuel your car to begin your search for the perfect demographic location to the scissors that cut the grand opening ribbon, expenses accumulate rapidly. The location will be the beginning key to your success. This more than anything else will set the pace to recoup your investment. A sports bar doesn’t belong out in the middle of nowhere nor do you want to put a 5 star restaurant in a rural area. Neither of the two will bring immediate return on your investment, at least not in a timely manner.
Even before you decide where you’d like to put your place of business an owner knows what type of establishment they’re building. With this comes your profit margin. Will you be serving eggs and predominately be catering to morning and mid-day crowd or more towards dining and liquor sales? Each is going to matter in how much investment and work is going to come into play building your business. It’s widely known that liquor sales make the most profit thus bringing a higher and quicker ROI, and it’s also common knowledge utility and supply costs are going to take a great percentage of that incoming revenue. There’s by far no doubt that in food sales alone money is made but as to how quick this happens will have different underlying factors.
In the middle of the mix comes labor costs. How much is each employee going to cost you and how many guests are you going to need to compensate this. Huge question and one that will never come with an easy answer. Every day will be different and every employee will be different, there’s no avoiding this. Taking the time to interview potential employees is costly in itself but just saying ok to the first 5 people that come in will destroy you. Keep in mind only one outstanding employee will come from every 10 interviews, and that’s if you’re lucky. Not saying you may get a couple ‘good’ employees during the process but good employees produce good work, outstanding employees replicate you.
Advertising, if you’re doing it right it should get cheaper as you go along. Wait, cheaper as you go along. How can that be? It’s simple, word of mouth is free. The most wanted response from your patrons has to be, “this is the place around“. If it isn’t you’re failing, maybe not miserably but you’re not winning. If your guests last words before leaving are, “wow, this is the best place around“, then why would you spend exorbitant amounts on advertising when that guest is going to do it for free.
The actual real-time overhead of your business is going to be your utility bills and your selection as to who you pay for these services is going to be limited. Example being your electric and water bills are most likely going to be a one company selection process, you pay the city/company that controls these utilities and that’s all you get to chose from. Other costs such as cable, toiletries, and other non-essentials can be mandated by who you interview and finally chose. Keep in mind when dealing with these companies that you also offer a service. One of the most important lines you’ll read on this website is – barter, it works.