Every restaurant is someoneโs passion project – at least they start out that way. The restaurant business is a tough playground and even the strong often have trouble surviving. If youโre looking to open your own eatery, you should do whatever you can to avoid putting yourself behind the 8-ball, financially speaking. Starting a restaurant business can be expensive. Cutting costs from the outset is crucial. Hereโs how to kick off your adventure with saving money in mind.
Rent your space, and rent smartly
While buying your restaurant location may be your ultimate goal, there is certainly benefits to leasing in the beginning (especially if itโs your first restaurant). Rent is typically cheaper than the combo of a mortgage payment and property taxes, for one. Also, leasing a space allows you to put that extra capital toward other things such as buying equipment, decor and labor. Youโll want to negotiate a good lease, however. Donโt be afraid to push for splitting up maintenance and repair costs, or opting for a percentage-based rent structure at first.
Or take your show on the road
A new restaurant doesnโt even have to have a traditional storefront. While mobile meals have been a thing for hundreds of years, the last decade or so has seen an explosion in the food truck scene. With a food truck, your kitchen is small but your equipment and utility costs are lower. Plus, you can buy an old food truck and fix it up to your liking for fairly cheap. Not only that, but you can now go where the people are instead of waiting for them to come to you. Itโs proactive marketing. Do your research, however. There are ways to save even more once you get that food truck up and running.
Be ruthless when it comes to food costs
Restaurants are won and lost on the smallest of margins, and by far the biggest place where you can save money is in the realm of food costs. Tailor your menu so that you can avoid food waste. Donโt throw anything away. Run specials. Buy bulk when you can. Begin running analytics on your food costs from day one. Know your profit margins for every single item on the menu. Donโt be afraid to make menu cuts early if something has too high of a food cost. Early is when you need to make these changes.
Donโt overspend on marketing
Itโs not uncommon for new restaurants to sink precious startup capital into what they feel is necessary, traditional marketing campaigns (TV and radio ads, print, even door-to-door flyers and such). This is a mistake, at least in the beginning. Social media sites including Facebook, Twitter and especially Instagram allow you to promote yourself for free. You can quickly and dramatically increase your followers and social reach with a few strategic steps such as partnering with another brand, using Instagram posts in blog posts and asking customers to share photos and tag you. You should also look into using the concept of pop-ups as marketing, as they are a way to promote your brand as well as make money!
Get creative with your funding
It surely counts as saving money if other people give you money to put into your restaurant. While the holy grail of this concept is finding an angel investor or two to throw cash your way, itโs more likely that youโll be able to get smaller investments from many more people through crowdfunding on sites such as Kickstarter and GoFundMe. Be sure to start your social media marketing campaigns before you ask for money – you want to build hype first!
Succeeding in the restaurant biz takes planning, hard work and a little bit of luck. It takes a great menu, cool concept and buzz around your community. But even with all of that, if youโre leaking cash from the get-go, youโre on the road to failure. Shore up your budget and focus as much as you can on saving money during the early days. To achieve your dream, you need to spend wisely.
Written by:
Dean Burgess
