Since I’ve been doing this restaurant-thang for over 15 years, I often get people coming to me for advice or to answer their questions. Over time, I’ve heard a few of the same questions being asked so thought a frequently asked questions page was in order on my blog.
I’ll be building on this list of FAQs as they come about so if you’ve got a question for me that isn’t answered here you can reach out in the comments, on Facebook or via this page.
Is there a tonne of money to be made by opening a restaurant?
I get this questions soooooooo much. The answer is both yes and no. You get out what you put in. IE, you work in your restaurant by doing the accounts or working front of house and ‘earn’ your keep that way. If you expect to set up a restaurant and let others run it while you sit back and collect a pay cheque, well you’re dreaming, at least in the early stages of your restaurant empire. Yes, good restaurants can make a heap of money but they will also have to pay a heap of money to stay operational (staff, lease, suppliers, insurances etc etc). Sometimes there is little to none left over after all of your outgoings have been catered for. Expect and make allowances for little to no profit in the early days (first 12 to 18 months). You need time to figure out what works for your restaurant, what you can cut and what needs changing (think advertising, staffing, menu).
Obviously you can make money in this industry, as I have but it takes hard work, commitment and you need to be in it for the long term.
How do you price your menus?
There a few methods out there for menu pricing but I’ve found my most successful to be 30% food cost or less. How does that work? The cost of your ingredients shouldn’t cost any more than 30% of what you’re charging your customers – so if you’re selling a pizza for $10, the cost of ingredients should be no more than $3. There are always allowances but I use this guideline in almost all of my restaurants.
Licences, permits and insurance – help!
You can’t (legally) function without them and they are the different between serving customers or being an empty restaurant. Licences and permits vary state to state Australia so always check with your local council what the requirements are in your area. In regards to insurance, shop around, seek advice and read the fine print. I’ve been burned once before via an insurance claim and it was an expensive lesson.
How long should I sign the lease for
No more than a year, two max. Don’t go all gung-ho and do a five-year lease because you’re worried about having to move after a two-year lease. Unfortunately, many restaurants don’t even make it to the two-year mark so imagine being liable for rent on a property for three more years after your restaurant has gone under. You might think I’m being negative but I’m merely being realistic and level headed. One to two years is enough time to figure out if you’re in the best area and whether you’re doing well enough to continue.
Thats all for now, if you’ve got a question for me leave a comment below.