HOW TO OPEN A RESTAURANT | 5 things to know BEFORE opening a restaurant
Updated: Oct 12, 2019
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Every restaurateur deserves owning a profitable restaurant that does not own them and in this show we talks about restaurant marketing, about managing your restaurant and we would be so much happy to answered your questions and much more.
Today, we will read your letter and answer your question. So let’s get started!
“Hello Hengam a great video! I would definitely be interested in more of your videos and advice. My wife and I also live in Texas and we are in a very beginning stages of owning our own restaurant. I'd love to hear more on the beginning of how you got started leading up to opening day and what you would recommend for us looking to put the dream into actions and what steps to take to properly execute? Thank you!” -Laurens
Many of y'all may know that my husband and I owned a couple restaurants in the San Antonio area. We bought a failing pizzeria in 2014 and in the last five years we tripled our sales with zero prior restaurant experience.
Now that it sounds may be impressive but also it means. It's been intense five years and we've been obsessed with growing our sales.
And that started the whole thing with starting this show because I used to get a lot of questions about how we got to do what we get to do.
So here it is, Lauren's first to say well I'm excited for you and your wife starting this adventure in the restaurant industry.
Let me tell you it's going to be hard but it'll be well-worth that if you're passionate about food and serving people we.
We don’t know what on earth we were doing when we bought our restaurant so here I'm gonna tell you five tips that if I could go back in time and focus on these five things.
I think we would have been in a better place maybe or not so I wanted to share those five points with you.
You have got to get obsessed with your numbers
You got a study to the numbers. You're purchasing an existing restaurant You need to review the numbers. You need that they're going to give you a P&L. Because what you're paying for unless it's an asset purchase.
And asset purchases is that when you're just purchasing the asset which is the oven or the make light or whatever chairs and tables. If it's going to be an asset, purchase it.
However if the what you're purchasing is based on the gross sales of the restaurant and there are a lot of ways that those prices are put out there. One of the main ways is that you divide the gross sales by 2.5 or something like that.
You can look that up but if you're purchasing a restaurant based on the gross sales so this is what we did right;
The restaurant we purchase we bought it for 140,000 dollars and that was based on the P&L
We have received saying whatever it was right so one of the things that it was that we did not know how to study the P&L.
You need to sit down with the owner.
You got to sit down with a broker and the question every single number and don't feel bad if you do not know because the owner is gonna be like “huh you're gonna buy this restaurant and you don't know what blah-blah-blah-blah”.
It doesn't matter you're gonna be coughing over money. You better know every single number you need. If you not look it up before going and sitting down with your owner. Study it, research what it indicates how it's calculated and sit with the owner.
I'm sorry to tell you a lot of times some of the piell's are cooked and I know that's politically incorrect for me to tell or do what it is so for instance you want a things you want to know.
You need to know the standards in your industry so what I mean by that is for instance for us we own vita Ria's so our pizzeria recommended a rate for different things is that the rent needs to be about seven to eight percent and your food and labor needs to be less than sixty percent which is your big prime cost or to variable costs that are very important your food and your labor.
So one of the things again that was happening is that our payroll was awfully a low number. I mean we didn't know what's low, we did not know what's high but it's because the owner was paying people cash not declaring those sales. Not paying proper sales tax on those numbers and all of that.
We did not know what questions to ask.
Again, YOU NEED TO KNOW THE STANDARDS.
whatever you're gonna open; a burger joint, is it a barbecue joint? You need to know the standards that are classic for that what you're going to do and match that to the P&L that you've been given to make sure they do match question every single number and that is my first tip!
The second tip I have for you is to NEGOTIATE EVERYTHING!
In the beginning when you start you feel like you know.. “no one's going to give me grace or give me time to pay for different stuff.”
You feel like you're not entitled to negotiate because you're just starting. You need to view that exactly the opposite because you're starting out ask for grace say hey how about I you know pay this you know like hypothetically even if it's AT&T.
I don't care what your vendors, your rent, ask for grace say “hey can I have one month that I don't pay rent you know or the first month afraid would you all pay charge me 50% off and then from the following month I pay full price negotiate” and see what you can get always negotiate the further out.
Then work your way back do you know what I mean watch some YouTube videos or a difference of about how to negotiate but you got an ago she ate your leash Dean you got to negotiate with your vendors. Your food vendor if you want to go the prime vendor route you need to say..
“Hey listen this is a startup you know you're gonna benefit if I'm going to continue to be in business is that correct fantastic then why don't you help me out for the next three months lower your rate to this give me some grace so I can get my feet on the ground.
And get going within three months I'll be back up you. Know we're very passionate about this restaurant we know it's gonna be successful and I want to work with you long-term and this is gonna be a long-term business relationship”
Ask for grace and negotiate everything.
Step number three under the everything zone is to document everything in the beginning.
You're gonna be entering this chaos zone where you you know people call you for different things You make a promise for differently unit you know you're gonna forget.
You've sat with somebody they told you “oh they're gonna agree to do this or that was a vendor it was a credit card processing rep you spoke with”. What did you always have a pen and paper with you when you meeting with people vendors.
When they're making promise you write it down always the date of the meeting the time of the meeting the person's name their contact information their business card. You can staple to your notes or whatever but document everything serial to go back
“hey do you remember on the day this at this time you told me this or whatever ideally” Anyway so you got a document everything and get in a habit. Then later when you’re with your staff you need to document everything, every time you coach a team member you've got to document everything.
Overall just document everything you know what I'm saying it's just the fact it is because there's gonna be so many moving parts you're going to forget now when it comes to document obviously you can use a classic pen and paper or something or a notebook you have or you can use a logbook feature that many software's do offer.
So for instance we use scheduling software's you know like if you use hot schedules or 7:00 shifts they're going to have a log book feature where you can log things and we do religiously use the log book daily we do our managers.
That’s tip number three I have for you is to expect that you're gonna make mistakes. Expect that equipment is going to break down. Expect it you're not gonna make much money because what happens is stress and disappointment happens.
When you expect this and this happens and then there is this gap results in this huge stress I'm gonna tell you like first us and the first year can we make no money obviously because rent was really high.
We did not know gross sales was low and so we made no profit that first year now what happened is for instance this one time, one of our make lines broke because our equipment the brush on. We bought we did not know the equipment in what condition they are that we're buying so make I'm broke down we call this company to come and fix it.
And I remember vividly because with this large catering order so these two guys come over to fix the make line in the middle of the shift and we have everything out on the fridge and it was a huge chaos cause we had this big catering.
And all the food is on the main fridge instead of on the make line and all that shenanigans. These guys worked for two hours and gave my husband an invoice for 750 dollars and they were unable to fix the make line.
So they worked two hours on that fridge. They could not fix it and we still had to pay them 750 dollars and I'm working hundred hours a week and making zero profit I tell you that hurt. But that’s the cost of this.
If I expected it not from now on I know that always when the technicians come out whether it's to check our AC or it's a plumber they charge for the trip one hundred and fifty dollars we've had people come out check like for instance we had a meat slicer for the guy you know there's an automation thing with the meat slicer to whatever he came over we had to pay hundred fifty dollars for for His Highness to come over and check and be like “oh it would be four thousand dollars” .
If we were to replace this and this and this so we're like “well no were not interested in and we still had to pay this gentleman 150 dollars for him to come out and those things can be very very stressful in a very unhealthy way when you're not making money so I'm telling you expect that you're not gonna make money.
Expect that equipment is going to break down. It is gonna be what is going to be I'm just being honest with you so that's why you need to go into it with that expectation. Know what is going to be for the first year till you can get this going.
It is going to take a village an enormous amount of work to make a business successful and I'm just being honest with you so expect the unexpected so it would be less stressful for you.
So the tip number four I have for you which has been the secret to our success is ..
BE OBSESSED WITH GROWING YOUR SALES
You're going to be obsessed with burn yourselves when the sales is not good.
And you're gonna continue to be obsessed with sales when sales is good because the way it works in the restaurant is whatever you do whatever you do today to grow yourself whatever activity you do to market your restaurant is not going to surface up you won't see the results in four to six weeks so we go through this season where sells is really good
And you slow down on your marketing because you think that ooph says it's really good.
You do the marketing the day, those sales is good for the next four to six weeks and that's going to make you having sustained level of sales that is so important.
You're gonna have so many problems in the restaurant people are going to quit. I told you equipment is going to break down but if sales is good I'm telling you this if sales is good at least you have this one thing you can hang on to.
When customers are happy with our food and sales is good we will further everything else because south quick you can pay more you can hire more people. Equipment breaks you just buy another one you pay a handyman to come fix it you just get over it but if sales is not good really nothing else makes sense.
So be obsessed with growing your sales from day one and if you have not already please go to our website or click on the link below we have in the description to download my 52 ways to growing your restaurant sales 52 ways because it corresponds to 52 weeks because I believe every single week you need to be sowing seeds to grow cells.
You're doing different things and all of them will work together some of the activities you do for your marketing it's like you know a bunch of the trees you have over here that the crop they give is like 50 pounds a year.
You're gonna do these different activities that are going to give you a hundred pounds a year--and crops you know as a farmer but you got to do them all because at the end if you want to have plenty of harvest and have good sales that steady grows.
And one of my goals for you is you know on this on the show is to help you grow your sales two digits or more as in ten percent or more every single month to month that has been our strategy
How we've tripled ourselves because we just focus on ten percent or more every single month in sales growth so if you don't have your guide yet go download it print it. Put it in your office and put it in action one thing every single week
And the last tip I have for you which my husband and I failed to do is to go work at another restaurant maybe you have had years of restaurant experience or not our case we had zero.
We never worked at a dishwasher as a server nothing at all. We never work at a restaurant and I would say that's really unwise so we had to learn a lot of things the hard way because of that.
So if you have the opportunity I wanted to suggest it takes six months and slow down on your what you had in mind and go work at.
Whatever restaurant in visit you know.. is that a burger you were thinking opening is it good what is it going to be go and work at a restaurant like that and get to know the owners because you're like well I've worked at a restaurant for so many years.
This is a challenge that happens because you think that “oh you were hypothetically the cook at a restaurant and you think that now it is going to qualify
you to run a restaurant properly because you think the owner doesn't really know.
I'm not saying that's you but you know saying that sometimes the mindset people have know that it takes a totally different set of skills to run a business being a businessman versus being a chef or a server these are different set of skills a business man or a businesswoman has got to know marketing HR finances.
You know there's a lot of moving parts food production customer service you know systems. There's a lot of things that you need to master as a restaurant owner so if you have worked at a restaurant for years if I were you I would build closer relationship with the owner of the restaurant you're working that figure out what are the issues he's dealing with.
And just learn as much as you can from another of restaurant owner I again my advice is that if you can save thousands of dollars and loads of stress and headache by slowing down six months.
In the meantime build up your savings to go into and starting your own adventure that's what I would do. It's your call I'd be happy to you learn more about you guys's progress as you're opening your restaurant and your journey if there's any way I can help you guys out be sure to let me know again if this is your first time on our show be sure to subscribe so we can stay in touch.
If you have any questions you would like us to cover in the future.
Here at making dough show be sure to go to our website at makingdoughshow.com just scroll down on the main page. If there is any questions you have of any kinds I'd be happy to do my best to help you and in the meantime let's get back to work and make some dough thank you!