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 be