How Much Does It Cost to Open a Restaurant?




So how much does it cost to open a restaurant?


Listen to Chef Marcus Explain exactly how much it costs to open your own restaurant.


Video Transcript Below


welcome to Markus GTV I'm chef Marcus

Julie animus chef on a mission today's

mission is opening a restaurant.

How much money does

it take to open a restaurant?


This is a question people ask me all the time.


"Marcus, I have 50,000 is

that enough to open a restaurant?"


Of course I always say my answer is no no

and no!


I don't care if you say two

hundred thousand or five hundred

thousand, chances are that's not enough

to open a restaurant.


What do I mean by that?


People ask me these blind questions all the time.


"I want to open a restaurant and I've got sixty thousand, is

that enough?"


First of all I don't know the situation of where you're opening a

restaurant.


I don't know what kind of building you're going into.


I don't know if it's Turn key or not.


Places that say they're Turnkey still cost a lot of

money.


Don't let people fool you when they say, "oh we have a turnkey restaurant for lease, it's ready to start the walk-in."


There's so many fees above and beyond with so called

turnkey, that if you go in with a limited budget, you're not going to succeed.


So here's a general rule about about opening a restaurant.


First, figure out what you need, then you multiply it by three to five and your getting close.


What? By three to five?


People tell me all the time, Marcus you're wrong!


what do you mean 3 to 5x!?

Then like clockwork they always come back to me and

say "oh my gosh Marcus you were so right!"


There's so many things that can go wrong.


Opening a restaurant that does no wrong is next to impossible unless you're opening up a franchise and even then, things can still happen.


Unless you're opening up something that's so systematized and cookie cutter

like a franchise your going to run into all kinds of unexpected obstacles.


If your going into a franchise they're gonna want you to have up to a million dollars or more liquid right because they don't want you to run out of money.


They're gonna have stringent written guidelines when you join a franchise.


They want you to succeed and you're going to succeed because they have a system and formula they follow.


Because of this, they want you to be over capitalized.


People say I can't afford to do a franchise but I can afford to do my own little thing better than a franchise.


So here are the reasons why a restaurant will go over budget.


This can probably apply to a lot of businesses.


The first reason you go over budget is because you don't have a budget.


You just simply say I haven't had time to create a budget.


Write things down, figure things out, and cost things out,

When you don't have a budget, you just have a ballpark in your mind.


I guarantee that if you have a ballpark in your mind


If you have limited access to funds, you will definitely go over-budget unless you cut corners and open up when you're not ready.


Opening up when you're not ready is not good at all.

So to make a budget, you really need to sit down and make a list of everything

you can possibly think of.


or which that's never going to be enough

right you actually need to study a

budget a profit and loss a balance sheet

you need to study the accounting of a

restaurant to be an existing restaurant

or a sample of a restaurant because

there's things you're gonna think of

that you're not going to think of that

are there there's gonna be a ton of

things you're like why no idea I that

pay money to open a restaurant to do X Y

& Z had no idea you know like at the

health department it might be a hundred

bucks might be 200 bucks but you would

have never ever thought for example

soda when you start hooking up with soda

guns and start running soda lines your

initial inventory your initial order

with installing all the equipment could

be a thousand could be two thousand

dollars and if you're a brand new

restaurant with no restaurant experience

no other restaurants and don't have

relationships chances are that

distributors gonna come in and say I

need at least half down or I need full

down for me to put all that equipment

and everything in all the product and

all of a sudden you're looking at six

seven sodas on the gun

each one is 100 bucks per bag in the Box

a cylinder whatever it is plus all the

equipment but oh my gosh I had no idea

to start pouring a $2.00 soda it's going

to cost me $1,500 to get into and that's

the reality but there's things like that

all across the board that you're just

not going to think of that's why you

have to study another active or sample

restaurant budget because you're going

oh my gosh what's this what's that

what's that and don't think these things

don't pertain to you because they will

totally pertain to you one thing that

operators never budget for enough of is

is training staff they think over an

open we'll get staff in there a couple

days ahead of time you need to train

your staff for a week two weeks which

just means running two weeks of payroll

now an average restaurant can be five

thousand seven thousand dollars in

payroll do you have an extra ten to

twenty thousand dollars sitting around

just to pay staff for two weeks Oh

most people don't have that kind of

money so most operators open up

themselves they I'm gonna do everything

myself

this is now time in training when you

open the doors your staff isn't trained

on those first impressions we opened Oh

Roman time 13 years ago and I got to

tell you people still remember the first

time they walked into our restaurant we

have a lot of guests that have been with

us for 13 years since the very beginning

and it's awesome it's called a totally

blessed them thank you so much to those

to those loyal guests but I got to tell

you some guests they'll remember the

first week they were here the first week

we're open the first six months we were

open the first six weeks we're open for

six hours we were open I have those

people that still come into the

restaurant too but there's other people

that don't come back because they do

remember their experience and if you're

not ready from the get-go you're just

just shooting yourself in the foot first

impression is everything granted every

new place has growing pains

every new place has kinks to work out

but you've got to be prepared you've got

to send your troops your staff to the

friendly battlefield water percent

ammunition dump one hundred percent

prepared they've got to go through basic

training and people don't send their

staff through basic training they open

wrestling open the doors and people

start fending for themselves they train

as things happen right most managers

most managers train when they see us

employee do something wrong to begin

with oh don't do that don't do that they

think they do on-the-job training right

so it's just like spot training here now

if you're doing that wrong let me

correct you I suppose that means formal

sit-down flout staff trainings going

over a manual going over procedures

going over role playing so that takes

money people that takes money opera

people don't have enough money to lose

money so here is

you open your restaurant you mount to

make sure you have tons of opera as much

operating money as you possibly can

because I've only known one restaurant I

talked to a lot of other restaurant

owners I've only known one other

restaurant in 22 plus years of those 25

years of doing this where the guy has

made money from month one for month one

he's turned a profit and never looked

back that is extremely extremely rare to

turn profit from month one it's unheard

of in the industry so you need another

five thousand dollars to cover your

first month ten thousand dollars you

need enough money to come you need

enough money to cover like your basic

expenses rent heat all these basic

expenses for six months it's just like

if you lost your job at home if you lost

your job you need you need a nest egg

you need something back there a backup

you need a backup plan

you need backup money sitting there if

you're not gonna use it that's what you

need in the restaurant you need that

backup you need you're gonna have a bad

week you're gonna have a bad month

you're gonna need to be able to take and

say hey I have this you're gonna need to

be sending a lot of extra money the

beginning on advertising advertising

marketing marketing market a lot of ways

to do this advertising and marketing for

low-cost now but you might want to still

resort to standard print media in the

bean because you don't have a list if

you go to my website 50 mistakes commie

talk about a ton of stuff there on how

to build your business how to market

your business but when you open from day

one and there are tricks well before you

open my last restaurant is open well

before we opened I had a nice database

in there well before we opened then I

got four basically free but I still had

to spend a little bit of money when I

see basically free means I had to spend

you know a few hundred bucks on products

a few hundred bucks on staff and a

couple hundred bucks to go to fair

street fairs and set up booths right and

hand out products and get people to sign

up for their emails and give me their

emails so it still costs money to do all

that and people just think whoa you know

what for example we had a blueberry

festival here in Ellenville two weeks

before we open well I had the man to

people on that on a booth either by

product the Linares and product to give

out we could have sold a product but

when you're opening up nobody nobody

wants to buy your product when you're

opening up like that they want to come

in and sample things so that's what we

did we set up right from the restaurant

it cost us probably 400

dollars for the day and that's you know

if you're opening up with fifty thousand

dollars four hundred dollars is a lot

looking in a small bucket of fifty

thousand and if you do one or two events

like that it's just you know you're

going to run out of money like that and

that's what happens so soda lines beer

lines all this equipment that comes in

now we've bought equipment our last

session we bought used equipment a lot

of places will inherit use the equipment

well a lot of this equipment sometimes

doesn't work

we got burned last time on our own my

last restaurant because none of the

refrigeration except the walk-in cooler

all the lowboys nothing worked all the

compressors were shot so all of a sudden

the last minute after we did

construction and once you finish

construction most places like we need to

open we need to open we need to open

which is obviously right you do need to

open it start generating revenue but

only if it's the right scenario so once

we go to turn all these are just these

refrigerators on nothing works nothing

works whatsoever so now we're scrambling

to order new refrigerators so we had to

spend an extra four or five thousand

dollars in refrigeration which wasn't

the big deal but the big deals now we're

losing a week because they have the

company's up to order these products and

shipping them to us we got to get them

put in place you're losing week you're

losing a lot of money by losing a week

if you if something's coming you off

like that um here's the big thing when

you negotiate your lease do not do not

pay rent until the day you open your

restaurant okay that's a big mistake a

lot of operators make they start paying

rent from day one you have no idea how

long it's going to take you to open and

renovate a business a restaurant things

happen our last place the air

conditioning didn't work okay

to be able to to go back and now have to

have to say we have to buy an air

conditioner and we're paying rent which

we which of course I knew better but

mostly like oh my gosh we gonna do this

we gotta do that we do it and we're

still paying rent we're still paying

rent we're you have no idea how long

does it take you to open your doors and

your landlord needs to understand

especially if you're doing capital

improvements okay now most landlords are

going to want to camp like well I'll

give you three months free or until you

open if you can get something like that

take it chances are you might be able to

pull something off in three months or

four months but I want a landlord's

gonna want to avoid just sitting on

their property for 11 months and not

being that active and not doing stuff

okay so there's two sides of the coin

you have to show that you're going to be

active and have a timeline and maybe say

your landlord you know I need the first

four months or until the day we open so

whatever comes first four months or the

day we open so then you're put under the

gun to actually do something quicker as

opposed to letting draw out for 11

months whatever um you know so a couple

of besides the coolers not working in my

last restaurant the a/c didn't work in

the one one unit so either replace one

ain't the one unit you know things

happen when you when you inherit a

building or when you're you and build a

building things happen like all of a

sudden we turn on the grill in the

kitchen we start grilling we were

growing vegetables next thing I know

smoke is bellowing into the dining room

who would have ever thought that that

would have been the case this was an

existing restaurant there was a hood put

in place an Ansel system the venting

system all that was put in place but did

the previous owners do something wrong

boat do they not have a grill do I mean

what was going on in the place of course

you never know we turn the grill on fire

it up start growing and the whole dining

room filled with smoke so there were

something would screw up with return air

but if you're if you're wasting if

you're losing time that your open

because of something stupid like that

it's costing you way more than fixing

the problem and if people are getting

smoked out of your restaurant then it's

really costing you way more so there's

my point to that is there's so many

there's so much minutia that can happen

of things that can go wrong in your

restaurant and this is why you need

plenty of time you know a training

budget to be able to train your staff so

you turn the grill on two weeks ahead of

time to do your staff trainings start

serving Tran staff meals you're gonna

realize that only your staff got smoked

out of them you're not it's not a dining

room full of guests okay

super super so I cannot stress that

enough so with all these things adding

up it's easy to go

over budget and it's very very very

feasible to go two to three times over

budget and really peep experts in

industry say three to five times if you

think you need fifty thousand you need a

hundred fifty thousand and that's

exactly what happened at my last

restaurant so don't we need fifty

business partner we need fifty

no we need 150 and that was just the

reality of it okay

not an experienced restaurateur so I

know that but people going into these

situations don't know that natural they

get burdened that's when you see these

restaurants that open and they never

ever ever have a chance in succeeding

because they just can't never get ahead

ahead and ahead there's just it's one

step it's one step backwards one step

forward two steps backwards it's just

like you're just like the money you're

bringing in is the money that you're

that you're sending out right so it's in

out and out and out and out and out and

out and it's just like there's nothing

ever there as a cushion that cushion

money that cushion wedding needs to be

part of your opening budget a lot of

people think well I could open a 50

thousand right you can open your doors

with 50 thousand you can open your doors

with two hundred four thousand right

gold open doors with five hundred

thousand but what are you going to do to

sustain when you're not making money

those first months and to catch up on

things that you really didn't think

you're going to happen so get over to my

restaurant blog my restaurant cyber

coaching website 50 mistakes calm fi fty

or 5-0 mistakes calm there is tons and

tons of free information over there

don't forget to sign up for my email

list over there I sent up valuable tips

and I'm happy to to talk more in depth

with you send me an email and help at 50

mistakes calm I suggest your going on my

website taking that free webinar on

building a database super super

important how to build a database or

databases key another big thing there's

a link there for restaurant owner calm I

joined that 13 years ago me first open

it saved same to my butt restaurant

owner calm it is a huge online library

of all these documents that you could

possibly use and there are opening

budgets on there's opening checklists I

mean if he has a checklist on a general

has a checklist on your life a month

ahead of time you should be

doing research in about a month a year

ahead of time you should be do out there

doing research and development on the

market concepts visiting restaurants

figure out your menu a year ahead of

time so there's timelines on their great

timelines but there's all kinds of staff

policies there's legal stuff on their

legal guidelines all kinds of

spreadsheets inventory spreadsheets

webinars audio files on their interviews

with experts the site is immense and I

think it's like 10 bucks a month or

something it's the best ten bucks you

will ever spend click the link on run 50

mistakes calm restaurant owner calm I'm

chef Marcus joy and thanks for watching

this if you like my videos please hit

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