Opening a business

Leedsfan123

Hi,

I'm looking for some advice from some business owners (or people who have experience in this area).

I am planning on opening a restaurant in a popular commuter town outside Dublin. There is a large target market there for what I am planning and there is nothing like it anywhere else.

I have a little money myself to put into this (not near enough) and friends/family will throw me a little more. But I was wondering what a rough budget should be for opening a restaurant would be. I have never run a food business before, but I have run a business and managed staff.

I plan on renting a unit and would work in it fulltime myself with my partner to reduce staff costs. I am loathe to take on debt finance to start a business and was wondering if angel investors is best the route to go down.

Any tips/advice would be greatly appreciated.

ironclaw

Are you building from scratch or taking over an existing premises? If its the latter, does it come fitted out? Restaurant grade kicthens could run you into the 100's of thousands. A full kit out from new, maybe €150k or more, depending on your target volume and exact requirements from the food side. You can get kitchen gear in auctions, it does occasionally come up at good prices, but you'd want to know what you are buying and be ready with cash.

Given you have never run a restaurant, I'd strongly suggest working in one or along side one. I've been involved in them from the purely IT side and even though I'd consider myself business savvy, I would not run a restaurant. There are quirks and things you really need to know. Your head chef will make or break you, no matter how much glitz or glam you put around it. The food must be good and it must attract people for Monday lunch and a Saturday night sit down. The key is people on seats, otherwise you are sunk. Lastly, cost your wastage. It can be huge. You need an experienced chef to know how much to buy in, when to use it and how to creatively use it when you are close to date. Be prepared for large write offs if you get it wrong. Your marketing budget needs to be massive, both physical and online.

My closing advice would be your financials. Very few restaurants do well. Look around and try find venues that are open and under the same management for perhaps 3 years or more. They are slim on the ground. I'd personally want an A-Team kitchen staff, brilliant front of house and a pile of cash to cover the quiet start up phase before I'd even consider it.

Leedsfan123

Thanks for your detailed comment. We are only looking at units with a kitchens in them at the moment, but if we do need to buy anything new I know they can be expensive (I would look into getting grants for anything we have to buy new). I have worked closely with a company who provide kitchen equipment so I am hoping to get things at as near to cost as possible.

The idea for what we are doing hasn't been done before, but the menu we are planning isn't overly complicated (my partner will be our head chef). I will work foh with a few other waiters etc. It will be a lot of work I know and any advice is greatly appreciated.

I imagine setting it up as a limited company would be a better idea than going soletrader?

Graham

Leedsfan123 wrote: »

I would look into getting grants for anything we have to buy new

Are you sure such grants exist?

Leedsfan123

I have heard of many businesses getting grants for coffee machines and the like, I am hoping that kitchen equipment would be similar. If it's granted you buy it yourself and they refund you half of it back. I will be meeting my LEO to discuss grants etc

mrawkward

There are generally no grants for this kind of business. Most investors would never even look at a restaurant, other than to eat in! You have no experience and the concept is untried! Recipe for disaster I fear.. Has to be one of the hardest ways to make a living, let alone a profit for even the well experienced. Please, please get advice from people who know the business before you commit a penny.

Leedsfan123

Ha I appreciate the warning. I know a good few restaurant owners and I will be working closely with them over the next few months (before I spend a penny) I hope to learn a lot before year end and I am planning to hopefully go full steam ahead from there

duploelabs

Because everyone eats, and everyone has a fair idea of how to run a business, everyone thinks they know how to run a food business. The path of start up food business success is littered with the ruins of people who have never worked in the trade before. Especially with no prior market research into your area, nor any experience (a few years might do you some benefit, definitely not a few months as you've previously mentioned), on what you have told us I predict you'll end up very broke. There's a reason why there are no niche restaurants in suburban areas, and this can go for rural towns also, is that they don't have the catchment to pull a sustainable amount of spend, any that do would be a tourism destination and therefore would have to rely on a summer of 8-day weeks and a winter of shutting up shop. There are so many facets to a food business and to run one completely you need to be familiar with every single part, so roll up your sleeves and prepare to to start washing some dishes before you even consider going out on your own

ironclaw

Leedsfan123 wrote: »

I imagine setting it up as a limited company would be a better idea than going soletrader?

Without being rude, if you need to ask this question, then you need to take a very big step back. Bring it all back to basics.

Yes, you would need to be an Ltd for a restaurant for a sounder legal side of things. You could be a sole trader but that would be a very complicated set up and your liability would be huge.

As regards Ltd, you mentioned your partner, I'm assuming that is a marriage? I would strongly suggest not going into business with a family member or significant other. Times get tough, tensions frayed and when money gets involved, its multiplied. You can shout a room down at your business partner and go home to shake hands the next day. You can't do that with your SO. Something to keep in mind!

odeamarcas

Leedsfan123 wrote: »

I have heard of many businesses getting grants for coffee machines and the like, I am hoping that kitchen equipment would be similar. If it's granted you buy it yourself and they refund you half of it back. I will be meeting my LEO to discuss grants etc

I'm afraid it will probably be disappointing news from the LEO Leedsfan, I write business plans on a daily basis for grant applications, and they don't provide grants to this category of business or for that type of expenditure. I've taken the below excerpt from a LEO office, you should check out their websites before you go into them. They will only brush you off if you aren't up to speed on what they can do for you. They could offer you courses, maybe some financial help towards a website, some mentoring (soft supports really), but financial help most likely will not be forthcoming. Best of luck with it all though.

Start:

In order to qualify for grant assistance from the Local Enterprise Office (Carlow), you must adhere to the following criteria:
Located in County Carlow
A business employing up to 10 employees;
A manufacturing or internationally traded services business;
A domestically traded services business with the potential to trade internationally;
The enterprise must be in the commercial sphere;
The enterprise must demonstrate a market for the product/service;
The enterprise must have a capacity for growth and new job creation.

End.

Walter2016

Leedsfan123 wrote: »

I have heard of many businesses getting grants for coffee machines and the like, I am hoping that kitchen equipment would be similar. If it's granted you buy it yourself and they refund you half of it back. I will be meeting my LEO to discuss grants etc

I think you are mixing up grants with private company inducements.

Grants are usually funds provided from an official source and I don't know of any for the restaurant trade.

There may be some seed capital tax reliefs available.

Some coffee companies will provide a full package in return for you paying a subsidised rental on the machines and taking their coffee beans. Similarly companies like coca cola will provided dispensing machines / refridgerators in exchange for you taking a full line-up of their products.

Maybe look at operating the food part of a local pub or golf club that has everything in place? This way you do not need to worry about many of the intricate aspects of running a restaurant business and concentrate on providing good food. If that works, then you could look at opening on your own down the road.

Graham

Walter2016 wrote: »

Maybe look at operating the food part of a local pub or golf club that has everything in place?

Most of those type of operations will ask awkward questions like what experience do you have.

Leedsfan123

Really appreciate all the feedback guys. To clear up a few things, I in the very early stages of planning this (as in it's been on my mind for long time and I'm only planning it now). I've applied to the LEO 'Young Entrepreneur Awards" and that set me on this path of gathering all the info I could.

The restaurant I plan will be more of a 'hole in the wall' type of a place (Like Rolling Donut or Dublin Pizza Company). It will be very small and will offer only standing or limited seating. It will be a healthy 'fast food' style venue (similar to the very successful Chopped) and I will only be targeting the lunch rush.

I will probably have to aim to open in Dublin city centre as I think a lot of you are right, there wouldn't be the necessary footfall anywhere else. II had planned to open in Drogheda as I live there and there is a good buzz about the town). But a small (tiny) space in dublin only trading from say 11am until 5pm, would hopefully not be too expensive to run.

I am months off actually opening and appreciate all advise/warnings/insults that are thrown my way.

duploelabs

Leedsfan123 wrote: »

Really appreciate all the feedback guys. To clear up a few things, I in the very early stages of planning this (as in it's been on my mind for long time and I'm only planning it now). I've applied to the LEO 'Young Entrepreneur Awards" and that set me on this path of gathering all the info I could.

The restaurant I plan will be more of a 'hole in the wall' type of a place (Like Rolling Donut or Dublin Pizza Company). It will be very small and will offer only standing or limited seating. It will be a healthy 'fast food' style venue (similar to the very successful Chopped) and I will only be targeting the lunch rush.

I will probably have to aim to open in Dublin city centre as I think a lot of you are right, there wouldn't be the necessary footfall anywhere else. II had planned to open in Drogheda as I live there and there is a good buzz about the town). But a small (tiny) space in dublin only trading from say 11am until 5pm, would hopefully not be too expensive to run.

I am months off actually opening and appreciate all advise/warnings/insults that are thrown my way.

You'll be serving from that time, you'll have another 4 hours before for prep for chefs, and one for clean down for your back of house. For your Dublin idea, the banks won't go near you for property unless you're within the bubble, which is the length of george's street up to Aungier street and then across to South William street, so demand is massive for that relatively small area and rents etc reflect this. I've just finished a consultancy with a multi-venue group based in London who're looking to move here with the same short turnover time serving, that was the one major sticking issue on the feasibility study which we did.

ironclaw

Just to add Leedsfan123, its my understanding that Chopped is a franchise. Its very easy to look successful as a franchise as your liability is limited as others peoples money is funding your expansion. To call it as 'successful', you'll need to count how many are a) open and b) in healthy profit in three years time. Most business loose vast sums of money in this period as you are ploughing dough (excuse the pun) into marketing and the inevitable mess ups unless you have super strict controls in place e.g. Stock, Staff etc.

duploelabs

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Websites4u

I think a) running / managing a business would be separate to running a food / restaurant business. get someone with this experience. Also an angel investor will only invest if the business is set up, has a system in place and sees that their money can scale the business. If you don't know what budget you would need to set up or yr 1, yr 3 , etc, i would have questions as an investor and even for yourself...