The romance of opening a restaurant appeals to all of us on some level. Creative personalities love working new dining concepts from the ground up, and nothing seems to offer more potential for fulfilling personal vision than opening a new eatery. Why not just set your imagination free and parlay your love of food into the perfect entrepreneurial opportunity? After all, an estimated 60 % of new restaurants will fail in the first year.
That was a tough-love statement, but it’s true. Heavy competition and razor-thin profit margins make food service a tough business and many would-be restauranteurs find out too late that only an honest self-assessment could have predicted how prepared you were for success before taking the plunge.
If the answer is anything but none, then a new restaurant may not be in the cards. Restaurants need more than dedicated souls who love to cook. The truth is that most new owners will be responsible for doing almost everything they can’t afford to pay someone else to do while the business grows to profitability — usually in about two to three years.
That means ordering supplies, waiting tables, scrubbing pots, swabbing the deck, hiring staff, and dealing with payroll and taxes in addition to cooking. Throw in a bit of Murphy’s Law, and if your plan doesn’t include a few years’ worths of seven-day work weeks, you may be entering the wrong business.
2. How much money can I afford to lose?
The high failure rate of restaurants means new entrepreneurs need to approach the food service business with their eyes wide open. How will your business be funded? If it fails, will you have to live in your car and work three jobs to pay off the business loans while trying to make ends meet? Are you sacrificing your retirement savings? Or the kids’ college fund?
Not only is it critical to consider the risk to your initial investment, but all new businesses struggle with unpredictable income, and tight profit margins can be challenging if there is too little cash to both reinvest money into the business and keep the lights on at home until you are established and profitable. Can you live with that?
3. Is it all about me?
Many new restaurant concepts fail because customers didn’t buy into it. A successful restaurant is one that attracts paying customers by giving them what they want, and that is not always personally satisfying to the owner. After pouring your heart into the restaurant of your dreams, are you prepared to put aside your ego, admit you were wrong, and make changes you don’t like to attract customers?
If you answered these questions honestly, and believe you have what it takes to take the next step, then you are moving forward on your adventure with the right mindset for success. New restaurants may fail every day, but with hard work and proper planning, many succeed. Yours can, too.