Location Is Just One of Many Factors to Consider In Opening a New Restaurant
Opening a restaurant can be a rewarding but complex undertaking. It is a responsibility with many different pieces of a puzzle that the new owner must skillfully put together. For many, it is all about learning an entire new business from inside out, and doing so in a relatively short period of time. Regardless of your prior job experience or education opening a restaurant is a huge gamble for anyone, anywhere in the world.
The most important factor in establishing any new business is the location. A typical restaurant owner is generally required to commit to a long term lease, and he had better hope and pray he makes the right decision, because if he doesnt, he will be stuck in that location for a long time. Or pay a hefty penalty to get out of the lease early. On the other hand, the operator of a mobile food concession has the ability to change locations, without penalty, at any time, as conditions warrant. If business slackens off in one location, he can readily fold up his tent, so to speak and tow his trailer to another location.
The initial capital expenditures for building lease, leasehold improvements, outfitting the kitchen, seating, lighting, flooring and all other pre-opening costs can easily reach $200,000 or more. And if you pour all your money into the wrong location, that money is as good as gone. You cant take the leasehold improvements with you. On the other hand, the owner of a mobile food business has a substantially lower initial investment with a much smaller risk factor. If things do not work out at one location, he can hook up his concession trailer and bring his business to customers at a different location. And take his entire investment along with him.
If your idea of fun is constantly worrying about money, hiring consultants, training and managing employees, complying with government regulations, setting up systems, balancing the books, taking inventory, preparing menus, controlling theft and working 18 hour days, then you are a natural born restaurant owner. If this doesnt appeal to you, you might consider the simplicity of owning a mobile food business. Did you know that many hot dog vendors working downtown areas make more money than the majority of struggling to survive restaurant owners? And most of them work only 4-5 hours a day. Talk about a low stress job with a fraction of the risk.
Hiring, training and managing restaurant employees are probably the most difficult tasks that the new restaurant owner must face. If you are an easy going individual, your employees will take advantage and walk all over you. If you are overly strict, they will leave and go somewhere else. The restaurant business is one where your employees, from your cooks to your busboys can either make or break your business. In many cities and even smaller towns, newspaper columnists write articles about the local eating establishments. A great review will usually bring in new business for a week or so at the most, whereas a bad review could ruin your business entirely. An unfavorable report from your local health department could also be devastating.
Managing a restaurant staff is a difficult task. It can be one headache after another. Employers find that many restaurant employees are unreliable and uncooperative. The restaurant business is plagued with staff turnovers. To add insult to injury your good employees are often wooed away by your competitors.
In order to achieve the status of an excellent restaurant, the new owner must wear many hats. He must learn everything he can about his business. He must be able to perform every job and he must be prepared to devote countless hours to his new career.
Opening a restaurant is a daunting task, but no matter what you put into it, in terms of time or money, it will not be successful if no one knows you exist. If you are taking over a location that was a restaurant at some point in the past, make sure you do not make the same mistakes that the previous owner did. Unless it was a management problem or some other obscure issue, restaurants usually fail because of their location or lack of working capital. Or as one restaurant critic jokingly remarked, The restaurant failed because the owner ran out of working capital due to a bad location.
The most important factor in establishing any new business is the location. A typical restaurant owner is generally required to commit to a long term lease, and he had better hope and pray he makes the right decision, because if he doesnt, he will be stuck in that location for a long time. Or pay a hefty penalty to get out of the lease early. On the other hand, the operator of a mobile food concession has the ability to change locations, without penalty, at any time, as conditions warrant. If business slackens off in one location, he can readily fold up his tent, so to speak and tow his trailer to another location.
The initial capital expenditures for building lease, leasehold improvements, outfitting the kitchen, seating, lighting, flooring and all other pre-opening costs can easily reach $200,000 or more. And if you pour all your money into the wrong location, that money is as good as gone. You cant take the leasehold improvements with you. On the other hand, the owner of a mobile food business has a substantially lower initial investment with a much smaller risk factor. If things do not work out at one location, he can hook up his concession trailer and bring his business to customers at a different location. And take his entire investment along with him.
If your idea of fun is constantly worrying about money, hiring consultants, training and managing employees, complying with government regulations, setting up systems, balancing the books, taking inventory, preparing menus, controlling theft and working 18 hour days, then you are a natural born restaurant owner. If this doesnt appeal to you, you might consider the simplicity of owning a mobile food business. Did you know that many hot dog vendors working downtown areas make more money than the majority of struggling to survive restaurant owners? And most of them work only 4-5 hours a day. Talk about a low stress job with a fraction of the risk.
Hiring, training and managing restaurant employees are probably the most difficult tasks that the new restaurant owner must face. If you are an easy going individual, your employees will take advantage and walk all over you. If you are overly strict, they will leave and go somewhere else. The restaurant business is one where your employees, from your cooks to your busboys can either make or break your business. In many cities and even smaller towns, newspaper columnists write articles about the local eating establishments. A great review will usually bring in new business for a week or so at the most, whereas a bad review could ruin your business entirely. An unfavorable report from your local health department could also be devastating.
Managing a restaurant staff is a difficult task. It can be one headache after another. Employers find that many restaurant employees are unreliable and uncooperative. The restaurant business is plagued with staff turnovers. To add insult to injury your good employees are often wooed away by your competitors.
In order to achieve the status of an excellent restaurant, the new owner must wear many hats. He must learn everything he can about his business. He must be able to perform every job and he must be prepared to devote countless hours to his new career.
Opening a restaurant is a daunting task, but no matter what you put into it, in terms of time or money, it will not be successful if no one knows you exist. If you are taking over a location that was a restaurant at some point in the past, make sure you do not make the same mistakes that the previous owner did. Unless it was a management problem or some other obscure issue, restaurants usually fail because of their location or lack of working capital. Or as one restaurant critic jokingly remarked, The restaurant failed because the owner ran out of working capital due to a bad location.
About the Author:
About the author: Michael Stadneck lost his financial planning job due to corporate downsizing and out of necessity became a hot dog vendor in New York City. He later bought a mobile food concession trailer and now travels the northeast leasing spaces at local fairs and at special events. He currently enjoys time with his family, makes a decent living, all without the stress.
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