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Starting A Small Restaurant

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What You Need To Know About Starting A Restaurant

Author: Mario Churchill

There are over 900,000 restaurants and eateries in the United States, and they serve more than 70 billion snacks and meals every year. You know how to cook and you like people, but what do you know about starting a small restaurant?

While it is a romantic idea, starting a restaurant is hard work. Do you know what permits you need? How much cash will you need to start a restaurant business? Where should you buy your supplies? How will you form your corporate structure? You need to learn the fundamentals of starting a restaurant.

Here are some answers to some pertinent questions about starting a restaurant.

? What Corporate Structure Should You Choose?

There are 5 choices to choose from for corporate structure: a partnership, sole proprietorship, limited liability company, or a C corporation.

Setting up an LLC will protect you from personal liability, if you are sued by someone who has visited your restaurant, your personal property (house, cars etc.) cannot be touched. This is the best corporate structure for your restaurant and any small business.

? A Lack of Qualified Labor.

This is one of the biggest challenges facing the restaurant business today. As the restaurant business continues to grow, the demand for qualified workers in a sparse labor pool is ever increasing. The rising labor costs and finding qualified workers are two of the biggest concerns for restaurant owners. You will need to decide the exact job description for each level of employee. You will need to define and outline clearly the duties and responsibilities for all jobs. You will need to list any special skills and other credentials for each job. You will need to establish a reasonable pay scale. Research what other, similar businesses are paying and go from there. There should be a minimum and maximum pay rate for each position. Waitresses are usually given a bit more than minimum wage, as they make tips in addition to their paycheck.

? Startup Costs and Ongoing Expenses.

You will need to decide whether to start from scratch, or take on the remodeling of an existing restaurant. If you decide to start from scratch, you will spend anywhere from $100,000 to $300,000 to purchase cooking and ventilation equipment, freezers, refrigerators, tables, chairs, bar stools, counters and cutting stations, shelving, and heating and cooling systems. If you remodel an existing restaurant with the same concept will cost less. The rent may be a bit higher, but in the long run you will realize significant savings.

? Managing Your Startup Budget.

Make sure you have enough money to purchase everything you need and get you through the first months after starting a restaurant, until you have a good positive cash flow. Shop around for your equipment and get the best possible prices. You may also want to check into used equipment or leasing your equipment. The cost of food will be about 25% to 40% of your revenue, depending on the concept of your restaurant. Payroll will be an additional 20% to 25%, and rent another 8%. You will probably come out with about 5% of the profits for yourself, if you are lucky. Even if you don’t think you will need it, open a line of credit with your bank. You need to establish a good credit record, this will help if you decide to open another restaurant in the future.

Article Source: http://www.articlesbase.com/management-articles/what-you-need-to-know-about-starting-a-restaurant-218621.html

About the Author:
Mario Churchill is a freelance author and has written over 200 articles on various subjects. For more information on starting a small restaurant checkout his recommended websites.