June 17, 2022
How Much Does It Cost to Open a Restaurant?
As restaurant consultants, one of the first questions we get asked is how much it will cost to launch the restaurant It’s a fair question really and the correct answer is generally. How long is a piece of string!!
We deal with restaurant groups with the significant financial backing and possibly a portfolio of multiple locations, as well as single-site operations, food trucks, and ghost kitchen operators at Swiss Knife. As a result, while the budget varies greatly, the approach is frequently the same.
THE PROCESS – HOW TO CALCULATE HOW MUCH DOES IT COST
The answers to the following questions will help you figure out how much your restaurant will cost.
- What is your overall concept?
- Where are you looking to open?
- Who is your target audience?
- What is your ideal timeframe?
- What is your budget?
We can start making assumptions based on our previous initiatives and current market trends once we’ve established those answers. In most cases, we would accomplish this by crunching data and providing advice on a feasibility study.
Market research is extremely crucial for restaurant consultants. It would be like traveling a tunnel without a torch if you didn’t grasp the local market and where the prospects might be. We’ve all seen those restaurant sites that are geographically in wonderful places on a map but are struggling for one reason or another. We’ve all seen those fantastic ideas that aren’t quite working because the venue isn’t quite perfect. Market research that is well-planned and backed up by financial assumptions will help you figure out how much your restaurant, bar, club, or hotel will cost.
We have undoubtedly witnessed a significant shift in property costs following the collapse of many businesses, and with the demise of many businesses come chances for others. Many of our existing clients have gotten fantastic discounts from their landlords, who are, for the first time in decades, attempting to attract operators to their properties. The cost of a restaurant or business property in London varies greatly from one borough to the next. However, there are a few things to keep in mind.
- What is the status of the site? If it was previously a restaurant with amenities like extraction, gas, and three-phase electricity, this might be major cost savings.
- Is the site available for a new lease or does it have an incoming tenant, in which case a premium may be charged?
- Using a real estate agent can help you locate off-market options and get a better price, but it can cost anywhere from 10% to 20% of the lease.
- Going straight to the landlord is frequently the most cost-effective option, but make sure you have your stats and concept documented in a landlord pack and that you’re ready to present well.
- Keep in mind that the lease should be approximately 8% to 10% of your gross income when looking for a place to rent.
BUILD AND FIT-OUT
Depending on the size, amount of detail, and, of course, what the local authorities throw at you in terms of compliance, interior design, architecture, and building work can become quite expensive. In the same way, concept, and purpose, as well as operational flow and efficiency, must be considered while designing and building a kitchen. Surprisingly, the latter is rarely considered.
However, the best piece of advice is to hire a capable project manager/quantity surveyor who will work within your budget to keep your project going forward and on schedule. Missed revenue possibilities are often the true expense, thus having a production team that can return your site to you within a rent-free period could save you money in the long run.
As restaurant advisors, we would recommend and follow these measures. We help a lot of new and existing businesses get off the ground. Get in touch to learn more!