Writing up a business plan - need some help, opinions, ideas...

Hey guys.
 
I've been browsing through this site for a month or so and have found some great information.  Mostly, I shouldn't be considering opening a restaurant.  That aside, I have a few questions.
 
I have spent the last 8 years working in a small/medium sized hospital, serving 80 individually prepared meals as well as a cafeteria serving around 200 employees every meal, though the cafe food is batch cooked.  I am currently a shift lead, and am more than capable of doing any job in the department, and am usually scheduled 4 different jobs a week.  Problem is, I need more out of life.  It seems the only things I get a joy from doing are things that challenge me.  I've tried school a few times and everytime ends the same, with me being bored and not caring enough to go (also, I wasn't sure of what I wanted from my life).
 
Another one of the cooks I work with went to culinary high school (eh..), but his passion is cooking and we create some awesome meals while the boss is away.  I'm highly considering opening a restaurant with him, and am prepared to take on quite a work load to do so.  The way I'm looking at it, is if he is the main cook, we both do prep, and I handle the managing duties, we'd have about half the labor costs filled for a fairly cheap rate- say 30k/each a year, though be working 12-16 hour days 6 or 7 days a week.
 
I'm envisioning opening a 70-100 seat restaurant with 20-30 seats in a 'bar side' with a few (3?)  larger tvs for sporting events.
 
We have mock menus drawn up, and using a wholesale list I've been peeking at on order days, have priced everything to give us atleast a 65% profit on just about everything but beef products.  Surprisingly, some items came in cheaper than other local restaurants which makes me think I overlooked something somewhere.  I have not priced out beef products, but looking at some of the local farms that have butcher shops, they seem very profitable at a retail rate. 
 
I am trying to write up the costs associated with opening the restaurant but I'm sure I'm missing something.
 
For fixed monthly costs, I have the following:
Rent
Utilities
Labor (including medicare and social security taxes)
Food/Alcohol
Unemployment tax
Insurance (both health and business)
Accounting
Advertising
 
Is there anything I'm missing?
 
A good friend of mine is an accountant, and said he'd be interested in working part time to help get things situated.  I also have a friend who is a radio personality in the area, who I am also hoping can get me some deals in radio advertising or set up a special event at the restaurant upon opening.  Also, my sister is a manager and my brother in law a cook at a local franchise, to help consult me if needed.
 
My town is approximately 20,000 people, and other than the 15 pizza places (no exageration), there really isn't much in my area for 'quality' food, other than a semi fancy $20/plate place, 2 friendlys (which I feel are outdated and I have no idea who they survive), a 99 (does anyone eat here?  Everyone I talk to says they dislike their food), and an Applebees. 
 
I feel as though, menu wise, Applebees and the 99 would be my main competitors.  Because I personally know a lot of people in the area, and would be offering a superior product at the same cost, I am hoping to draw some of the crowd away from those establishments.
 
To do so, I am batting around a few ideas-
 
1/2 Price appetizers after 9
Eat free on your birthday
Those at the bar prior to the 5th inning get a few round if the Red Sox win (though I'm not sure with MA liquor laws if this is legal)
Keno at the bar
20% off for Hospital employees (approximately 600 employees)
Trivia night (its big in this area)
A Mai Tai for 2 served in a hollow pineapple or a MaiTai Guy (seach google images)
Also, a local Chinese restaurant keeps a wall of chop sticks for their regular customers.  I'm thinking of doing the same sort of thing, but with kids plates instead.  Kids can use porcelain markers to draw on a clean plate, after dinner the parents can either take it (for... $2?), or I can have it baked at the restaurant and it will be displated somewhere in the building, for use next time that family comes in.
 
Do you guys have any suggestions on ways to increase my chances of getting a loan?  I figure increasing my chances from 0% to 2% is still a 2% improvement.
Even if I do draw something up and have the courage to take it to a bank, it would be more of a fact finding mission than it would be to actually try and obtain financing.  Are there any formulas I should be following to try and anticipate daily meals served?
 
I like a challenge, and the more thought I put into this venture the more it consumes me.  I lay awake at night thinking of menu items, drink specials, how to attract people.  I know it will be a LOT of work, but that just drives me more.
 
If you made it this far without trailing off, I appreciate the time you just spend reading this, and I thank you in advance for any bit of advise you can lend.
 
-Nick

Nick,
 
Welcome! Sounds like you have the bug...
 
Have you found a spot where you would like to put this restaurant? If you have found a building, is it now or has been an operating restaurant, or is it just a shell that needs all of the plumbing, electrical and venting?
 
Have you any experience in actual construction and the costs involved, along with dealing with building and health dept codes and inspectors? Are you up to date on the construction codes that are required to build out a commercial kitchen in your area? Have you spoke with your local zoning board to see if they will even allow you to do what you want to do? This is no longer a free country where you can just buy or lease property and open a business. Also, you will need to look into permitting costs along with any little surprises they may throw at you, like EPA considerations if you are on well water and septic, which is another animal.
 
Plumbing and electrical you are looking at anywhere from $10 to $50 thousand dollars if not more. Then your vent hoods and Halon system along with exhaust, say anywhere from $5 to $20 thousand dollars or more.
 
And don't forget three handicapped restrooms if you are doing a sit down establishment. If takeout, you can normally limit that to one employee restroom depending on your local code, saving you anywhere from $10 to $30 thousand dollars or more. 
 
Have you thought this far ahead?
 
As far as a loan, I don't know of any banks loaning monies for restaurants. I have an entire laundry list (personal friends including myself) of long standing and very profitable businesses that could not get a loan from a bank if they were the last business on the planet.
 
If I were you, I would look for a restaurant that has closed its doors and is waiting for a new owner to take it over. Check craigslist.com under commercial properties, there are usually a few restaurants being listed every week or two. You may have to move, but honestly that is more than likely the only way you are going to do what you want to do.
 
Or, start small http://hotdogprofits.com/ and build your own little mobile restaurant in your garage.
 
Sorry to be a stick in the mud, but those good old days of bank loans and friendly communities of just a few years ago are long long gone.
 
Mike
 
 
 

Thanks for the reply Mike.

I guess I should have mentioned this in the first post, but I would much prefer to move into an existing space. I realize the costs of either building or renovating a commercial space into a restaurant would be astronomical and there's no possible way we could swing it.

Though my only worry about moving into an existing location is there's a reason someone else either went out of business or wants to sell. Looking at the restaurants in my area, there seems to be 3 or 4 buildings that are constantly revolving restaurants every 2 years or so. I've also noticed the clientele of each location stays pretty much the same.

Like I said, we haven't gotten much passed talking about doing it, so there's no real location in mind. There are a few commercial properties in town than have been vacant for a couple years now, and if it gets that far I'm curious if the owners would consider renovating to suit- though I'd imagine it would either take a long term commitment on our part, or we'd have to come up with a share of the cost of renovations- both of which we can't really do.

As for the friendly community though, my area is very gung-ho about supporting local business. I'm not saying it would work for me, but the most expensive restaurant in town prides itself on locally grown products, and people seem to be willing to pay a premium for it. But I'm sure you have a better insight into what works and what doesn't.

Though I guess without funding, this is all for not. The only real option I see is that company that takes 20% of all credit card sales until it's repaid, and Id imagine if I were to sit down and figure out how much extra money I'd need to be able to cover that missing 20%, I could take extra to be able to survive until it's paid back. I'm to tired to try and crunch the numbers now, but I'm sure thetes a way to finagle it to have enough capital left over to compensate for the lost revenue until it's paid off. Though even just typing that it sounds like a horrible idea.

Anyways, I appreciate the response and look forward to more.

I have seen kitchens with very little kitchen equipment and space, kick butt with a good size menu. I would look at a smaller space that you both can operate with very little labor and over head. This will give you a chance to get into a restaurant, in a new location and start off fresh. This doesn't have to cost an arm and a leg if you know how to build a menu around limited equipment. The dining room could also be accomplished the same way...............PNWC

You left Workmans Comp off your Fixed cost list

Hi Nick,

Amazingly enough, I am 99% certain I know where you are, based only on the description in your first post. If I'm right, you should make the drive up the trail to say hello to me when I open next week!

And, if I'm right, my wife and I have chopsticks up on that wall at China Gourmet.

Stubby

Foodbme


You left Workmans Comp off your Fixed cost list

 
Don't get me started!

Based on what you said you and your friend's strong skills are, I would suggest you start with a low overhead CATERING BUSINESS! Establish yourselves in the community as the people to go to for interesting meals. If that works, THEN maybe your next step would be a restaurant. Another option would be a food truck. That's the "In" thing right now.
Unless you have 150% of the cash you think you need to start up (And that won't be enough) and operate for 6 months without making a dime (Actually loose money) - a restaurant is out of the question.

Thanks for all the replies guys.
 
PNWC-  Our original idea was to do mainly 'bar food', but after thinking about it a bit more, we realized the cost of making it a full service restaurant wouldn't be that much more, and would (potentially) increase our revenue.  Other than hiring a few wait staff and another cook, we couldn't think of much additional cost, other than an increase in utilities.  Granted, the food costs would go up, but with a good inventory system and careful menu planning (we've already thrown out the items that require unique ingredients),  I don't feel the end of month costs would be that much greater.
 
Stubby- You are correct, I'm just right down the trail from you.  I was at the China Gourmet New Years party, were you there as well?  Do you think Greenfield could support another good restaurant? One with better food than the franchises offer?  That old Movie Gallery on Federal St- next to CVS has been calling me every time I drive by, but I'd need the current owner to be willing to renovate it.  What about that lot across from Yankee Candle?  I can send you a mock up menu of items we'd be selling, and really, and advice you could give towards that would be amazingly helpful.  Are you opening a restaurant or a 'trailer' like most of the others on this forum?  I'm pretty sure Greenfield doesnt have anymore liquor licenses, which would kill any ideas I have about opening up in this town.
 
Foodbme- I did include it in my costs worksheet, though I forgot to list it here.  Thanks for the heads up.  Catering is a great idea though, and the overhead would be very manageable.  We would still need a somewhat commercial kitchen (though I guess most venues we would cater to would have a kitchen as well).  The biggest sticking point would be with our current jobs, it would be nearly impossible for our schedules to line up as we both cover the same shifts that nobody else in the department is qualified to do.  I don't think my boss would be willing to work with us on getting weekends off without us making serious concessions in pay and schedule flexibility.
 
 
 
I did find a few places that will lease equipment for fairly good interest rates (for existing businesses- I'm curious what the rates would be for start ups). They do both lease to own, and the other plan is to purchase for 10% of the retail price.. after doing the math though, its cheaper to own at the end if the intentions are to keep the same equipment- where I work now, we've had the same equipment for atleast 10 years, so I'd definitely do the lease to own option.
 
Now that I have a better idea of what the monthly expenses will be, I'm going to sit down and try to figure out how many patrons I'd need a month, based on the average menu price, and see if its viable. 
 
The best thing I have going for me at this point though, is its just not myself as an owner putting in the long hours- I'll have a friend there to do it with me.  I'm hoping that alone will make the hours bearable, and save us a chunk of change for the first few years.
 
Again, I appreciate all your advice and I'm not taking it lightly.  This is just something I really want to do, but not something I'm just going to jump in to unprepared.  Like I said before, I love a challenge.
 
-Nick

Hi Nick,

To be honest, I think Franklin County is a tough nut to crack for a new restaurant. It's a very economically depressed area with not a lot of disposable income. I see it every day at my stand, people scraping change out of their cupholder to buy a hot dog, or the guys that skip lunch because they only have enough money to buy the hot dogs their kids are asking for. The people who do have the money to eat out are generally pretty serving their ways and may need some pushing to try a new place.

I think if you are serious about doing this, you need to get really creative with your concept. A creative name, unique decor, and really good menu are a must. China Gourmet is so successful because they really do something different than the other 3 Chinese places in town. Mag Pie pizza seems to be holding their own very well despite being across the street from the most popular pizza in town, and that's because they are doing something different.

As for your location ideas... I would worry about the movie gallery location. It is too far off the road in a section of federal street that is a traffic nightmare. I'd worry about not getting noticed. The lot across from Yankee candle would be an amazing location, but I think there must be a reason it is still for sale after YEARS on the market. My guess is the price is off the charts, or the town doesn't want anything there and makes it difficult.


I think that if it were me, I'd look at the old auto parts building right next to the movie gallery you were talking about. If you could negotiate with cvs to use some of that parking lot, the auto parts building is right on the road with better visibility and more options for making the exterior interesting and attractive.

Stubby's