startup questions

Author
keginthecloset
Junior Burger
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2006/12/25 23:32:47 (permalink)

startup questions

Hi,

I'm considering starting my own restaurant. I have some questions though:

- What are some good books to read on starting/owning a restaurant? Anything from general startup/operations to financing, writting a business plan, etc. How about managing/leadership in general?
- What are good places to work besides a restaurant to gain experience? I'm talking of running the restaurant, so I know there is more to it then just pricing the menu and ordering inventory.
- Good summer internships? Such as at resorts? I'm 18 and will be graduated by the summer if that opens up more doors.
- Good majors/colleges? Keep in mind i'm not the greatest student, C average maybe, and I don't want to pay an ass load in tuition. Location isn't a big issue.
- I've thought of starting a restaurant in Indiana or down south in maybe North Carolina. They are talking/or maybe it is offical about raising the minimum wage in Indiana from like 5.25 to 7.00 by 2008. I won't start my restaurant until like 2009-2010. Now I guess I was just planning on having cheap labor for the young ones obviously so this is going to increase my start up costs/employee payroll ALOT more than I have planned on paying. Anyways my question is how does the increase in minimum wage affect restaurant owners in particular. I think I know but i'd like to hear what you guys have to say.
- I read that you should set aside 80k in employee training. That is a lot of money to spend on training when you are not getting any income yourself. However I see the benefits. My question is, how do you train people when the restaurant is not in operation? That would seem a little difficult.
- I have always heard that the owners will have to wait 5-7 years of running the restaurant before they get paid, because they have to keep putting money back in the restaurant. However owners have to make SOMETHING. Now I would have this restaurant (I want it to be something like Logans, Hard Rock Cafe, Applebees, etc) in a small town of about 10-15k where there is not a ton of competition, you wont see any of the sit down restaurants in this town anywhere else and most of them arent exactly the nicest...anyways from your experience is 30k-50k to much to expect to take home in general after one year in business?
- Tell me if i'm crazy for thinking this, but wouldn't it be a waste for me to put a lot of money into advertising? I mean sure maybe a small ad in the paper or something but isn't your greatest advertising tool word of mouth?
- Financing your restaurant? I plan on needing 1-1.5 million...rough estimate. I doubt I have much money maybe a couple k, probably little-no capital, probably little credit (whatever I have with a credit card) Can't you get SBA loans easier than a bank loan? What about "angelinvestors"? What are some ways to finance a restaurant?
- POS system. I have never seen these systems used but I love what I have read about them on the internet. Anyone know, are they good? I love the thought of being able to have waitresses send orders to the kitchen from the customer's table and I love the thought of the kitchen staff being able to read clear, consistant orders. There is no way that all waitresses/waiters are going to write neat, is a POS system worth budgeting into the business plan?
- Music. I want an up beat atmosphere that attracts to all. I want the music to be more than just something you hear in the background when the restaurant is only half full. I like anything, country, rock, hip hop, r&b, etc. Only not everyone does. I want to play a little of everything, good idea or not? Especially hip hop when the old folks don't like that. Stick to country, rock, r&b?
- Hardwood floors easier to keep clean than carpet?
- Kitchen floor. I've seen some type of covering put over concrete, most popular for garages and basements. I've seen this stuff in person and it is fairly soft. Would this be easy to keep clean in the kitchen? Sorry I can't think of the name of it, hopefully someone knows what I mean or can recommond a good kitchen flooring.
- Carry out. Worth it in most cases or not? I can see it for pizza but i'm not serving pizza.

Sorry for making most of my questions long. Thanks in advance to anyone who can help me out.
#1

17 Replies Related Threads

    keginthecloset
    Junior Burger
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    RE: startup questions 2006/12/25 23:51:48 (permalink)
    Another question.

    - Bus boys. What is a good system for them to know if people have left and the table can be bused? They aren't always around to watch people leave and tips aren't always on the table.
    #2
    DoubleB
    Junior Burger
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    RE: startup questions 2006/12/26 00:06:17 (permalink)
    The restaurant business has THE highest failure rate of any business. Not one of the highest, THE highest. Experience is best gained starting from the bottom. Sure, there are schools with good programs, but you still need experience. At the ripe old age of 18 or 19 I can't imagine getting financing for a restaurant from ANY source except family or friends. I don't mean to discourage you, but to give you a little glimpse of the problems that plague the industry. Are you aware of how many hours a successful operator usually puts in, especially in the beginning? What makes you think the restaurant biz is for you? What makes you think the concept (and cost) associated with an Applebee's type restaurant will work in a small town? If that were the case the chains would flock there. The best advice I can give you is to work in the industry for a few years and see if that's what you REALLY want to do. By the way, WHY would you ask the best places to work EXCEPT a restaurant? That almost seems to be a telling clue as to future success potential.
    #3
    Pwingsx
    Double Chili Cheeseburger
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    RE: startup questions 2006/12/26 00:11:27 (permalink)
    I don't about any of this stuff, but I must admit it made me laugh to hear you say you're 18, and a few paragraphs later, refer to paying the 'young ones' minimum wage.
    #4
    keginthecloset
    Junior Burger
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    RE: startup questions 2006/12/26 00:16:53 (permalink)
    haha I guess I should have mentioned I have worked in sit down restaurant for 3+ years. I've done dishwashing, busing, cooking and I still plan on working there or at a restaurant until I can start my own. In fact I would like to work at 2 restaurants, do something a little different and see how another restaurant operates. The problem is most sit down restaurants where I live suck. The other one or two that don't isn't hiring right now.

    But anyways my guess is that starting out as the sole restaurant owner, serving lunch and dinner everyday, I will probably have 80 hours a week on average. I think the restaurant biz is for me because it is what I know, I enjoy working in that atmosphere, and I enjoy working with a wide variety of people (teens, young adults, old adults)and interacting with the customers. I think that my concept will work because there is nothing like it in this town. You have a couple seafood places where only one of them is nice. A buffet place that is almost 20 bucks a person. An expensive restaurant that gets mixed reviews, i've never eaten there just in there to get an application and then I hear great or awful things about it. As far as my estimated startup costs that is a very rough figure, I did go and estimate my seating costs for 200 people, about 50k but thats it. I think that the town is to small for a national chain like Applebees to come here. I think there is room for another good restaurant in this town though.

    Also I asked about other places to work to see if there is experience worth getting by working in say an office setting.
    #5
    DoubleB
    Junior Burger
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    RE: startup questions 2006/12/26 00:22:04 (permalink)
    After rereading your post I also noticed that you ask about investors. With restaurants having the failure rate that they do; NO investor, bank, or even the SBA would invest in a startup venture by someone without EXTENSIVE experience in the restaurant field, excellent credit, and a high percentage of investment by that person. Unless of course you have enough assets to secure the loan (ie some sports figures). I can't think of a commercial venture less likely to be able to obtain financing then a startup restaurant. This is not a business that you should even think about learning from a book. There are just too many variables that can't be taught that way. Best of luck to you in whatever you decide to do.
    #6
    DoubleB
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    RE: startup questions 2006/12/26 00:48:24 (permalink)
    Please don't misunderstand my posts. They are not meant to discourage you IF this is truly what you want to do. They are just meant to make you aware of some of the pitfalls that you may face. If you are really interested in getting into the biz and you are working at a successful restaurant now, how about asking your boss if he would let you see some of what he does. Tell him that you would someday like to open a restaurant in a DIFFERENT town (no threat to him and he may want you to sign a non compete agreement), and that you will come in to see what is involved in your OFF time. Perhaps he/she thinks you're a great guy and will let you into some type of management training job in that restaurant that way you get paid while you learn. If that doesn't work, do you have any larger towns close by where you might be able to get into a management training program in one of the chain type places?

    As for schooling, some of the state colleges, like USC here in Columbia, SC have HRT (hotel, restaurant, tourism) programs and aren't too expensive for in state students.

    Books, yes, there are some good management books and some tailored to the restaurant industry. I am not at home right now, so I can't think of the titles off the top of my head. There are also some biographies about people like Truett Cathy (Chick Fil A), Harland Sanders (KFC), Dave Thomas (Wendy's) etc. All of these will give you just a little peak at some who were successful and what they went through. A lot of the info in the books won't help, but all can give SOME good advice.

    You might want to ask anyone you meet in the food service industry what they like and what they hate about the restaurant biz. Also, ask them if they had it to do all over again, would THEY go back into the business. Ask them how they got started and how they make decisions in their place.

    Just out of curiosity, where are you located?
    #7
    texgrill
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    RE: startup questions 2006/12/26 07:10:57 (permalink)
    Keg

    I have never worked in a restaurant but worked in a Dominos Pizza for a month.

    I have operated a part-time catering and food cart business for the last two years. Dont have any formal business training. I saved and used my own money to start up.

    Agree with the earlier posting. I dont think anyone will give you a loan at your age. You could check around for the requirments for a SBA loan. I also agree you will have to save and invest your own money.

    Yes the failure rate is high for food service, but alot of folks are trying it. Why couldnt you start a food cart or catering business? That will show any lender alot about your seriousiness about owning your own sit down place. I have a regular job and do the caterting biz on the side and enjoy it alot. Quite a few folks were negative about me starting my business, you will always have that. You are your business and the survival of it will depend on planning, and sweat/money investment by you.

    Ronnie
    #8
    DoubleB
    Junior Burger
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    RE: startup questions 2006/12/26 13:48:23 (permalink)
    Ronnie makes a good point. I had thought about suggesting a food cart, but many people feel that is beneath them. I really hadn't considered the catering option because I felt there was a pretty good sized investment to be made there too. I guess that you could do it using rental equipment, etc. just rented for the job. I was focusing more on ways to get you where you wanted to go and to be sure that's where you REALLY want to go. Just look in the Sunday newspaper (larger town)classifieds for restaurant equipment auctions and you'll get an idea of how many failures there really are. If this is really what you want to do, I am all for going for it. Just don't expect to become an overnight millionaire. I believe it was one of the stock brokerages that used to say "They got rich the old fashioned way, they earned it."
    #9
    keginthecloset
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    RE: startup questions 2006/12/26 15:21:17 (permalink)
    Doubleb its funny you mentioned about having my boss show me some stuff because he actually offered to but it hasn't been a good time. It's been very busy with the holidays and stuff. I'm located in Decatur Indiana. Just south of Fort Wayne. Actually I am leaning towards going to Ivy Tech in Fort Wayne next year (cheap community college, solid reputation) and there is all kinds of restaurants in Fort Wayne. It's the second largest city in Indiana. Applebees, Logans, Texas Roadhouse, Hooters, TGIF, etc. I was leaning towards getting a job at one of those places since ill be up there for school anyways. Those places pay more and there is the chance for advancement.

    That food catering business idea is good. It's defiantly not something i'd want to do long term but it would look good to lenders like you said Ronnie.
    #10
    keginthecloset
    Junior Burger
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    RE: startup questions 2006/12/27 22:03:00 (permalink)
    I have another question.

    It's about the set up of the business.

    Sole prop., partnership, corporation. I like the thought of being able to do whatever and the ease of the set up as a sole p. or partnership. The thing I hate is that your assets aren't protected so your ass can get suied blind. I have some basic knowledge of a corporation but not detailed enough.

    Can't you have just one or two people are shareholders in a corporation? Like the two owners of the restaurant. Then your in control and can do things like you want as you can in a sole prop. is that right?

    I know that the corporation is the hardest to form but I still want to learn more about it.

    Another question, what about leasing equipment? Wouldn't this improve my chances for getting the loan I need? I was looking through some leasing companies and I think about all of them have a program where you can buy the equipment at the end of the lease.

    Thanks to anyone who has already replied to this and to anyone who can answer this question for me.
    #11
    DoubleB
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    RE: startup questions 2006/12/27 22:48:33 (permalink)
    Yes, you can form a single shareholder corp, BUT there are many ways to pierce the corporate veil. You really need to ask an attorney about this. It's too important to be answered on a forum. While I have no personal knowledge of an LLC I understand that MAY offer you some protections without so many hassles.

    As for leasing equipment, yes, there are many places that can do that. The problem is that you would still need excellent credit and most places want a track record of success. Used equipment leases are sometimes available, or you could buy used at restaurant equipment auctions. I'm fairly sure that the Fort Wayne area would have a good number of these. Go to some of them and learn what equipment goes for. Don't buy junk, there's too much good stuff at reasonable prices.
    #12
    MBFDFyre
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    RE: startup questions 2006/12/31 11:57:46 (permalink)
    I am half tripping out on Ambien right now(I have a legal prescription) but after reading all these posts, it sounds more like this kid has a term paper due and is just asking questions to get more filler for his paper. Again, I appologize, I am feeling really loopy right now
    #13
    rolling
    Junior Burger
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    RE: startup questions 2007/01/13 21:19:36 (permalink)
    im amazed how this kid talks they way he talks,i mean you can tell he got good ideas and he probably become one of the biggest restaurant chains owners in the future who knows,but hes too rushed in for his age, I wish I could have that way of thinking back in my 18's about being business person.
    hope everything works out for you in your near future.
    #14
    rouxdog
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    RE: startup questions 2007/01/14 10:59:58 (permalink)
    Young man, you've received some good advice in this forum. Yes, many failures, but also many successes. Hold on to your dream. Set and stay with a good course of direction. In addition to your goal of restaurant ownership, set (write on paper) interim benchmark objectives which will eventually get you to your goal.
    I admire your determination!
    Rouxdog
    #15
    Matt Gleason
    Health Inspector
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    RE: startup questions 2007/01/14 11:06:47 (permalink)
    A corporation is not too difficult to form but it takes planning and time. There are tax issues with corporations though! It may not be worth it for you to start a corporation right off. As for liability, that is what insurance is for! Talk to your attorney regarding the proper coverage. There is also personal liability insurance! Most people will settle out of court taking the money that your insurance company offers them. The only time you have to worry about paying more is if you run a lousy operation and are known for not following health and fire code regulations! Be a good business person, help the community and follow the rules.

    Leasing is ok and has it's pros and cons! If this venture is a short term investment, then lease, you can walk away from the equipment later and not have to worry about selling it. The only problem I have with leasing is that you pay out more than what the equipment is worth! Bottom line.. it's your call.

    Matt
    #16
    Adjudicator
    Sirloin
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    RE: startup questions 2007/01/14 11:10:26 (permalink)
    "I'm considering starting my own restaurant. I have some questions though:

    - What are some good books to read on starting/owning a restaurant?"

    FAST FOOD NATION

    #17
    Dr of BBQ
    Filet Mignon
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    RE: startup questions 2007/01/15 00:08:33 (permalink)
    quote:
    Originally posted by Adjudicator
    FAST FOOD NATION




    And you'll never eat fast food again! LMAO
    Jack@DrofBBQ.com
    #18
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