Ray Kroc started with 1 hamburger stand in 1955. Three years later McDonald's had sold its 1,000,000th hamburger and now is one of the most recognizable brand names in the world. If a career in owning restaurants is for you, start with the basic factors of success and work your way up.
Running a restaurant takes more than being a good chef or having a taste for gourmet food. A business education puts you in a better position to know how to manage your restaurant and when you buy the second and third restaurants you'll have the background to hire and train a manager. The restaurant industry has different gross margins than other retailers. For example, a retail clothing shop has 50 percent cost of goods sold, while a restaurant has a 30 to 35 percent cost of goods sold for food and 20 to 25 percent for drinks.
Chef and Restaurant Training
You may not have the desire to become the executive chef in your restaurant, but you should at least have a firm knowledge of certain cooking techniques, processes and procedures. For example, you may decide to offer veal osso bucco on the menu. The problem is that it's a long, slow cooked dish. If few people order it, you've wasted food which decreases your profit margin. A better choice would be seared veal chops cooked to order in less than 20 minutes. Since the chops are not cooked until order, there's less waste.
It's difficult to run a restaurant without having experience working in a restaurant, even if you've had training. Get experience in all facets of the restaurant from being the host at the front and seating customers, to clearing tables, making drinks and preparing the food. You'll know how each job should be performed for a successful restaurant and the experience and characteristics required when you hire staff.
Opening a restaurant takes money, either yours or someone else's, such as a bank. Without a strong financial portfolio -- assets and good credit history -- you won't get bank financing. The start-up costs for a restaurant depend on the type, size and location. Building a restaurant involves more upfront costs than leasing existing space. If that space wasn't built as a restaurant there are conversion costs that run anywhere from $250,000 to $350,000 and that doesn't include tables, chairs, dishes, and bar and kitchen equipment. Total costs could run between $450,000 to $525,000.
Franchise or Independent
An option for those who want a business-in-a-box restaurant concept is to become a franchisee. The advantage is all the guess work has been taken out for you. The menu has been developed with food costs and pricing. The recipes are refined. The franchiser probably has vendors set up for food and supplies which gives you a better price than if you were an independent. The restaurant has been designed -- even the uniforms have been selected. The downside is you do pay an application fee, a licensing fee and ongoing royalty fees, and in some cases marketing fees as well. You must follow the recipes exactly so customers always have the same dining experience, no matter where the restaurant is located.
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