Real Estate

5 Unexpected Costs of Opening a Restaurant

Starting your own restaurant is a lifelong dream for many restaurateurs. The industry has always attracted entrepreneurs from all walks of life because it is a versatile business where innovation and creativity are embraced. 

To avoid the pitfalls associated with startup costs it is important to understand everything that is required. There are always some unexpected costs that will crop up along the way and can hamper operations if you don’t have a contingency plan.

Below are some of costs that you might not think about prior to opening. 

1. Business Insurance

This is one of the most overlooked business startup cost. After all, you might not anticipate needing to use insurance anytime soon. But there are many common occurences that could happen to anyone where you’ll be thankful for your insurance policy. There are any number of potential disasters that run the gamut so talk to an insurance broker about fully covering your big investment. It may seem expensive up front, but it may just save your business down the road. 

2. Construction Surprises

A new restaurant may require a lot of remodelling. A cursory glance at the facility you are renting might give you an estimate of the cost but you will be surprised when the actual work starts and underlying problems such as leaks and damaged electrical wiring start emerging. Negotiating a clause with your landlord where they help pickup unexpected building issues is ideal, but either way, plan to some surprise expenses. 

3. Staff Training

Training for an opening is long and expensive. You will have to hire a full staff weeks before opening and pay their salaries with no income coming in. The chefs will need to practice cooking through the menu so include all of the food costs and the front of house will need to learn your company culture around customer service. Don’t be surprised when some of your new hires quit in the middle of training and you have to start all over again. This can be an expensive endeavor so plan accordingly. 

4. Deposits

You may not realize that some of your vendors may ask for a deposit. Your landlord you may plan for but your power company may also ask for a large chunk of change up-front. As a new business many suppliers may ask you to pay on delivery (COD) as well until you’ve built up your credit worthiness. 

5. A Slow Start

You have your projections and just enough money to float you through the startup phase. This can be derailed quickly when you don’t hit those projections early. We all think our concept is enlightened and our food is inspired – consumers would be foolish not to flock to our new restaurant. The reality is, consumers are fickle unpredictable beings. Having enough money to tide your company through a slow start may be the most important thing you can do to help ensure your success. 

There are many costs associated with opening a restaurant. We do our best to plan for the unexpected. Remember the five above expenses when you are budgeting for your next opening.  



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