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Let's talk about calculating the start-up costs of your restaurant. This is a place where you can not be too detailed. Everything is important. Even the box of pencils that you buy to do your staff training. Every little detailed cost will come into play, because unfortunately you won't get revenue until you open, and you're going to need to pay for all of those things without any income to offset them. And also, in the beginning of the life of a restaurant, it's rarely as busy as you want it to be, or as it will become.
One of the most significant start-up costs will be construction. Now if you're taking over an existing restaurant, your construction costs might not be too great. But if you're starting with a raw space, the engineering, the ventilation, the plumbing, all will add an extraordinary amount to your construction costs. And unfortunately, it's usually more than you want it to be.
Additionally, you're going to need to have staff in place and on payroll in advance of your actual opening. You probably will want to hire your senior staff earliest, then your managers, and then your hourly staff later and closer to the opening. But everybody need to have time to be trained in their position and in the space before you open, or opening night could be a disaster and you could create a very bad first impression.
Additionally, there are all the other costs that are involved in equipping a restaurant. Kitchen equipment, refrigeration, stoves, mixers, small utensils. And then all of the equipment that's needed in the dining room. Tables, chairs, glassware, plate ware, service ware, silverware, all of those cost money and need to be brought in before you open.
An important thing to remember with supplying your restaurant with equipment, is you don't need it all to open. You can reorder. You may have a need for fewer pieces of equipment to get open, than you need a year or two down the road. Don't buy equipment because you think it's cool. Buy the equipment you need and do that first and grow the restaurant's equipment as the restaurant grows.
So once you've done a wonderful, detailed, thorough job of estimating all of your start-up costs, it's important to remember that things are going to happen. Things are not going to go exactly the way you want, maybe your gas doesn't get turned on the day you expect it to, or you're unable to get your permits in time to open. So you need to build in a contingency. You need to build in some percentage of additional costs for your opening. Something's going to happen with construction. Something's going to happen with what's required. And you want to have some cash that you planned on for those things that happen. Unfortunately.
Once you have all of your start-up costs prepared, it's important to start thinking about how they'll get paid for, when the bills will come due, and how that will dove-tail with your revenue as you start operating your restaurant, and all those start-up costs lead to that wonderful moment, when you open the doors and start feeding people and making them happy.