ForumsStarting a Business

I recently sold a restaurant that I owned and operated for a number of years, plus worked in the industry prior.

First, you will need to determine a theme / focus for your restaurant - aka your unique value proposition (UVP), basically what sets you apart from the competition. Be aware that offering the lowest prices and the best quality is the hardest to accomplish. Sounds like you may already have some ideas and putting together a sample menu is a good start.

Second, you will need to develop a business plan based around your UVP. Here's a link to a free page on my site that gives a breakdown of the necessary elements for a business plan:

http://thesologuide.com/planning/

Since you are seeking funding from a lending institution or investors, they will want to see a business plan. Some may only ask to see your Executive Summary and Financials, while others will want to see the complete plan. Regardless, you should create a complete plan because it will force you to research your idea and determine if it can truly work.

I am concerned about a couple items regarding your concept. Please don't take this as a personal attack, only concern from someone who has owned and operated a restaurant and knows how the business works.

You mentioned that you would like to hit a total bill price of $35 - $40 for a family of 5. Are you planning to operate a fast food establishment? You are targeting $7 - $8 per person. These are fast food prices. There is a reason why other restaurants aren't hitting these prices for a complete meal - because they can't.

Most restaurants operate in the range of 26% - 35% food costs depending on the type of establishment. You will want to target towards the low end of the range. If you have food costs of say 28%, your $7 per person price means that you have to make something of quality from food costing you $1.96. The corporate giants fast food restaurants are able to hit these prices based upon corporate contracts with food suppliers based upon mass volume. You, as an independent, won't get the same pricing.

The cost to build a restaurant from scratch is huge. There are a number of restaurants that are failing right now - either up for sale or recently closed. This creates an opportunity for you to buy an existing restaurant with all the necessary equipment and a built in method and customer base at a discounted rate. You can always alter the hours, menu, concept, etc... after you buy it. Or you can negotiate aggressively with a landlord who recently had his restaurant tenet close. It is harder for landlords of restaurant properties to find tenets. I recommend that you target finding a property that was / is a restaurant instead of building from scratch.

Since many restaurants are failing, there is an opportunity to buy used restaurant equipment cheap. There are some businesses that specialize in this. Your other option is to speak with business brokers that may be selling restaurants in your area to see if any of their customers have equipment for sale.

Are there any other 24-hour restaurants in your area? If not, it may be because there isn't a need for one or enough business to make it profitable. There are roughly 45,000 people in my town and there isn't a 24-hour restaurant because it becomes a ghost town usually around 9 PM. There are a few places that stay open later, but none that are open 24 hours.

Do you have any previous restaurant experience? This will be important for a lender. They will want to see that you have experience running this type of business. If you don't, I recommend that you get some experience now while you continue to work on your plan.

Are you ready to work nights, weekends and holidays - and long hours?

I recommend that you seek out a community member here that goes by the name of "phanio". He has excellent insight into what you will need to attract an investor and sources for those funds.

Hope this helps.

Doug Dolan

The Solopreneur's Guide

http://thesologuide.com/