How to Avoid Overspending on Your New Restaurant

They dream of creating an incredible menu, hiring impeccable staff, and filling the restaurant with only the best décor and atmosphere to help draw customers from far away. With research, planning, and a whole lot of hard work, you can make your restaurant dream a reality. 

Then they ask: How much does it cost to start a restaurant? 

In this post, we will discuss the five ways in which new restaurant owners tend to overspend. Be conscious of these and aware of your bottom line, and you’ll be well on your way to successfully opening your restaurant.

Five Ways Restauranteurs Typically Overspend

The average cost to start a restaurant can range between a few thousand to a few million dollars. According to a survey from RestaurantOwner.com, the median cost for a restaurant startup is $375,500; which equates to about $3,586 per seat. If these figures seem overwhelming to you, you’re not alone. Most restaurant owners who participated in the survey estimated that these median costs were 15% over their projected budget. 

Before you start planning to spend hundreds of thousands of dollars to get your new restaurant up and running, let’s look at some ways to keep control of your budget.

1. Equipment 

Be careful not to overspend when purchasing equipment. Investigate second-hand options, do some shopping online, and buy only what you need to get started. You can always add more equipment as you start gaining revenue. If you know your restaurant is going to need more expensive equipment to operate properly, you may want to look into financing options to reduce the risk of overspending.

2. Technology

It’s a necessity in today’s world, but purchasing and maintaining high-end restaurant technology can be expensive. Before you decide to make the investment, build a list of the tech you want and prioritize that list. What is essential to the everyday operation of your business? The most important technology to invest in is probably a bookkeeping system and point of sale system. Total Touch ® is a great point of sale solution, with affordable pricing options!

3. Sales & Marketing

If you’re unfamiliar with marketing, you could easily overspend while trying to get the word out about your restaurant. Often new restaurant owners either get coerced into an agency contract or hire expensive advertising agencies to do their marketing. There’s nothing wrong with hiring an agency to market your restaurant, but if you’re trying not to overspend you may want to look into other options. You can start building buzz for your restaurant yourself by posting on social media, creating low-cost Facebook, Twitter, or Instagram ads, or even go old school and start handing out flyers.

4. Construction & Décor

This is arguably the most fun part of bringing your restaurant dream to life. Through construction/remodeling and decorating, you can truly make your restaurant whatever you want it to be. But, of course, creating perfection comes with a price. Construction expenses can add up quickly, especially if you run into an unforeseen problem. Make sure to account for the unexpected when planning your construction budget, as more often than not you will experience something unplanned. When choosing your décor, keep in mind that a few high-impact elements can be more effective (and cost-efficient) than a myriad of small items.

5. Food   

The most important part of any restaurant is the food. After all, it’s the reason you’re in business! It can be easy to overbuy when it comes to ingredients, but with careful planning and budgeting, you can manage your food expenses so you actually make a profit at the end of the day. First, don’t be swindled by a fancy food vendor. Think local! You’ll probably find fresher ingredients from your local farmers, plus customers are often drawn to locally-sourced ingredients. Reach out to farmers and suppliers to establish relationships and lock in pricing that works for everyone. Next, identify areas of waste by monitoring what food is left uneaten, and perhaps consider changing your portion sizes. Finally, weigh everything before you make your purchase. Fresh fruits and vegetables won’t last all week, so make sure you purchase an appropriate amount and don’t end up throwing money in the trash.

Affordable, Powerful Point of Sale Software

We mentioned it before, but it bears repeating – the most important technology to invest in for your restaurant is a point of sale system. Our powerful, easy-to-use restaurant point of sale solution, Total Touch, helps restaurant owners like you increase sales and manage your restaurant. It is designed to meet your distinct management and operational needs, including payment acceptance, back office management, inventory control, scheduling, and more. Total Touch is equipped to support a variety of restaurants, from quick-service pizza joints to premier fine dining spots. The system is also compatible with most merchant service providers, which puts you in total control of your payment processing. (If you haven’t chosen a payment processor yet, we recommend Electronic Merchant Systems!)

Additional benefits of Total Touch include:

• Open Table Management – manage tables, servers, and improve guest experience.
• Simple, Easy-to-use Interface – keep your staff focused on customers and not fighting with a complicated system.
• Gift Cards and Loyalty Programs – integrated features to reward customers and keep them coming back.
• Online and Mobile Ordering – increase sales and reduce order errors.
• Pre-authorize Bar Tabs – ensure bartenders charge the customer correctly to keep profits healthy.
• Kitchen Display System – support for KDS and expo kitchen printing.
• Payment Options – options for customer-first service, such as splitting checks by seat.
• Employee Management – manage employee permissions, schedule staff, and track time from any terminal.

 
To learn more about building and managing your restaurant with Total Touch point of sale software, contact us today!