Ways to Reduce Your Restaurant Startup Costs

If you are opening a new restaurant, it goes without saying that the startup costs must be your first concern.  But did you know that despite giving it so much thought and the careful planning that goes behind starting a new business, over 60% of owners fail to continue operations for more than a year?

And even if they succeed in the short-run, research has shown that about 80% of the new restaurants fail within the first five years. So, what leads to such disastrous results?

The answer lies in startup costs.

If the startup costs for your business are too high, then it means you have to invest a large amount of money just to open up your business. Managing it well and ensuring it runs smoothly will require further resources. Overspending before your business even starts operating is the primary factor that increases the risk of failure.

So, what can you do to ensure that your restaurant thrives and flourishes instead of failing like most others? Here are a few tips you should follow in order to reduce startup costs.

Plan your budget

When you plan your new business, it’s important to know what forms the startup costs so that you allocate your resources accordingly.

Costs incurred in paying rent, acquiring permits and licenses, hiring labor and any other professional services as well as buying the necessary equipment are all included in the startup costs.

Marketing and advertising your new restaurant are also included in the same category.

Start small

Whether your restaurant attracts customers from day one or not, fixed costs like rent and salaries have to be paid in due time no matter what.

Therefore, it will be beneficial to hire a few employees initially. And when your business picks up the pace and you feel you need more help to serve the customers and manage operations, then you may hire more workers accordingly. This helps you save the money spent on redundant staff.

Moreover, you should open a small restaurant and then expand or upgrade instead of investing a huge amount of money on opening a large restaurant only to find that it doesn’t run as expected.

The same goes for kitchen equipment including cutlery, crockery, and other utensils.

Buy only the essentials first and then add on the extras when the need arises.

Use an efficient point of sale

Point of sale (POS) systems might require an initial investment, but their running and maintenance cost is much lesser than that of the conventional sales terminals.

Modern POS systems are affordable, fast and flexible and can be altered to meet the needs of your specific restaurant.

Be energy efficient

It goes without saying that the air conditioners, vents, lightning, and other electrical appliances will be functioning for a large amount of time.

Therefore, invest in energy efficient solutions to reduce costs.

For instance, using LEDs instead of incandescent bulbs can reduce your electricity bills by 70-80%.

Consult with an associate your hardware and tools store to find out which refrigerators, cooling systems, exhausts, and other similar equipment are the most energy efficient.