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There isn’t an average cost for starting or opening a restaurant. It is possible however to have a clear picture of what should be budgeted for. We can also advise you on the biggest mistakes made when costing an opening.
Obviously you’ll have rent (or a mortgage if you bought), staff costs and the costs of stock – food, drink, and also utilities. Most important for any opening, though not the biggest cost, is the cost of acquiring customers. Starting a restaurant means telling a lot of people you are opening and encouraging them to visit and spend money.
If you’ve taken over an existing restaurant you might have paid for goodwill or existing custom, but don’t think this will last unless you’re active. When starting a restaurant you will need some standard marketing materials – a brochure, menus, winelists, a fantastic set of photographs, some proper branding and a website. The costs of these materials is an average of about £5000. If you skimp on cost you’ll lose turnover.
To turn these into customers you’ll also have to look at public relations, mailshots, advertising, promotions and internet advertising. The marketing cost of starting a restaurant is usually 5-7% of your projected turnover. So if you want to turn over £10,000 a week, you’ll need to spend around £500 - £700 per week on marketing to be full.
This might seem like a lot but remember the more you work at your marketing the more customers you will have and the more they will spend. Every large chain of restaurants, bars and hotels knows the power of marketing – and it is essential when starting or opening.
It is possible to lower these costs. We don’t think press advertising is worth the cost. To advertise in a few publications a year will cost you thousands but will not bring in enough trade to cover the investment. By contrast, advertising online and by using PR is much more profitable. The key is spending enough in the right places.
Some other important numbers when analyising the cost of starting a restaurant are:
- Your staff costs should not exceed 20 – 25% of turnover.
- Your gross profit should be at least 70%.
- When you open you will be less than half full.
The costs of renting or buying your venue, and those of refurbishment vary the most. This is perhaps the single most critical aspect of any restaurant startup.
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