I’m always hearing about restaurants losing so much money in the first few years. Why?
In: 3
Because there are a ton of upfront costs to design and build your restaurant. Plus, kitchen equipment is not cheap.
Then you open and you have to have the exact right combination of food, service, and price on Day One. If you are slightly off of any of those things, people will try you once and not go back. Or you won’t get the rave review.
Then even if you’ve got the right combination of price, food, and service, you still have to be in a location that can regularly fill your seats. If you are too big, then you are paying rent on space you cannot regularly fill and you have a commercial kitchen that is sized for an empty dining space…and you paid for and will continue to pay for both of those in the longterm….eating up your profits.
And finally, you have to spend money on food to prepare, and if you don’t use it all, it goes in the trash. If you were a retail establishment, your unsold wares would just take up shelf space…at a restaurant, it’s more money down the drain.
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