The dream of owning a restaurant

For some reason, many people have a dream to one day open and own some sort of restaurant. It is one of the most common career dreams people have. Many people like to cook and even more love to eat, which is likely one of the main reasons why this idea is so popular. However, reality thinks quite the opposite of restaurants.

Restaurants go out of business more often and faster than just about any other type of business. In fact, even during good economic times, obtaining a loan from a bank to start a restaurant is next to impossible. The only way it can usually happen is if you are buying a known and established franchise. Otherwise, you better have your own money or have access to someone rich that you know.

The failure rate for a restaurant within the first 3-5 years is somewhere between 60%-80% depending on which study you look at. This is considerably higher than the failure rate for all new businesses and suggests that a love of food and dining is not nearly enough to become a successful restaurant owner. There are several reasons why restaurants fail so often. Many of them fail due to a lack of cash flow and poor estimating of costs. Other reasons include lack of experience by the owner and key employees. Additionally, there are other reasons having to do with business and the people that get in to restaurant ownership not actually having sufficient business acumen as well.

If you still want to open a new restaurant after reading this post so far, I have a little bit of useful advice for you. First, get experience. It may not be fun and may even feel like a waste of time at first but it is very important to your future success potential. Go work at a successful restaurant. The closer the restaurant you work at is to the type of establishment you want to open the better. Tell the boss that you really want to learn the restaurant business from the inside and you’ll find that you won’t usually be turned away as quickly as you might think. You may have to do some less savory jobs there, but as long as you get a good idea about how the business operates then it’s worth it.

After you have sufficient experience, you will need capital. Make sure you have enough to provide cash flow for 8 months-1 year. Next, align yourself with good staff. Hire a manager and cooks that are experienced. Maybe even an experienced partner is worth considering. You don’t want your new restaurant to be the training ground for your workers.

The final bit of advice I have is to make sure you have strong business skills on board. Whether it is yourself, your partner or manager, someone MUST have strong business skills and knowledge otherwise your restaurant will fail faster than you can grill a steak. If you do all these things then maybe you’ll have a chance to succeed with a new restaurant.