I have been a foodie all my life and my love for food ensured that my association didn’t end there. A couple of years ago, my friends wanted to start a restaurant and were looking for partners , without a second thought I jumped at this proposition. I was also working on a restaurant POS startup in parallel at the time –my own startup. Below are my experiences from “passively” running a traditional brick and mortar business (Dhanda).
Things that I learnt
It’s all about the location
You would think that in this day and age, when online/phone orders have become ubiquitous, the location of a restaurant shouldn’t really matter, right? You’d be surprised to know that isn’t the case. Although location obscurity can keep the overhead costs low, a word-of-mouth marketing cannot offer what a good location can. Restaurants mostly are in the real estate business. The success of a good restaurant depends primarily on how well it’s located barring the coffee shops/ QSR chains like subway etc. In hindsight, it was a good decision to choose a prime location over picking an obscure one.
A main road location, with an obvious handicap in parking is preferred over a not so obvious location.
The numbers never add up
Typically, this is how you the cost numbers should stack up. There are fixed costs like the salaries and overheads viz. rent, electricity, water and variable costs like food cost (cost of raw materials calculated as a % of seling price of the poduct), packaging costs, cost of delivery and of course the wastage. Based on these estimates you make a pretty excel sheet which details your gross/net profit, time to break-even etc. and everything looks perfect.
Until reality slaps you across your ignorant face because you haven’t accounted for