Lots of entrepreneurs consider the restaurant business. It’s easy to sit in a restaurant and imagine doing it better. I’m no different. So, when presented with the opportunity to invest in a new restaurant business, I dove in like a Shark Tank advisor.
In reality, the restaurant business is hard. It’s really hard. Those that have mastered the trade are often immensely successful; everyone else seems to struggle.
Like any new business, the best place to begin is to develop a detailed understanding of how wealth is created and lost. There are four essential steps to this process:
- Find truly successful industry advisors.
- Read all of the how-to (succeed) advice on the Internet.
- Create an operating budget from scratch.
- Validate assumptions with your advisors.
To save everyone that stumbles upon this post some of the time it takes to create an operating budget from scratch, here’s the one I created.
Some things you need to know:
- There are many hidden columns in the workbook.
- Many variables are within the hidden columns.
- We were planning a HUGE multi-purpose facility in the middle of a densely populated city.
- Some of the numbers were intentionally altered to differ from the actual plan.
- You should validate F&B costs, labor costs, and other costs, as a percentage of gross sales, with your advisors.
- Sales and marketing costs reflect the effort required to drive a significant event business.
- The ‘comps’ within the workbook were surfaced from information we found on the Internet.
- The ‘impact’ tab was our attempt to measure the social impact of this business.
For each division (restaurant, cafe, events) we estimated an average week two years in the future; projections then ramped up to and over this estimate on a monthly basis (over a five-year period).
Anyone with some basic knowledge of Excel should be able to pick apart and customize this workbook to fit your needs.
Thanks to Travis Talbot, Franklin Ferguson, and Daniel Clarke for helping me with this. I did not know anything about the F&B business when I started. These guys had to answer over a thousand questions to get me up to speed.
This post was written by @brucewarila