Hey guys, my name is Wilson.
This week I'm going to be talking about how much does it cost to start up your restaurant.
This has been a question that I get on a daily basis.
Can I start my restaurant with $10,000?
Can I start with $50,000?
Can I start with $100,000?
We're going to be answering it right now.
Now before we actually go into it, if you haven't had a chance, definitely watch this
video.
The four types of restaurant concepts that there are because it definitely varies between
a bubble tea shop, from an ice cream, to a fine dining experience, to a casual dining
experience, all these come into play when deciding how much does it really cost when
you're starting up a restaurant.
So now that I've shared that with you, make sure you guys stay until the end because I'm
going to be sharing with you five money saving tips for your restaurant when you're building
out and then I'm going to be sharing with you some resources in the link below as well,
okay?
So now let's dive right in.
Now I know that you like knowing the numbers, I know that you like people giving you the
straight answers, which is the reason why I'm giving you the straight answer right now.
For you to be able to open up a low end restaurant, we're talking about from $100,000 to $175,000.
Something that is in the median end, we're talking about $175,000 to $225,000, and something
that is on the higher scale goes from anywhere from $750,000 to over $1,000,000.
This is the answer that you're looking for because you want exact numbers and that's
why I'm giving it to you, but this is not realistic because there are so many different
variables that come into play which is the reason why I'm going to explain a little bit
further about why and how these numbers come about and things to consider when thinking
about how much does it cost to set up your restaurant.
Now as I dive in a little bit further, another way of presenting the numbers and how much
it costs is by the square footage, and what I mean by that is you can calculate based
upon the footage that you have anywhere from $100 to $800 per square foot to have your
restaurant up and running, okay?
And what that includes would be including the renovation, the rent, the build out cost,
the equipment, everything is included.
That gives you a median of a $450 per square foot.
Now once again, this includes a lot of different things and we're jamming everything into it
so that's the reason why I'm going to dive in a little bit further for you.
So you may be wondering my location is only 500 square feet, how much do I need to pay?
Do I still need to pay $100,000?
Or my place is 2,00 square feet, how much do I need to pay?
Is it going to be $300,000?
To give you a better answer, on average it costs around $100 to $800 per square foot
to be able to forecast how much you're going to spend setting up your restaurant and that
would include anywhere from renovations to equipment to your build out costs to the décor.
All those would be included when it comes down to averaging how much does it cost for
your space.
So for example, if you have a 500 square foot place and you're having a lower end of the
equipment and lower end of the renovations and you don't need to have build out costs,
then the cost per square foot may go down to let's say $200 and that you can actually
build out a 500 square foot place for only $100,000.
For the same location and the same size, if you're going a little bit more higher end,
if you need more equipment, if you need more décor, then the prices would go up to let's
say $500 per square foot or $800 per square foot, depending all on the equipment that
you buy and also all the furniture that you buy, and that's the reason why there are so
many different variables that come into play and I'm giving you a range depending on your
needs.
Once again, it varies from $100 to $800 per square foot, so depending on your needs you
can actually kind of project how much would it cost and project the whole set up costs
for your F&B.
Now that you know the generalized number of how much it costs to set up a restaurant,
I'm going to be diving into the five big variables where you can consider and that really comes
into play on how much does it cost to set up your restaurant and the number one variable
is your location.
When we talk about your location there are different ways of setting up your location.
First of all, you can actually buy out or actually rent a place that is completely empty
and you can build it from scratch.
We're talking about building a washroom, we're talking about building the piping, the grease
traps, including all the hooded vents, and redoing all the HVAC and everything, and that
itself is going to be much higher in terms of the budget.
Now a little bit lower than that, you can consider buying an existing F&B place and
you can just convert that and do some renovation, minor renovations, to be able to get your
shop up and running and that itself, you're going to save on the build out costs, you're
going to save money in building out your washroom and then you're going to save building up
all the different equipments, so on and so forth.
And lastly, you can actually consider buying out let's say a place that is not operating
a food and beverage but has all the different components already.
For example, let's say a massage place.
They have all the piping, they have the office place ready, then you can just take off some
of the walls and include your pipings, so at the end of the day we're going to be talking
about the variable that is really determining the factor of how much you're going to be
able to spend.
The second money saving tip for you and another variable that you should really consider and
one of the biggest costs is equipment.
When it comes down to equipment everyone wants new stuff and when you want new equipment
it comes a big price tag, which is the reason why I said that prices range from $100 per
square foot to $800 per square foot depending on this variable as well, which is equipment.
You can actually choose buying new equipment or you can actually lease it so then that
way you're only paying a monthly rental fee and that would help you with your cash flow.
You don't need to pay the whole thing up front, you're going to be paying interest if you
lease it out, but on the other hand you're going to save on your cash flow.
Another alternative to save on money when it comes to equipment is to go into second
hand shops.
A lot of F&B places go out of business, which is the reason why their equipments goes up
for auction a lot of times and a lot of times when you go to the auction places, these secondhand
places, you're going to be able to get them for a lot cheaper than the actual original
new cost.
For example, with our ice cream shop, initially when we first started we thought we'd need
to buy all new equipment so we spent $30,000 buying a brand new Taylor soft serve machine,
okay?
And we bought two of those.
That's $60,000 that we spent buying a machine.
Within three months we realized that these machines are not what we wanted because they
did not produce enough ice cream in the timeframe that we need, which is the reason why we started
looking into what are some of the money saving tips and that's when we found out that hey
you know what, we can actually buy secondhand equipment which is equally as good and we
bought a secondhand equipment that produces more and better ice cream for only $10,000
and we got this machine from an auction place.
I'm like wow, that's amazing.
Now I'm sharing this goodie with you to be able to save you some money when opening up
your food and beverage shop.
The third variable to consider when opening up your shop that would save you tons of money
and that can vary from here to here is the opening inventory, and what I mean by that
is when you open your shop you're going to have to buy a lot of ingredients, whether
it be soft serve and tons of different powder and tons of different milk or if it's a restaurant
you're going to buy tons of meat and tons of pasta, tons of sauces, and at the end of
the day you need to be able to budget accordingly because a lot of inventory has shelf life.
When you do not manage these ingredients properly then you're going to be able to spend a lot
of money just on food costs that goes to waste, so when you're opening up your shop budget
accordingly, make sure that if you're ordering something in bulk, get them to deliver it
multiple times a week, right?
So then that way you can make sure that your food is always fresh and on top of that, it
actually decreases the amount of spoilage and your costs for your shop.
For example, because our ice cream shop was so busy all the time during the summertime
we continued to order 50-60 jugs of milk every single week and before we knew it we were
in winter season and when winter season hit our sales went down dramatically and in turn,
we actually wasted 20 jugs of milk because we were not producing enough volume and that
itself is a lot of money when it comes to spoilage.
For us, we need to make sure that we always consider the different trends and how people
are shopping and how people are consuming our goods and we should always just buy in
small quantities and get it delivered as a needing basis, okay?
So then that way we can decrease the amount of spoilage which brings in a lot more money
in your pocket.
The fourth type of variable when it comes to opening up your restaurant is the contingency
fund.
A lot of people do not account for this.
This is actually a must have when it comes down to it, although you're going to see a
bigger spend and a bigger budget that you need.
This is something that is crucial to your success.
Why I say that is because for any food and beverage shop to take traction, to actually
make traction, you need to be able to bring your food out there in the world and it takes
time for people to talk about your place, it takes time for people to know how great
your place is, and usually it takes a couple months to pick up.
If you do not have enough funding to last that six month period until you gain that
traction you're going to be able to go out of business.
You're going to compromise on your food offering and the quality would go down, and then in
turn it goes into like a backwards spiral into something that is no good and it compromises
everything that you have been building your shop to stand for, which is the reason why
having a contingency fund for your food and beverage is super important.
Please, please, please do not oversee this line item when it comes to your budgeting.
The last variable to consider when opening up your shop is professional fees.
Anywhere from franchise fees that we're talking about, that ranges from $30k to $50k, to accounting
fees, to your architect, to your lawyer fee, to your consultant, all these type of fees
add up.
It could go up to like tens of thousands of dollars and if you do not account for these
little costs which adds up then you can easily run into the red, so you can easily be in
a situation where you don't want to be.
Once again, contrary to the first three variables which you can actually account for and actually
save money for, these are the different things that you should definitely always consider
and always account for when coming to your budget and when you're budgeting how you're
going to set up your food and beverage shop.
For us, when we first started our ice cream shop we didn't account for paying for a consultation,
we didn't account for the lawyer fees when we were setting up our franchise and that
itself cost us more than $40,000 and in turn it is because, only because, we were lucky
and only because we were able to generate a lot of buzz from the beginning that we were
able to afford all these professional fees, otherwise I can tell you we wouldn't be in
business today.
So make sure that when you're accounting and budgeting of setting up your shop, always
account for professional fees.
Doesn't matter how little they are because they always add up.
So there you go, how much does it cost to set up your F&B shop.
Hopefully by now you understand that there is no straight answer that I can give you
in terms of how much does it cost to set up your F&B shop because once again, there are
so many different variables that come into play.
I tried my best to give you a ballpark range initially, then we came into how big your
size to project, how much does it cost to build your F&B, and then we talked about the
five different variables where you can actually save money on and actually account for your
budgeting and that way you're going to be in the best shape to budget for your food
and beverage shop.
Hopefully this has helped you and given you some insight into how to prepare for your
opening.
If you want to learn a little bit more, I've actually written down from step one to the
end step, to a thriving shop all in the link below, so go in the link below.
These are basically stuff that I've learnt from the past five years from actually selecting
a winning menu to choosing the perfect location to actually finding out what our customers
like to actually finding the perfect location.
All these things all in the link below so make sure that if you guys want to learn more
about how to build a thriving food and beverage shop, check out the link below.
If you guys liked this video, make sure that you give me a thumbs up.
Otherwise, if you have any questions leave it in the comments section below and I'll
make sure to answer it for you.
Otherwise, subscribe along the journey.
I'll see you guys next week.