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Old 06-01-2007, 07:42 PM
 
Location: North of The Border
253 posts, read 1,200,510 times
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Default How much $$ is needed to start a bar/cafe?

Obviously, this varies based on location and other circumstances, so what I'm wondering is how I find out what is realistic and what is unreachable.

For the past year, my husband and I have had serious thoughts about starting our own neighborhood bar/cafe. We both have experience in homebrewing beer and working in kitchens, and I love to cook. We have some fairly solid business plans in mind. We are tired as working as slaves instead of doing what we really love. But how?

Those of you out there who have started a restaurant/cafe/bar from scratch - how did you do it? Did you lease a space that was previously a bar/restaurant? Or did you start from scratch and furbish everything yourself? We'd want to start out selling beer/wine from a distributor, and eventually have enough capital to start our own microbrewery (right now we're only capable of making beer in 5 gallon batches - that does not last too long!)

How much money are we talking, realistically, to even contemplate such an attempt at a new business? Liquor license, equipment, furnishings, advertising, insurance, etc...
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Old 06-01-2007, 09:00 PM
 
Location: Sunny SC
4,079 posts, read 9,371,952 times
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You really should do a business plan to figure all of that out. You would have to do some research but it's neccessary. Cost of a liquor license depends on several things, especially what town it would be in, so noone can guess that. Also, what size would you like your establishment to be? You could find a place to rent that was once a restaurant and might already have usable kitchen equipment, which would probably save you some money but if you decide to buy, check out ebay. I know someone that has a hugh restaurant and bought almost everything on ebay. Another good way to get advice is SCORE through the SBA, check it out. They will meet with you and give you business advice for free. Usually it's with someone that has been there, done that.

Good luck with your venture!

Last edited by Rapture; 06-02-2007 at 11:52 AM..
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Old 06-02-2007, 08:40 AM
 
Location: Weston, FL
2,825 posts, read 8,756,476 times
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I echo what Rapture stated above. Also, if you need additional help, a nearby university should have a program through the SBA. These programs are free, you are able to speak with other small business folks,many retired, who can help guide you through the process.

Owning your own business, as we do, has it rewards and many challenges. You really need to think it through, do all your research, don't give up your day job (at least one of you has to keep theirs until you can make the transition), and plan. I can not stress enough how much planning is involved. And factor in the "what ifs."

Good luck!!
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Old 06-02-2007, 10:03 AM
 
8,169 posts, read 21,392,136 times
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Without a business background or a trained background in the food service industry, I'd caution you that you're setting the stage for another restaurant business failure. Which have the highest failure rate among new business start-ups. There's a lot more to a successful restaurant than just a love of cooking and having been around a kitchen. Staffing, marketing, menu creation, wastes, licenses and health department compliance, management, etc ... are all big factors in the success of a restaurant.

Look at it this way .... there's a lot of new restaurant start-ups by folks in the business for a long time with successful restaurants under their belts ... that still fail. They know a lot more than a J&W graduate about the business, and yet they still can't guarantee the success of a new start-up.

But, if you want to go through with this dream, seek out all the possible business advice you can get through SBA or whatever means are available to you at modest (or no) cost, before you invest any money or obligate yourselves in any way.

You'll need to figure out how you're going to have enough money on hand for your planned start-up costs, inventory, labor, and all the incidental expenses which crop up in the initial phases of your proposed business, along with all the ongoing overhead expenses which quickly are a burden to the projected cash flow income ... things like withholding taxes, workman's comp, insurance, and so on. Many new restaurants don't figure on those burdens out of their cash flow and quickly run afoul of the state/county/city/federal bite on the gross cash flow ... which have a priority over your business requirements, well ahead of any supplier or business related expense, or even your personal requirements for your time or return on investment. The tax authorities can and will shut you down if you don't pay them in a timely manner, and then your investment and opportunity to create cash flow is all gone .... without you escaping the obligations you've taken on (like payments, rent, fixtures, etc.).

You will find as a new start up business that most suppliers, landlords, and anybody else that you get credit from will require you to sign a personal guarantee for the payment in full. Even if you form an LLC, or a corporation, you won't get credit extended without that personal guarantee on the bottom line. Are you willing to risk all of your other personal assets (like your home equity) for this venture?

Having started up several successful businesses (that had a much lower risk than what you're looking at), along with a couple that didn't make it ... I'd tell you that you would be at very high risk to open this business without having set aside at least 2 (possibly 3) years of personal living expenses in the bank before you open your business. That's money in the bank over and above all of the business plan projected money you need on hand to open and operate your restaurant ... and I'd be nervous to open the business without having at least 2 to 3 times the amount of money available that the business plan called for. You'll simply find many unexpected expenses which will quickly burn through capital faster than your cash flow will support for the first year, at least. Don't count on cash flow paying for anything but an opportunity to be in business for at least the first year.

I see from your header that you're in the PNorthwest. Have you looked around at the local marketplace? Do you see an opportunity or a need for what you propose to do? It's a growing area with a large population base in some locales .... is there a niche for you to fill? Who is your competition? Do they fulfill the existing demand? What's going to set you apart from them? Even a little low-overhead neighborhood family style cafe is going to take a lot of capital to get started ....

A bar? many locales require you to have food service as part of your liquor license. Now you've got two sides of the house to run ... both labor and capital intensive, with a lot of dollars tied up in inventory and operating expense.

I have friends who opened up a small micro-brewery/restaurant (very modest, basic) a few years ago on the main street in a front-range Colorado town ... their start-up up front cost was over $2mil. That didn't include any operating capital past the day they opened the doors, or any set-aside for personal living expenses. They've since cut the menu back to some sandwiches, pizza, calzones, and finger-food (buffalo wings, potato "freddies", artichoke hearts w/dip, etc) .... high profit, low overhead foods to serve, all in disposable "baskets" to minimize kitchen clean up. They still aren't taking hardly any money out of the place ... and are working a lot of hours to make a go of it. On the surface, it looks like they do a pretty good trade most afternoons and weekends; kinda' gone to a "sports bar" theme with all the big screen TV's, etc. But paying off that $2mil loan to get opened has been a big burden, and the bar license was expensive to buy out an existing license from a closing bar (owner retiring) down the street.

I have another friend who graduated DU's Hotel & Rest Mgmt program a few years ago. He partnered with a "money man" and opened a bar in Denver which became one of the "hot spots" for a few years. They made lots of money for awhile (6 figures/mo), but after 5 years the place was done, the glamour gone (it was losing almost as much money per month as they had been making!). They tried to open 3 operations in the place since ... all new theme, menu, "gimmick", furnishings ... without any success. They've since sold the building, having lost all the money they made out of the place when it was "hot". Friend has consulted on two other successful high end restaurants, simply on a "consulting fee" basis ... he got his money to get the places up and running and then was out of the picture. Both restaurants did well for about 4-5 years, then faded in the marketplace and the owners have re-opened under new themes, new menus, new interiors ... at great expense. My friend now does something completely out of the hospitality business for a living .... what a roller-coaster ride.

Not trying to discourage you from pursuing this venture if it's your desire, but want to try to paint a bit of the real picture of going into this type of business. If you can raise the capital and really want to make it happen, it can be done intelligently and you can maximize the odds of success before you ever open the doors .... just be sure you know what you're doing to the best of your ability before spending any real money. OH, and you will need to quit those day jobs ... you'll be working a lot of hours if there's any chance of success in this venture.

Good luck .....

Last edited by sunsprit; 06-02-2007 at 10:34 AM.. Reason: add'l comments
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Old 06-02-2007, 01:49 PM
 
2,429 posts, read 4,512,133 times
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I honestly don't know how much it costs to open up a business. But back when I was in California one of my neighbors took out a loan and opened up a small Italian type restaurant in the food court of one of the local malls. It was much cheaper to start out that way because he only had to lease a small area while the mall provided the eating and dining area. He puts in a lot of long hours and almost lost the business because he did a poor job of keeping the books. But he doesn't have a liquor license, although many in the mall do sell beer. A beer and wine license is much cheaper than a liquior license.
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Old 06-03-2007, 02:51 AM
Status: "You cant have any pudding if you dont eat you meat" (set 4 days ago)
 
10,718 posts, read 10,566,599 times
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excellent advice from all the above posters!!

here's a good tip.....talk with a sales director, or regional salesman/supervisors, of foodservice wholesalers. many of these folks have been restaurant owners, or background in cooking,,,but they also get a real life picture of "what works" in the marketplace,,,anything from,,menu selections, to decor, to margins. to expenses, to equipment.
many have insights,,,as to what areas are growing, and failing,, and they can give you fixture plan (equipment) estimates, along with inventory estimates, etc.
say i called sysco's regional sales director,,, first i tell him,,im planning on opening a restaurant(dont tell him where, yet) but you want a feel for the product and wholesale companies...i'll guarantee this person can answer just about every question there is,,to opening a restaurant..and im sure they even have accountants that will assist,,,you on a business plan,,,and probly has an equipment leasing company,,
also ask that sales director,, for a few names of cafe owners that are very decent and will talk to you,,,outside of your competitive area,,,he will give you names,,and go meet with them,,,bring a pad and paper,,listen and write down good ideas,,
i work for a grocerstore wholesaler, as regional development supervisor,,,not just for real estate but also operations,, just a few weeks ago,,i got a call from a person who wants to open thier own perishable store (upscale meat market)
he has a vision what he wants,,but doesnt know how to get there,,well,,i can take him by the hand every step of the way and answer most questions,,,or direct him,,to the right area to get an answer,,
the company i work for,,will actually set up a new store,,have expert supervisors in all areas,,,,and even be there for hard labor on opening day training store personnel..

look to meet with folks,,,thats in the business,,and thats there job,, is development,,,,you can get a huge amount of free advice.,dont get caught up in any salesman hype,,,

one last thing,,,ADAPTATION IS THE KEY TO SURVIVAL,,IT ALWAYS HAS BEEN,,,,BE OPEN-MINDED,,,,YOU WORK FOR EVERY CUSTOMER COMING THRU THAT DOOR ,,,YOU KISS THERE BUTT,,,,DONT BE ARROGANT,,,,THAT THEY ARE LUCKY TO HAVE US (BUSINESS)
AND,,,BE PRICE FRIENDLY,,,,PERCEPTION IS REALITY!!! ALWAYS HAVE A "CHEAP PLATE" ONE IN EVERY COMMODITY ON THE MENU,,,LOOK AT VOLUME NOT MARGINS,,AT FIRST,,,YOU NEED TO MAKE FRIENDS FIRST,,THE MONEY WILL COME!!
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Old 06-03-2007, 03:21 AM
 
Location: North of The Border
253 posts, read 1,200,510 times
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I appreciate all this feedback. Every day I see so many new small businesses opening, and I wonder, "how do people do this?". Are these people getting massive trust funds or qualifying for chunky loans? Because I'll get neither - I've been working and saving and I want to start something very small, say a casual friendly beer/wine bar that has a very limited menu. My husband and I would be the only employees, so small and simple is the plan. If that works, we'll grow from there.

Where I'm living now, in Oregon, there's a mini-market on every corner run by (mostly) Korean husband/wife/family teams, but also African and Middle Eastern. Most of them barely speak English. How are they starting their own business with such circumstances?

I just want to learn if it's feasible to start my own business without being independently wealthy, and basically having no idea what I'm doing! Proper planning is important, but sometimes just jumping into something new and different is what life is all about. Live and learn.
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Old 06-03-2007, 05:53 AM
 
Location: Land of the Roo's
188 posts, read 593,169 times
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Quote:
Originally Posted by mainebrokerman View Post

one last thing,,,ADAPTATION IS THE KEY TO SURVIVAL,,IT ALWAYS HAS BEEN,,,,BE OPEN-MINDED,,,,YOU WORK FOR EVERY CUSTOMER COMING THRU THAT DOOR ,,,YOU KISS THERE BUTT,,,,DONT BE ARROGANT,,,,THAT THEY ARE LUCKY TO HAVE US (BUSINESS)
AND,,,BE PRICE FRIENDLY,,,,PERCEPTION IS REALITY!!! ALWAYS HAVE A "CHEAP PLATE" ONE IN EVERY COMMODITY ON THE MENU,,,LOOK AT VOLUME NOT MARGINS,,AT FIRST,,,YOU NEED TO MAKE FRIENDS FIRST,,THE MONEY WILL COME!!
Make sure that the above is in your mind all the time.

This is very true , it applies to all small retail business , as you will be relying on the public that come to you for your income , you gotta be humble.

Ive been dealing with the public for the past 20 odd years until i got out of retail 3 years ago.

There will be times where the customer is WRONG , but you have to over look this as the customer is always WRIGHT.

You can spend many dollars advertising your business , but at the end of the day small business rely on WORD OF MOUTH , thats the best kind.
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Old 06-03-2007, 09:23 AM
 
8,169 posts, read 21,392,136 times
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gnubler ...

those (successful) family operations you see are the result of folks coming in with expectations of achieving results through a lot of hard work, long hours, and the whole extended family pitching in to get the job done without receiving an income for their efforts.

generally speaking, it's unlikely that they have the obligations and the standard of living that you've come to expect in life.

I've rented to a couple of these families, and they're living a dozen people or more) in a 2 bedroom apartment. They get by on an overall income that would make you pause. In other words, they're willing to sacrifice everything for the American dream of a business and financial success. Along the way, they'll accept having almost nothing to get that better life, if not for themselves, for their children to get ahead.

I think your expectation of a two person bar operation is unreasonable. Think of the hours of operation ... even from Noon to closing is a lot of hours per day, and you can't just open or close the doors at the times without a lot of other hours to prepare or close up.

Add in your vision of a brewery and it's not physically possible to do it all with two people ... and still serve the clientele. You'll be burned out in a few weeks if you even make it that long .... a food service operation is highly labor intensive. You simply can't do the front and back of the house with two people and have something that the public is going to want ....

Best to follow mainebrokerman's advice ... get a lot of knowledge before you venture into this business.
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Old 06-03-2007, 04:54 PM
 
Location: Sunny SC
4,079 posts, read 9,371,952 times
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Quote:
Originally Posted by gnubler View Post
I appreciate all this feedback. Every day I see so many new small businesses opening, and I wonder, "how do people do this?". Are these people getting massive trust funds or qualifying for chunky loans? Because I'll get neither - I've been working and saving and I want to start something very small, say a casual friendly beer/wine bar that has a very limited menu. My husband and I would be the only employees, so small and simple is the plan. If that works, we'll grow from there.

Where I'm living now, in Oregon, there's a mini-market on every corner run by (mostly) Korean husband/wife/family teams, but also African and Middle Eastern. Most of them barely speak English. How are they starting their own business with such circumstances?

I just want to learn if it's feasible to start my own business without being independently wealthy, and basically having no idea what I'm doing! Proper planning is important, but sometimes just jumping into something new and different is what life is all about. Live and learn.
This is not something to just jump into, isn't that why you are asking the question on here?

As stated above this is not something you can do successfully with two people. I have opened a couple resturants and managed six or seven, it's hard work. That doesn't mean don't do it or you can't do it but not with two people. The other business you mentioned is a lot different than a restaurant/bar and can be run with two people. You really have to do a business plan, this way you will have done all your research, know what things cost and have a marketing plan. etc...You can type business plan in Google and print one out, follow along....not that hard but research is involved. I really hope you do it and are successful but have a plan.
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