4 Reasons You Shouldn’t Open a Restaurant

4 Reasons You Shouldn’t Open a Restaurant

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For many food-loving, entrepreneurial minded individuals, opening a restaurant is a dream worth pursuing, at least in theory. If that sounds like you, designing your own menu, hiring and training staff to deliver your personal vision of perfect service, and adding all the right touches to create that “just-right” dining experience are all things you’ve probably pondered extensively. And while those things are truly important to running a successful eatery, there are many more requirements that aren’t nearly as glamorous.

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The restaurant business is not for the light-hearted, and though a passion for food and a desire to succeed may be important, there are some frequently overlooked aspects of restaurant ownership that may cause you to shudder. So, before you finish your business plan or take out that loan, consider these top reasons you may not want to open a restaurant.

Running a Restaurant is a Serious Time Commitment. 

Opening any business requires a significant amount of time and dedication, but those seeking to go into the restaurant business may find the amount of hours required to be crushing.

What takes up so much time?  In addition to the daily tasks associated with operating your business and engaging with employees, you’ll also need to work with vendors, maintain positive customer relations, plan and tweak menus (seasonally or to simply weed out underperforming items), review key metrics to indicate profit and loss, and create marketing plans to help get the word out about your establishment.

Over time, you may find that you can pawn those items off to managers or other employees, but that’s not always the case, and finding the right people to trust with your investment isn’t always easy.

It’s also worth noting that sick days and holidays are two things owners can seldomly indulge in, and though the kitchen may open at noon, prep time starts several hours before that and closing procedures can ebb into the wee hours of the night.

Staffing a Restaurant is Expensive.  

According to a recent survey by the National Restaurant Association, 1 in 3 Americans received their first job experience in a restaurant. That’s not surprising given that the restaurant industry is responsible for employing a third (1.6 million, to be exact) of all working teenagers, many of whom will go off to college or seek long-term employment elsewhere. This, of course, leads to extremely high turnover. Furthermore, many of those employees are also enrolled in school (27% according to U.S. Census Bureau), which limits their availability and requires significant shifts to staffing throughout the year.

Toss that in with the industry specific pressure that’s often placed upon key restaurant employees, as well as the general ebb and flow of workers who quit or are fired, and it’s easy to see how much time and investment is necessary to successfully staff a restaurant. How much can hiring new employees cost? The Center for Hospitality Research (CHR) at Cornell University estimates that turnover can be as high as $5,864 per employee.

Budgeting for a Restaurant Represents a Significant Challenge. 

In his monthly newsletter, Tony Maws, owner of Craigie on Main in Cambridge, MA, discusses the granular nature of budgeting for a restaurant: “You build a budget for your business that needs to take every glass, coat hook and light bulb in to account.”  He makes an excellent point.  Beyond the cost of staffing a restaurant, owners will find a daunting list of things they need to include in their budget. Common utilities, electricians, plumbers, electronics (sound systems, televisions, etc), internet and telephone access, décor, furniture, equipment, marketing initiatives, menu printing, etc. all need to be factored in.

However, beyond that laundry list of financial considerations, Maw also points out that equipment, no matter how new, will break, which means budgeting also for the unexpected, like fixing or replacing costly but necessary equipment or address plumbing emergencies.

The Journey to Profitability Can Be Long And Challenging.

Many enter into the restaurant industry due to their love of food or passion for the industry, but profitability is typically a major goal. After all, it’s hard to pay the bills on passion and dedication.

Though it seems to be a general belief that it takes at least two years to break even, profitability is a difficult point to reach, and determining when and at what rate the return on investment will come is even more difficult when you factor in expenses (predictable and unpredictable), many of which were listed above.

Furthermore, profitability can require a lot of tweaking. Restaurant owners often become experts in trial and error exercises as they try to find the sweet spot for everything from menu, pricing and vendor costs, to staffing decisions and marketing efforts.

Opening your own restaurant can be a rewarding experience, but it takes a lot of time, money, and patience to get things off the ground. If you are getting into the restaurant business because you love food and understand the industry, then you may already expect and have come to peace with some of the challenges discussed above. However, if you aren’t familiar with or willing to take on the grueling requirements that accompany restaurant ownership, this demanding lifestyle may not be for you.

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About the Author — Jennifer is a alum of the University of Denver. While in the graduate program there, she enjoyed spending time identifying ways in which non-profits and small businesses could develop into strong and profitable organizations that while promoting strong community growth. She also enjoys finding unique ways for freelancers and start-up businesses to reach and expand their goals.

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  • Gregg Sourbeck

    Great information on budgets. A budget is the document that keeps you headed in the right direction. Sure, you’ll make some missteps that have to be corrected. Sure, you’ll encounter some unexpected events and expenses that will throw your budget off. That’s normal. That’s business. That’s life. But without a budget, how do you know what to aim for, what to set as goals? How do you know when you’ve exceeded your goals? Not only does a budget allow you to more easily recover from unexpected roadblocks, a budget gives you the plan for overcoming them.

    • Jennifer Lobb

      Thanks, Gregg! Very well said; thanks for sharing. It’s an excellent tool, not only for restaurants, but for all businesses!