Starting a restaurant easily cost hundreds of thousands of dollars. Equipment, space, menu design, and marketing are all big-ticket items that add up quick. Throw in staff and inventory and your funding may start to look flimsy. While these factors may seem nonnegotiable, businesses before you have made it by on much less money than normal and still seen success. Read on to find out how you too could start a restaurant with a barely-there budget.
1. Run a test case.
Starting a restaurant doesn’t have to be go big or go home. You can create a “sample version” of your concept for a fraction of the cost and learn a lot about your business in the process. A test case can consist of opting for a smaller, less ideal location with less glitz and glam and more focus on the food. If your menu is as good as you think it is, your food will generate enough buzz to keep customers coming back. Since your expenses will be low, you’ll be able to generate more initial profit from your test case than you would a traditional restaurant. This income can serve as the funding you need to expand your concept down the road.
2. Create your own budget.
Every restaurant is unique and while some expenditures are necessities, there are many you could probably do without. Don’t be pressured into spending money on things you don’t really need. When you’re just starting off it’s okay to focus on the essentials. This is especially relevant when updating a space. Completely recreating the design of a space can be expensive, as is buying all new equipment. Rather than have a “new or nothing” mentality, try to work with what your space comes with and put money towards critical enhancements (like a broken oven or leaky plumbing).
3. Be resourceful.
Use your creativity to see the possibilities in not so ideal situations. For example, an outdated restaurant space may seem like a huge undertaking, but a little TLC could save you a lot of money. If the layout is already set up for a food-service operation you won’t have to update the design very much and can focus on surface enhancements, like new furnishings and fixtures. Making over a former restaurant is less costly than starting from scratch on a blank canvas.
4. Look locally.
When it comes to marketing, website design, printing and other needs, get bids from local businesses before going with the big name option. Large agencies can have inflated fees that you’ll likely avoid when dealing with a small business. You may also be able to cover some of the bill with a restaurant slip when dealing with a local company.
5. Opt for wholesale and raw materials whenever possible.
When you use a contractor or interior designer as a middleman you’re going to pay much higher costs for your materials, equipment, and furnishings. When replacing flooring or making other improvements buy the raw materials yourself and just pay for the labor to have it installed. For appliances, score wholesale prices at restaurant supply stores and avoid shopping retail whenever possible.
6. Lease expensive equipment.
When drafting up how much funding needed to start a restaurant, many owners fail to consider the option of leasing . High price tag appliances can be leased to cut startup costs. Some retailers will also have rent-to-own options where you can choose to take ownership when you have more flexible spending later on. Appliances like refrigerators that don’t experience much wear and tear are your best bet for renting since these will likely still be in decent condition should you decide to return.
