Do you presently have a POS (point of sale in place) or perhaps some other customer database?

I know these are tough to do with little information but estimated build out cost and equipment cost, supplies cost on a 3600 sq ft bar/restaurant

... plates 12-22, around here that is kind of a mid range price so mid range decor, I guess Ruby Tuesday esque if I had to pick a chain to connect it too

... I estimate kitchen @ 1500 sq ft (no special equipment I guess), dining/bar @2100 so maybe 100-140 seats depending on bar design (looking at a square or rectangle close to center, tables around, booths on 2 side walls

... menu is eclectic, American I suppose, no pizza though, so no ovens there

... location is prepped, new strip mall never anything in it, has plumbing up to bathroom, needs wall running to 20ish ft ceiling to separate kitchen though (or I think it'd look weird), HVAC is installed, grease interceptor installed

... that's all I can think of for now, I'm just trying to workout a total in my head... liquor license is $20k, tap in fees are $5k per 8 seats I believe bar count is different though... have a consultant @ $50/hr (think this is a good deal for his experience) not sure how much time I should use him for (I have no experience in business)

Also how many managers, cooks, waiters, bartenders, do you think you'd need for this set up to run 7 days a week (lunch, dinner, close @ 2 am most nights?)....

And what would you budget for your head cooks/chef and managers, etc (I'd like to hire experience since I have none to kind of learn from them)

Sorry lots of questions don't mean to hijack but any ballparks on this stuff given the set up I'd really appreciate, can try and answer any questions that would help.

Also what kind of marketing/advertising would you do, its located on a pretty expansive subdivision and across street from another expansive sub and apartment complex (homes 250k+) pretty much a homogeneous pile of upper middle class white people and about 2 miles from the downtown area of the city, just off an expressway but not an exit that is heavily trafficked besides residents... I'd like to attack the subdivision group which is like age 30+ with families without killing the opportunity to keep the bar busy through the night... maybe this is trying for too much though.

$100-$300/sq ft, depending on concept, market, experience
Couple of questions for you..
1. What market are you in?
2. Are liquor licenses transferable in your state?
3. Does your consultant have prior experience in scratch build-outs with his/her money @ risk? I ask because $50 is low, sends up a red flag for me.
4. Have you signed a lease yet? If not, what if any communications have you had with property owners/agents(impacts costs)
5. Where are you in this project? Kicking tires, pre-planning, design (all impacts costs)
6. What business/start up experience do you have of any variety?
7. Is this to be financed with debt or cash?

1. Midwest, Grand Blanc in Genessee County, MI --- speaking of, do you have any pop density points you look for (like X/people per square mile per competitor.. think this area is not even close to saturated just wondering if you use anything like this as a macro check)

2. Yep, within county, and luckily the dieing city of Flint is in the county so there is quite a supply

3. Consultant first worked in beer industry (distributing), then sales (restaurant software), then managed a Mr. B's Pub (http://www.mrbsrochester.com/ example location), then built out the one Howell, Michigan I believe with partners the brand owners (he quoted 1.7mil sales avg 2.5 in the heyday, obv that translates to nothing without cost side just giving an idea of the size), also was owner/operator of a coney restaurant and fast casual (his words) during this 9 year period of restauranting, now he does consulting in the area and has a soft goods supply company napkins and what not...

so I really don't know about his own risk in these ventures, if nothing else though I think he's probably worth it for contacts and to give me an outline of what to do maybe help out at launch? Thoughts?

4. No lease. Strip owner wants a restaurant in there, its actually his dream but he can't swing it, he is a friend of family. Units are 20x60, 6 available (i think 3 is plenty), food basket (large liquor/convenience store with some groceries is in end unit), anytime fitness w/ 1000 members next to it, physical therapy at end, and a salon in another couple units.

He is been so helpful so far with contacts and what not think he really just wants to fill this place up, help his store (food basket) and move on to next project.. that's my read anyway. Others are contracted @ $5800/mo for 3 units (have seen agreements), he's offered me up to 8 months free build out time, 6 months free in operation and $3000/mo to year 5 and told me to write up the renewal options and an option to terminate after a few years if its not working out. Water paid for, and triple net is fixed and included.... seems like a crazy sick deal to me. His brother owns 3 low end bars in other areas and he helped build them out from scratch, offered his services to me in that regard.

Drew up an earnest money agreement that gives him $3000 to hold in good faith that is refundable for any reason within 90 days (maybe my license falls through or something) and after 90 days he keeps it if I have not given a firm decision or executed a lease with him with all the terms discussed above and liquor license contingency.. if executed 3k goes towards rents.

5. I've got myself surrounded by everything I need (I think) lawyer who specializes in restaurants and securing liquor licenses in area (about to retain their services), lease negotiated almost fully just not executed, 2 builders to quote when layout is nailed down, 4 arch firms I want to talk to all about build out and design, landlord with restaurant equip experience, and rest consultant who is the biggest unknown but seemed quite knowledgeable... LLC is formed, got my EIN, so now is kind of the get in or get out time I guess.. next step is get home and turn the ideas real as far as menu/layout/decor.. all costs are upcoming, haven't incurred anything but the earnest money yet.

6. None, I'm a poker player, branched out into real estate a little with some rentals and now looking for this challenge specially with the sites shutting me out (no wife/kids lots of time). Only biz experience is my degree from U of M Ross School.

7. Hard to say yet. Have lots tied up on Full tilt, playing right now in Vegas, and not sure on total cost yet. Have a couple hundred thousand completely liquid though right now and my rentals are owned free and clear so I can mortgage them soon (planned to anyway good rates)..... I can get that mortgage $ mid September likely result if my estimates are close are using liquid funds until run out then finance one of the homes after that... unless you think this is a good time to seek a commercial loan (tough with age (23) and being poker player maybe?)

Really appreciate your time!

@4cardgrind
Based upon the info provided in the thread, I am very skeptical of this project & don't quite understand the sequence of steps you took to get it to this point. I would prefer that you have some solid industry experience & well formed concept in mind before selecting a site & entering into any negotiation with the property owners. However, I will answer your questions & comment on the weak spots. I hope you find that to be useful. You sound like a bright & ambitious person, but also logical enough to walk away from a deal if necessary. I have spoken with a few 2+2 members re: similar projects & will offer you the same via telephone at no charge for about 30-45minutes. Pm for contact info. Anyway, tight on time so here's a start....

Costs
$100-$300 /sqft. Most of this is dependent on the exact condition of the site, the concept to be executed & the experience of the principals. What is the pitch of the roof, how much electrical service has been brought to the units, how many tons of AC are in place, how much modding does the duct work require, new build-outs don't get grandfathering so does city fire code require installation of a sprinkling system ($$), do we need to cut additional doorways per fire codes, do we need to re-position bathrooms & cut into sanitary, has a cement floor already been poured & do we now have to cut into it to run drains, sewer, power etc.., are the dividing walls between the individuals load bearing, etc..etc.. These issues should have been brought up by your consultant after the site inspection & addressed in the meetings you had with the property owner. The abated rent is nice, but we should be looking for TI $ for permanent improvements of this variety. I would be concerned if neither your consultant or attorney addressed these basic negotiating points with you. Keep in mind these are not insignificant costs (time & money). The experience of the principals informs the overall price for pretty obvious reasons. Those who have put money at risk are likely to have developed sharp pencil instincts and know how to execute a build-out @ a significantly lower (correct) cost & you need be sensitive to costs now & not later. Plan for your exit before opening.

Financing
I don't think you will have any luck with a commercial loan, but likely have the credit required to obtain a merchant account & accept credit cards. There will be some high cost financing available to you after opening (credit card factoring), but I wouldn't pursue it.

Last thing, your kitchen is way oversized @1500 sq ft. I'm not sure where this estimate came from, but take 500sq ft back into the dining room for the time being. The actual concept will inform the kitchensize more than anything else.

I will post more tomorrow.

AF,

I'd be interested in hearing your thoughts on Groupon and its impact on restaurant industry. Is it something you would spend marketing dollars on?

Also as someone who has managed and operated restaurants what are your thoughts of sites like grubhub.com and menu.com that allow users to place orders online or on their mobile phone in exchange for a % of the sale. How much of a sale would you be willing to give up to these sites for the service.

@4cardgrind
Re: Lease & Site
I understand that this deal is colored by your family friendship with the property owner, but still find it odd that the property owner was so willing to do business with you. It's been my experience that landlords who control good locations are picky about their tenants & are very careful about entering into a lease agreement with unseasoned retail operators of any variety, but of restaurants in particular. In this case we have the conversion of 3 bays into a restaurant & once that conversion is completed re-purposing that space back into 3 empty bays is both unlikely & expensive. He clearly wants a restaurant operator or he wants someone build a restaurant out for him so he can have a restaurant tenant, not necessarily you. This brings up the question of how sophisticated the property owner is. I am curious to know if the lease agreement will require a PG (personal guarantee) that will put you on the hook for the balance of the lease should you choose to exit & don't have a buyer in place. Your on the hook for 180K in rent, plus cams & property taxes. You noted that he has offered an option terminate after a few years. That's very strange. I have never encountered a landlord that has made that offer. In fact, quite the opposite was true. I had to make that a deal breaker to get any traction with it.
Look at it this way, if you fail the landlord is left with an outfitted restaurant that he can easily cycle another tenant into (new build-out, didn't work because operator wasn't experienced, etc..etc...) He will also be able increase the rent. You might be thinking that if it doesnt work out I will just find a buyer and exit, but that is easier said then done. This brings us back to planning for the exit before opening. That means getting built-out at the right cost & in the right format. You have to be extremely cost sensitive & that requires expertise you don't presently have & it seems like the people you engaged don't either.
The site itself sounds marginal, based upon a mediocre tenant mix that will not enhance your business very much. For example, a bank is better than a fitness center because banking transactions take less than ten minutes & often occur during off-peak restaurant hours so we are not too concerned with the parking lot load. Banks also draw in a large portion of the local community & so it's helpful for them to see that a new restaurant has opened. Fitness center, not so good. In bedroom communities these places do much of their business in prime restaurant hours & they are not in & out in ten minutes, so the parking lot load becomes an issue worth analyzing.

Perhaps you have already confronted & overcome these issues. Hopefully the professionals you have engaged brought them to your attention. A good business person can walk away from a marginal deal if it can't be improved.
ATM you have cash & ambition, that does not give you an edge.
More to follow.

I'm not a restaurant operator but I know a great business when I see one: http://www.crackinwildeggs.com/ . I took my wife for breakfast there for her birthday last week... And damn.

This place has managed to figure out how to get upper end clientelle to come in and spend 30$ on two plates largely composed of eggs.

Ap5 could you takea look at their concept (which is doing very very well atm so probably worth your time if only to see what you can steal) and comment on it?

EDIT: Fwiw I'm quite cheap and I managed to spend 37.50 w/tip for a 8 oz steak, two eggs, stuffed french toast, 2 OJ's, 1 alchoholic beverage, and 2 small cups of grits of the day... And I'll be doing it again soon.

Nice post. We are starting to see growth in operators that focus on the 1st & 2nd service part & take a pass on dinner--First Watch comes to mind. The operating hours allow for a more stable staff & culture. There are some good margins left in breakfast goods & definitely good demand for these locations. I rarely eat breakfast out, but when I do (or have to) I don't have a list of places in my head like I do for lunch or dinner. There something about breakfast out that is more enjoyable to me than dinner out.

Breakfast rec for those reading from Las Vegas...
The chicken & waffles (make sure they bring you both sauces) @ Bouchon in Venetian is one of my all time favs. Service can be a little choppy & poorly paced, but overall pretty enjoyable.

My goal is to get a "proper" operation set in place, so I want to learn standard practices. I'm looking for any material that would help in that regard and also expand my knowledge about the industry in general.

Opening was a mess, but I'm beyond most of the pain from that experience. I really just want a more sophisticated/fluid system in place(looking for outside knowledge), since I want to scale up eventually.

Please post a 2-3 of the problems you are trying to overcome in your present operation & I will try to provide some insight.

A lot of my issues stem from productivity dropping once I leave the kitchen (i'm not even a cook).

1. Productivity.
I've done a lot of the duties myself and know how long it "should" take, but some employees seem to drag tasks out longer. Should I establish a quota system or benchmarks? Meat should only take so long to cut, but I feel iffy about telling people to do it faster due to obvious danger. I would take 20 minutes versus other people taking 1 1/2 hours - 2 hours.

2. Supervising and trying to delegate supervisory duties.
I will try to empower an employee and put him in charge, and will often times find them bull****ting with other employees and not working.

3. Optimal amount of employees.
I'm not talking about a per shift issue. I'm talking about overall. I feel comfortable with a certain amount of staff, but that means not everyone gets the hours they want (I also find people will ask for more work and bitch about working too much). I'm potentially losing a cook because of this, but I don't like being too dependent on any one employee.

I've considered a disciplinary system where I give a verbal warning the first time, write them up the second time, and fire them the third time. It's just a headache to think of what it would do to my kitchen turnover.

My servers are a different story though. I find them much easier to manage, possibly due to not caring if they quit or not. I find them much more easy to replace and train a new one - I live in a college town.

I have other issues, but I feel like i've given you enough to chew on. This thread in general has been really helpful to me. I've taken note of how you said to make one place profitable and go from there. So far profits haven't been an issue, I just need to get my business model down before I even attempt to expand.

Thanks.

side note: how much cash do you suggest I hold versus operating expenses?

I'm a 23 year old Finance Major who has worked in retail since basically the day I was born (cell phones and accessories)...it's a family business....right now I run a store in a mall in new england but Malls and specifically the cell phone retail business has taken a huge hit due to online sales and ebay....

I was thinking of switching gears and in 1-2 years can have 75k-100k cash to use as a down payment on a restaurant/bar that is a little bit more stable than retail shops in a mall.

Only thing is I have 0 experience in the service industry....I have worked in retail since I was 10 years old basically and practically have owned my own business for a few years now....I grew up in a family where everyone including extended family had small businesses.

Is the transition going to be rough or do you recommend that after I have the necessary cash I take 5-6 months and work in a restaurant/bar etc...

The 2nd question is regarding how much cash to have in the bank when you open...I figure for new restaurants it should be 6-8 months of expenses...but if you are getting into an existing profitable restaurant and paying a little bit of premium for it...do you still need 6 months of expenses in the bank for your business or 2-3 would do?

Assuming I can find a good deal that will sell for 2-2.5x net cash flow instead of 3+ of course

I assume financing will be easier for an existing restaurant? so I can use that 50-75k and put it as a 20% down? or would I need a little more than 20%?

Everything I have read or heard about restaurants using Groupon has been negative. Discounting your goods by 75% just doesn't work for restaurants. I know that the Groupon pitch to restaurant operators revolves around how the customers will spend more than the value of their gift certificates & how these discounted sales will result in repeat business from new customers etc...etc..., but I don't believe in it very much. A large majority of restaurant advertising is trying to win back customers you failed to impress when you first opened. If you have followed the thread, you know how much I stress opening well & this is one of the major reasons why. Get it right the first time & you won't need much advertising. If there was a way to game Groupon by manipulating my menu prices or restricting service parts, I might run it to create trial--but I can think of many better ways to get trial without giving away the store. BTW, what Groupon does is not especially innovative. Radio stations have been doing this exact same thing for many, many years.

I don't know how it will impact the industry overall, but imagine that marginal operators will continue to pursue it as a band-aid measure instead of fixing the real problems with their operations.

I'm not familiar with either of the sites you mention,but have dealt with similar companies who like to get between the restaurant & the customer by offering a delivery service or ordering service. It works in some markets, but gets no traction in others. I would personally be pretty hesitant to engage them. If I am involved with a restaurant that has a menu that travels/delivers well, I am probably delivering myself & I would have planned for that long before opening. I would give up 0% of the sale & insist on a flat charge that I would then pass on to my customers. There is just not enough margin to go around.

Sorry for the delay in responding. These are great questions OP, but they are also very basic and I'm surprised to see them coming from someone whose family has been in the business for 15 years. The bottom line is you don't yet have the level of command of your business required to open multiple units & you need to decide if your going to continue to endure these problems or make the necessary changes to overcome them & avoid their recurrence. Most of these issues should have been addressed in the pre-planning & pre-opening stages of your operation. I can't stress enough how important that period is for a restaurant opening, so keep that in mind for your restaurant #2. I do commend you for addressing these issues as many indy owners will just deal with these exact problems continuously over the life of their operation & then complain about how difficult the restaurant business is. Operating a business can be tough at times, but operating a poorly designed & poorly structured restaurant is miserable. Make the investment of time, effort & $ to overcome these problems so you can seperate yourself from the world of marginal operators.

Kitchen Productivity
If you want to maintain command of your kitchen (even in your absence) you have to resolve yourself to completely organizing every aspect of it's operation. Let's start with the basics.

Prep List
Every prep task in the kitchen should be included in a well designed prep list that you can create in Excel. Include every raw good that has to be handled in some way & that includes items that need to be moved from freezer to cooler (thaw pull). That list should include columns for par & prep & perhaps a notation of the amount of time required to complete it.

Standardized Prep Cards
Every prep task should also be layed out in a step-by-step fashion on a laminated 8.5 X 11 piece of paper that will be inserted into a binder and kept in the kitchen. These standard prep cards should include step by step pictures of the prep process from beginning to end. You should also include what tools are required to complete the prep, exactly what container the prep is stored in & where the prepped items are placed in the kitchen upon completion. Your doing this for two reasons. #1 to standardize exactly how you want raw goods handled, #2 make it easier to train new employees
and thereby rely less on unproductive ones

Employee Discipline
You should definitely put a system in place that will document employee infractions as they occur. At some point your going to get into some sticky spots with problem employees & the paper trail you have created will serve you well. It will obviously impact your turnover. I am guessing your concerned about turnover because you haven't invested your time in creating a training program that will allow you to easily cycle in new employees.

2. Supervising and trying to delegate supervisory duties.
Forget about empowering employees. Either make a task part of their job or provide some incentive for them to complete it.

3. Optimal amount of employees.
The level of staffing that allows you to operate your restaurant in the most profitable manner is the correct one...period.

Got caught up on Gordon Ramsay's Kitchen Nightmares this weekend and the below captioned link is to the "Oceana" episode. Worth a viewing if you enjoy train wrecks & also the first time I have seen Gordon basically give-up on a place. Also take it as a PSA not to eat anywhere on Bourbon Street.

http://www.hulu.com/watch/243527/kit...htmares-oceana

Well the Chicken & Waffles won, but then Flay & Company managed to botch the whole thing up (as expected) and all of three of the restaurants shut down pretty quickly. LOL. They turned it into a healthy soulfood concept & it lasted just a few months.

Who the **** wants healthy soul food? I mean that's an oxymoron if I ever heard one. People who want soul food and people who want healthy food- those are two groups with basically no overlap imo.

@boredsocial
Yeah, I agree. It such a basic flavor profile mistake that it makes me wonder if the real brains behind Chipotle was Ells' founding partner who went on to start Qdoba (I think). As for Bobby Flay, I guess there is a reason he said he's not opening anymore restaurants.

If the other guy went on to start Qdoba... he's a damned fine businessman. I've been there semi regularly since moving to Louisville in late 2006... And the food is very good, using very cheap ingredients, isn't especially cheap considering those ingredients, and there is basically never not a line.

Bobby Flay isn't Ramsay IMO. Not if he thought healthy waffles and fried chicken was a good idea. Gordon strikes me as a good chef and a great businessman... Flay might be a great chef and a very mediocre businessman.

Thanks apocalypse_fives.

It's becoming more and more obvious (aside from you telling me) that I need to remove all ambiguity from every process, which seems obvious in itself.

That is exactly the right approach. The more decisions you can take out of your employees hands the better. I also think you should experiment with some "non-traditional" back of house hires, especially if your drawing most of your kitchen staff from the college labor pool. Mix in some older adults who have serious responsibilities like mortgage payments or their kids' tuition & don't pass on an applicant because of a potential language barrier. These have often been my most productive & reliable employees. After you get your systems in place you can start hiring more based upon attitude vs. experience or skill. A bad attitude is something you will never be able to manage, but with proper systems an inexperienced employee with a great attitude is really quite easy to manage.

Hey apocalypse_fives,

Thanks for doing this thread. I read every post and got a lot of great information.

I am strongly considering opening a QSR restaurant right next to a indoor mini-mall/swapmeet that my mom owns. This would be done in Southern California in a predominately Hispanic lower-class area. The swapmeet once supported about 15 different tenants that sold different types of merchandise. Based on this, I think foot traffic should be pretty good. Parking is plentiful and we own the entire lot.

I have no real experience with the restaurant industry or food in general. I have a law degree but it's not really important unless we get sued I suppose. I had a few questions:

1) The previous business (the big minimall building) burned down and my mom is opening a closeout sale store in its place due to zoning. Think of it like a clothing outlet for mainly working class Hispanics.

The restaurant will be situated right next to it. Ideally I would like it to synergize well with walking shoppers so perhaps some frosty beverages or desserts would be in order. Would you agree this should be a key component?

2) I also think the food should obviously cater to Mexican tastes since most of our shoppers are Hispanic. Any advice? Do you think becoming a franchisee of a larger chain would be better in this spot?

3) The building will finish in six months so do you have any advice on books to read in the meantime other than the two you listed? More nuts and bolts information rather than macro, I suppose? I am highly motivated and learn/read quickly though I may be in over my head at the moment (I'm following your suggestions on hires).

4) I am a bit concerned with the viability of the location. The fire has left the property abandoned for about two years. However my mom plans to license the restaurant space regardless but has given me the option to look into developing one in the space.

I somewhat suspect that the restaurant could fail completely if the clothing outlet fails to attract the same amount of customers that our old building did. I am leaning strongly towards making it a food truck for that reason. Seems like a no-brainer to make it a food truck?

Your finance degree (2nd only to economics for entrepreneurs imo) & experience in retail will be very helpful, but there will be a transition & it will be significant. A restaurant is just another form of retail, but operating one will be more complex then your present store.

I would recommend that you get some experience working in the type of establishment you would like to eventually own & operate. Even better if you can work in a few different places & a few different positions. It's pretty easy to get cross-trained in a restaurant, just make your self available & have a good attitude.

Restaurant financing is very difficult to secure from traditional sources even for experienced operators. I have heard of situations where simple HELOCs were refused to otherwise qualified applicants due to the intended use funds. It's likely the only financing available to you will from the seller. For example, seller carries a note for some percentage of the agreed upon purchase price & the note is secured both by the contents of the restaurant & your personal guarantee.

I like to have ~3 months worth of operating expenses in cash & I keep those funds completely segregated from daily operating accounts. I will draw down from that account when I have an instance of major equipment failure, make up a gap in payroll expense & likewise. I then replenish that account ASAP.
Some have operated with much less & some with plenty more. In your case I would like to have more so I can ensure I can stay in business until my business reaches operating volume. When I open a new place I spend a significant amount of time ensuring I can operate almost perfectly from Day 1 & am very aggressive about driving sales in from Day 1. In the end it doesn't matter what size your cash cushion is because if your operation is weak you will burn through all of it.

I don't quite understand the site. There is presently a swap meet type business in operation (indoor or outdoor) & your mom is putting up a building next to it with plans to open a close-out store & perhaps you will put a restaurant in that new building also?

Anyway, my first question is what is the present traffic volume @the mini-mall/ swap meet & is there any food service on site. Does it operate 7 days? My first instinct is to locate a foodtruck operator & let them operate @ the swapmeet/mini-mall from the best location you can put them in & observe what kind of sales they generate.