Starting Your Own American Restaurant

How to Procure Permits, Licenses

Registering your business and obtaining the necessary permits and licenses are vital for your restaurant operations. After these legalities, you should decide on whether to start from square one, renovate a commercial space, or buy out an already established diner. Generally, starting from scratch would cost around $100,000 to $300,000 to cover industrial cooking/baking equipment, ventilation, refrigerators/freezers, tables and chairs, bar and related furniture, shelves, counters and dining utensils. Remodeling an existing space would cost less but often the rent is higher. A start-up capital of $100,000 to $150,000 would be sufficient, depending on your preferred design for the restaurant. Salvage and reuse items to save on capital. As for buy out, there are restaurants on sale at around $200,000. But considering the cost of repairs and replacement of furniture, fixture and equipment, you will have to spend some $100,000 more.

Prepare an All-American Menu

Be ready with your sumptuous and mouth-watering American recipes. Hire an excellent cook or chef if you can't handle the cooking and baking yourself. Popular American dishes and desserts include parfaits, brownies, ice cream, pork dishes, casseroles, pancakes, pizza dishes, steaks, hot dishes, stews, pastas, burgers and sandwiches. Beverages include mocha, coffee, tea, wine, beer, brandy, rum, tequila, cocktail drinks, juices, sodas and water. Of course, provide extra treats like candies at the counter.

POS System in Place

To cater clients well, install a point-of-sale (POS) system in your restaurant to allow smooth and orderly collection of sales and to carefully manage both the floor and the kitchen. POS will allow you to accept major credit cards. Commissions charged by credit processors run from 1.8% to 2.5% of sales.

Points to Ponder

Experts say that restaurants often fail because of undercapitalization. Avoid the temptation to flaunt fancy equipment and utensils during the start-up, especially if you are short of capital. Decide which items are critically important for the opening of the restaurant. Forego purchasing of not-so-important items and focus on cost-effective ways of creating and adding value to your products/services.

Much of the operating costs is spent for buying food items and ingredients. Cost of goods sold will account for 25% to 40% of revenues, 20% to 25% for payroll, and 8% for rent. Profit margin (income after tax) should come around 5%.

Since restaurants are mostly open everyday at around 80 hours per week, put up your restaurant with lots of human traffic along a busy street. Pick a place that is frequently passed by motorists, residents and commuters to save a great deal on advertising.