Want to own a restaurant? BE CAREFUL & FOCUS ON BIG TICKET ITEMS!!!

When you go to open your own restaurant there is nothing in writing saying "CAUTION, START AT YOUR OWN RISK".

Opening a restaurant is very risky and can be very challenging. Most successful restaurant owners have failed once or twice before they found great success. 

One in four new restaurants fails in the first year of operation.

A restaurant has many variables in costs which are always fluctuating. The best businesses are the ones with many fixed costs which provide more stability. 

The most common identifiable cost in a restaurant is the food cost. 

When I opened my restaurant I did not know very much about the industry so I was very grateful to my friend Emma who introduced me to Elias, who has owned restaurants for over 20 years. He explained every detail that I should watch-out for, especially food cost.

One of the highest food costs is MEAT.

Food cost should not exceed 34% of sales. Desirable food cost should be around 20%. IHOP and breakfast places are much desired because of this. These types of restaurants are typically around 22%. Their main focus is not on steak. It is on pancakes that have a great profit margin.

In-N-Out does make a lot of money on the double-double. It is the same with steak restaurants. They may have some great steak but if all they are selling is steak they will not make any money. Restaurants make the most money with non-meat products that provide them with high margins, French Fries, drinks and smoothies.  

Focus should be on these big ticket items:

1. Non-Alcoholic Beverages
   This would include all soft drinks, coffee, and tea. The cost for restaurants in this area is literally pennies on the dollar. This is why many restaurants and chains switched to "free refills" without worrying one bit about their bottom line. These items cost the restaurant between 5 cents and 20 cents per serving. Keep that in mind the next time you want to order a $2.50 Coke. Soda is cheaper than paper cups!

2. Wine
   The markup on wine is astronomical, but it depends on the brand of drink and whether by glass or bottle. Regardless, a very conservative estimate would land in the 200% range while some put the markup at closer to 600% at higher-end restaurants.
   

These are the top mark-ups where restaurants make huge profits