Lack of capital, want to open a restaurant, how to get a loan to invest?
Recipes from professional chefs are ready, but what should you do if you lack capital to open a shop? What do you need to do if you want to borrow money to invest? Today, MHA invites you to understand about investment because if you want to invest in opening a shop, you need to have knowledge about investing in the restaurant business first. You need to know how many years it will take to get your investment back so that you can talk to the bank and understand.
Understand funding first
Normally, the main investment comes from 2 sources.(or what we call 2 owners)namely1. Owner 2. Creditor
1. OwnerHere it means business owners, shop owners or shop partners who provide capital to open a restaurant. They can be in the form of individuals or juristic persons. Generally, owners tend to use their savings or reserves to invest. However, in the present era, it is very difficult to take out a large amount of savings to invest because the situation is still uncertain. Having reserve money kept for emergencies is necessary, or some of the money can be taken out to invest and the rest must be found from other sources, which we callcreditor
2. CreditorsHere, it means the source of money borrowed for investment. Generally, it will be a bank or financial institution that lends money for doing business or what is called a "business loan" by charging an annual interest rate. Whether or not the bank will lend depends on many factors, such as the assets of the borrower, financial history, and the business plan that the borrower submits when applying for the loan. Not everyone will be able to get a loan because the bank itself has to look at the feasibility of the business to reduce the risk of bad debt if the business fails after lending. shutterstock_170427077.jpg495.97 KB
Therefore, what you need to think about if you need to borrow money to invest in a restaurant is to study the business feasibility carefully first. Start by thoroughly studying the restaurant business concept, starting with the following easy questions:
What are you selling?We may have a preference or go to a restaurant and see a way to sell something, but we need to first investigate whether the product we want to sell is suitable for the location or not, and whether there is a customer group to support it or not.
Who are you selling to?Find out who the real customers of the shop are. Many people often make the mistake of opening a shop because their friends or acquaintances like the food they make. In the end, when they open the shop, they can only sell to acquaintances and no more customers, so they have to fold their business.
How to sell?How much should we sell it to customers? How much will customers be willing to pay for the food we sell?
Where to sell?Where will customers buy from? If selling at a store, location is important. Or if focusing on delivery, you have to see how many customers you can deliver to within 5 kilometers. Do you need to invest in renting a cloud kitchen?
When to sell?When will the store open? What time will it sell? What is the peak time of the day? And what days will sell well and not so well?
These are like experimenting with a business on paper first, setting up a hypothesis, then finding data to support it, and detailing it as clearly as possible, and it will allow us to“Business plan”The shop's products will show the costs we will have to pay, how much are the monthly operating expenses, what are the advantages and disadvantages of competitors, if we really do it, will our production capacity be sufficient, and will the estimated profit that we have calculated be worth doing business or not? *This is important.Because banks will consider lending based on profit data.What is written in this business plan includes: shutterstock_1073013353.jpg783.24 KB
Back to the investment issue, if you want to open a restaurant, how do you get a loan to invest and get approved? You need to study these 3 additional things.
You must know what you will use your capital for. In investing in a restaurant, there are not only costs to invest in the restaurant. There are also many hidden costs, such as costs for improving the restaurant, costs for decorating the place, costs for buying things or equipment used in the kitchen, costs for hiring employees, costs for promoting the restaurant, and it is necessary to have emergency reserve funds.
The shop area also has different prices and there is also a large deposit for the shop.
The cost of structural and interior design is divided into a minimum design fee and an advanced design fee, which the shop owner will have a central area to choose from.
Construction costs and renovation costs in the case of renting a shop for renovation
Kitchen equipment: gas stove, oven, refrigerator, freezer, etc., depending on the type of shop to be opened.
Equipment for various services, such as customers wanting to sit in the shop, how big should our shop be? The capacity to accommodate customers, how many chairs and tables should be provided according to the size of the shop, so that the shop does not look too empty or cramped.
The cost of various public relations media, signs, the size of the signs, and don't forget to take into account the sign tax because if the sign is big, the tax will increase accordingly.
Various license fees, such as alcoholic beverages, etc.
Pre-opening employee costs, such as employee training and recruitment costs
Utility costs such as water, electricity, internet, telephone, CCTV, etc.
Cost of various consumables such as paper, pens, food containers of various sizes, plastic spoons, forks, straws, plastic bags, tissue paper, etc.
2. You must know first how much capital you will need.Let's try to calculate from the total investment that we need to use to open the shop, whether it's the deposit for the place, the cost of making the shop, miscellaneous costs, including working capital. In this part, we need to prepare investment costs for preparing to open the shop of about 60-70%.
Working capital reserve4-6 months in case of unexpected events, if there are no customers coming to the shop as expected, there will still be this money to support the business. There is money to pay for raw materials, water and electricity, and employee wages. Because don't forget that opening a new shop takes some time for customers to get to know the shop. This part is 20-30%.
Marketing budgetNewbies often forget about this budget. They spend most of their capital on shop decoration, forgetting that making your shop known also requires a budget, such as advertising costs, media production costs, influencer hiring, and even billboards, flyers, and various marketing materials. Set aside a budget of 10-20% for this.
3.You need to know when you will get your investment back.For example, if we use a total investment budget including operating funds of 3 million baht, we conduct a survey and find that customers in the restaurant are willing to pay 200 baht for our food, and there are approximately 3,000 target customers per month or 100 people per day, which equals a monthly income of 600,000 baht, which is considered a rough figure. Of this amount, deduct approximately 35% as the cost of sales (a standard figure that should be controlled so that the cost does not exceed this), which equals 210,000 baht, followed by rent, wages, miscellaneous expenses of approximately 300,000 baht, totaling a net profit of 90,000 baht per month, for a total annual profit of 1,080,000 baht per year.
Then try to enter the formula to calculate ROI or Return on Investment, the rate of return on investment, as follows:
ROI = (Net Profit/Investment) x 100
From the example, it can be seen thatROI = (1,080,000/3,000,000)x100 = 36% per year, which is considered OK.
Then calculate the payback period using the formula
Payback period = Investment amount divided by net profit
From the example, it can be seen thatPayback period = 3,000,000/1,080,000 = 2.77 months or approximately 2 years 10 months.
From this preliminary calculation, we have to look back and see if we are satisfied with this payback period or if other investments give better and faster returns. We have to weigh the results.
In addition, if we calculate the financial statements, we will see the value of the store in the future 4-5 years from now. Let's see if the value of the store will increase from the investment or not. Which will be information for ourselves, investors and banks to decide to invest or lend to our restaurant business. We recommend that you study more at the course.“Study of the feasibility of the restaurant business” byProfessor Seth Setthapong PhdungphisutManaging Director of Genosis Company Limited, consultant for restaurant and franchise business. This course will teach you how to study the feasibility of a restaurant business, analyze competitiveness, analyze marketing feasibility, customer needs, analyze service capabilities, and analyze financial feasibility in a simple way for new entrepreneurs. Most importantly, this course is FREE!!!click
And finallyFor those who still don’t have an idea of what kind of food shop to open, we recommend that you try studying the various cooking courses from Makro HoReCa Academy first. Because there are complete courses to study, including recipes from professional chefs, guaranteed deliciousness that customers will love, calculation of raw material costs, along with recommendations for selling prices per unit. It can be said that after watching, you will be ready to open a shop immediately.
