One of the reasons why most restaurants fail after opening for a short time is usually due to mismanagement of investment budget from the beginning.
Financial plan is very important for those who are thinking of entering the restaurant business because of the importance of running a restaurant.
There are many details that are related to capital. Therefore, if the investment budget is mismanaged from the beginning, the chance of success is difficult.
So, if you want to open a restaurant, how do you allocate your budget? We have some guidelines to tell you.
Financial plan is very important for those who are thinking of entering the restaurant business because of the importance of running a restaurant.
There are many details that are related to capital. Therefore, if the investment budget is mismanaged from the beginning, the chance of success is difficult.
So, if you want to open a restaurant, how do you allocate your budget? We have some guidelines to tell you.
No matter what size or type of restaurant you have, it is recommended to divide your investment budget into 3 parts:
- Investment money until the shop opens for business 60 – 70 %
- Working capital in the store for approximately 4 – 6 months: 20 – 30%
- Marketing budget 10 – 20 %
Budget for investment until the shop opens for business
Of course, the largest budget will be in the first part, the investment budget for the shop, which includes everything from
Of course, the largest budget will be in the first part, the investment budget for the shop, which includes everything from
- Lease fee
- Rent
- Design fee
- Fees for various permit applications
- Construction costs
- Cost of installing electrical, water and gas systems
- Decoration cost
- Equipment cost
- Container cost
- Others such as CCTV systems
All of these are necessary parts to make a restaurant happen, and are often the parts that cause the budget to go over budget, especially in the decoration part.
If the entrepreneur can control the budget within the framework, it will not affect other budgets. The key point of this part is
Therefore, it depends on the concept of the shop and the design. In particular, the shop plan is very important. Whether the budget will be exceeded or not depends on this part.
If the entrepreneur can control the budget within the framework, it will not affect other budgets. The key point of this part is
Therefore, it depends on the concept of the shop and the design. In particular, the shop plan is very important. Whether the budget will be exceeded or not depends on this part.
Therefore, what entrepreneurs need to do their homework on is the concept of the shop, cutting out all extravagance, because most of the time the budget goes over the top because of extravagance.
The concept is not stable and is constantly being revised. Please keep this in mind. If you want to get a quick return on your investment, you need to manage your investment budget within the framework because the longer the budget goes over, the longer the payback period will be.
The concept is not stable and is constantly being revised. Please keep this in mind. If you want to get a quick return on your investment, you need to manage your investment budget within the framework because the longer the budget goes over, the longer the payback period will be.
Working capital within the store
This is another very important part and has a direct impact on the status of the restaurant business. Many restaurants that cannot survive are due to a lack of working capital.
The reason for the lack of working capital is because of the lack of investment budget allocation planning, spending too much budget on the first part, even though the restaurant business is a good cash flow business.
But this definition is only applicable if the restaurant is well-received by customers and has a large number of customers per day, which is not the case in most cases.
The reason for the lack of working capital is because of the lack of investment budget allocation planning, spending too much budget on the first part, even though the restaurant business is a good cash flow business.
But this definition is only applicable if the restaurant is well-received by customers and has a large number of customers per day, which is not the case in most cases.
Therefore, when starting a restaurant, entrepreneurs need to set a budget for working capital that is sufficient for at least 6 months. This means that even if the restaurant has no customers for 6 months,
The business is still open even though the sales are always at a loss. There is money to buy raw materials, there is money to pay rent, water, electricity, employee salaries, and your own salary because a new restaurant may have to wait for customers to get to know it.
Tell others, don't expect luck, focus on safety first.
The business is still open even though the sales are always at a loss. There is money to buy raw materials, there is money to pay rent, water, electricity, employee salaries, and your own salary because a new restaurant may have to wait for customers to get to know it.
Tell others, don't expect luck, focus on safety first.
Marketing budget
This is a budget that we recommend separating because a common problem for SME restaurants is that they have a well-designed and beautifully decorated restaurant but do not have a budget for marketing.
Every time we do marketing, we have to do it economically because we have to spend our personal money first, which is something that should not happen, especially in this era of high competition and customers have many store options.
Creating awareness for customers through various channels, even through storefront signs and parade floats, is very important. Therefore, it is important to set aside a separate budget for this from the beginning.
This will allow entrepreneurs to fully plan their marketing from the very beginning of opening their store.
Every time we do marketing, we have to do it economically because we have to spend our personal money first, which is something that should not happen, especially in this era of high competition and customers have many store options.
Creating awareness for customers through various channels, even through storefront signs and parade floats, is very important. Therefore, it is important to set aside a separate budget for this from the beginning.
This will allow entrepreneurs to fully plan their marketing from the very beginning of opening their store.
Reiterate the importance again. Managing the investment budget within the plan framework and allowing the restaurant to open on schedule has a direct impact on the future of the business. Will the restaurant recover its investment slowly or quickly?
Whether it will last long or short depends on the first step, which is investment budget management. Especially if you can save some budget without affecting the quality of construction and the concept of the shop.
This will help increase the chances of getting your investment back even faster.
Whether it will last long or short depends on the first step, which is investment budget management. Especially if you can save some budget without affecting the quality of construction and the concept of the shop.
This will help increase the chances of getting your investment back even faster.
