Start-up restaurant owners are notorious for investing in things their business doesn’t need. Their rationale for their behavior is that they “don’t want to leave anything to chance.” That doesn’t mean that you go ahead and break your budget - don’t do this!

If you own a start-up restaurant, you’ll first need to understand that you and you alone are responsible for your restaurant’s financial health. Your shrewdness will help your restaurant churn out positive reviews even when there’s a hole burning in your pocket. Your budgeting skills and planning can maintain your business’s health without you having to overspend on stuff.

That said, falling into the overspending trap is easier than overcooking an omelet. To save you from making this common mistake, we’ve listed some of the most common areas restaurant owners overspend on.

1. Restaurant Marketing

We get it – the restaurant industry always has been and always will be crowded. However, that does not mean that you splurge money on operational costs on marketing. You need to ensure that you’re getting what you’re paying for as well. Some of the mistakes that restaurateurs make are:

• Several restaurant owners promote their food in front of the mass market rather than a targeted one. “But everyone loves food!” Yes, but picking a segment helps curb marketing expenditure. 
• A start-up restaurant can’t afford dedicated sales and marketing staff. 
• Hiring an advertising agency in the first few stages can also increase marketing costs. 

But does that mean you shouldn’t focus on marketing at all? Not really. There are cost-effective ways of marketing yourself. Here are some of them:

• Get your hands dirty. Familiarize yourself with the basics of online marketing. Not only will it help you formulate a budget for your marketing campaigns, but you’ll also understand quickly what works and what doesn’t. 
• It’s downright imperative to have an online presence in this day and age. Social media, website, and also a blog on your website. It will attract people to your restaurant. Try out your luck with Facebook marketing, too. 
• Encourage your customer base to leave reviews for you online. It will get you heightened attention.
• Consider networking with other restaurant owners or striking up a collaboration if their offering goes wellwith yours. For instance: coffee and cakes, pancakes and milkshakes, steaks and wine – the opportunities are endless!

2. The Kitchen Equipment

While this may come as a surprise, several restaurant owners overspend on their kitchens in their first few years of business. Why do they do that? Well, the answer may be more complicated than you think. There are two explanations for this:

• You do need great equipment for your kitchen. It can help you prepare those complex and sophisticated food dishes. 
• No, you don’t need fancy equipment because one should only focus on serving high-end meals when they can afford the costs of those meals. 

Here’s a simpler explanation. In the first few years of operation, your restaurant can easily go out of business if you’re not careful with your finances. Kitchen expenses can easily rack up if you buy the stuff you don’t need to serve meals no one wants. One good way of avoiding this expense is to find a supplier who can rent you the stuff you need. This can ensure you have what you need without being stuck neck-deep in debt. 

3. The Food

But isn’t this the one thing you do need?

Well, you can always buy too much of everything. Even though the supplies you stock up on depends on the number of customers you deal with, you should try your best to avoid buying too much food. Several restaurant owners make a huge pantry by initially going with a bad menu. Even though buying the optimal amount of supplies is easier said than done, there is a way of doing it.

For starters, avoid buying stuff from expensive vendors. Reach out to local farmers and suppliers that can provide you with what you need at a lower cost. Once you’ve established a relationship with these businesses, there’s a higher chance of you getting a discount on what you buy. Moreover, go over your menu. Evaluate what you offer and identify the waste areas. 

Talk to your staff and ask them about the often returned meals or go into leftovers. Take off these meals from your menu and make the menu shorter. There’s no point in having a long list of offerings if people only order five items repeatedly. 

4. The Décor

Image Source: https://www.pexels.com/photo/restaurant-with-served-banquet-tables-in-patio-4947396/
Image Title: Restaurant Ambiance
Alt. Image Title: Restaurant During Daytime
Image Description: A restaurant’s interior

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But doesn’t the ambiance make up half of the experience?

It does, and we’re not asking you to stop spending on the décor – we’re just asking you to rationalize your expenses. Since you’re just opening up, you need to remember that you can’t spend on a classic artifact. In terms of the decorations, you can invest in some attention-grabbing-affordable objects rather than going all out and getting the highest-end options.  

Some elements that can help you create the perfect ambiance are: 

• The lights
• The furniture (minimalistic furniture can work wonders)
• Landscaping
• The paint texture
• The plants you pick

That said, there can be a few exceptions to this rule. If your restaurant start-up is a gourmet restaurant, you won’t have a lot of options. You will have to spend heavily to create the appropriate ambiance. However, when setting up the interior, you should be aware of the meal price. Once that’s done, determine the strata of the demographics that can afford those meals.

 What kind of ambiance do they prefer? Do they like live music? Would they want a smoking room?

Not only will this help you get the interior done while staying true to your budget, but it will also be according to the taste of your target market. Your repeat customers will give you ample business when it resonates with them.

Wrapping Up

Risk management is an integral part of every business. It’s vital to realize that some investments can make or break your business, which is why keeping some resources in reserve can save your restaurant from going out of business. 

Make a plan and stick to it – you’ll do quite alright. 

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