Hey guys, my name is Wilson. This week I’m going to be talking about how
much does it cost to start up your restaurant. This has been a question that I get on a daily
basis. Can I start my restaurant with $10,000? Can I start with $50,000? Can I start with $100,000? We’re going to be answering it right now. Now before we actually go into it, if you
haven’t had a chance, definitely watch this video. The four types of restaurant concepts that
there are because it definitely varies between a bubble tea shop, from an ice cream, to a
fine dining experience, to a casual dining experience, all these come into play when
deciding how much does it really cost when you’re starting up a restaurant. So now that I’ve shared that with you, make
sure you guys stay until the end because I’m going to be sharing with you five money saving
tips for your restaurant when you’re building out and then I’m going to be sharing with
you some resources in the link below as well, okay? So now let’s dive right in. Now I know that you like knowing the numbers,
I know that you like people giving you the straight answers, which is the reason why
I’m giving you the straight answer right now. For you to be able to open up a low end restaurant,
we’re talking about from $100,000 to $175,000. Something that is in the median end, we’re
talking about $175,000 to $225,000, and something that is on the higher scale goes from anywhere
from $750,000 to over $1,000,000. This is the answer that you’re looking for
because you want exact numbers and that’s why I’m giving it to you, but this is not
realistic because there are so many different variables that come into play which is the
reason why I’m going to explain a little bit further about why and how these numbers come
about and things to consider when thinking about how much does it cost to set up your
restaurant. Now as I dive in a little bit further, another
way of presenting the numbers and how much it costs is by the square footage, and what
I mean by that is you can calculate based upon the footage that you have anywhere from
$100 to $800 per square foot to have your restaurant up and running, okay? And what that includes would be including
the renovation, the rent, the build out cost, the equipment, everything is included. That gives you a median of a $450 per square
foot. Now once again, this includes a lot of different
things and we’re jamming everything into it so that’s the reason why I’m going to dive
in a little bit further for you. So you may be wondering my location is only
500 square feet, how much do I need to pay? Do I still need to pay $100,000? Or my place is 2,00 square feet, how much
do I need to pay? Is it going to be $300,000? To give you a better answer, on average it
costs around $100 to $800 per square foot to be able to forecast how much you’re going
to spend setting up your restaurant and that would include anywhere from renovations to
equipment to your build out costs to the décor. All those would be included when it comes
down to averaging how much does it cost for your space. So for example, if you have a 500 square foot
place and you’re having a lower end of the equipment and lower end of the renovations
and you don’t need to have build out costs, then the cost per square foot may go down
to let’s say $200 and that you can actually build out a 500 square foot place for only
$100,000. For the same location and the same size, if
you’re going a little bit more higher end, if you need more equipment, if you need more
décor, then the prices would go up to let’s say $500 per square foot or $800 per square
foot, depending all on the equipment that you buy and also all the furniture that you
buy, and that’s the reason why there are so many different variables that come into play
and I’m giving you a range depending on your needs. Once again, it varies from $100 to $800 per
square foot, so depending on your needs you can actually kind of project how much would
it cost and project the whole set up costs for your F&B. Now that you know the generalized number of
how much it costs to set up a restaurant, I’m going to be diving into the five big variables
where you can consider and that really comes into play on how much does it cost to set
up your restaurant and the number one variable is your location. When we talk about your location there are
different ways of setting up your location. First of all, you can actually buy out or
actually rent a place that is completely empty and you can build it from scratch. We’re talking about building a washroom, we’re
talking about building the piping, the grease traps, including all the hooded vents, and
redoing all the HVAC and everything, and that itself is going to be much higher in terms
of the budget. Now a little bit lower than that, you can
consider buying an existing F&B place and you can just convert that and do some renovation,
minor renovations, to be able to get your shop up and running and that itself, you’re
going to save on the build out costs, you’re going to save money in building out your washroom
and then you’re going to save building up all the different equipments, so on and so
forth. And lastly, you can actually consider buying
out let’s say a place that is not operating a food and beverage but has all the different
components already. For example, let’s say a massage place. They have all the piping, they have the office
place ready, then you can just take off some of the walls and include your pipings, so
at the end of the day we’re going to be talking about the variable that is really determining
the factor of how much you’re going to be able to spend. The second money saving tip for you and another
variable that you should really consider and one of the biggest costs is equipment. When it comes down to equipment everyone wants
new stuff and when you want new equipment it comes a big price tag, which is the reason
why I said that prices range from $100 per square foot to $800 per square foot depending
on this variable as well, which is equipment. You can actually choose buying new equipment
or you can actually lease it so then that way you’re only paying a monthly rental fee
and that would help you with your cash flow. You don’t need to pay the whole thing up front,
you’re going to be paying interest if you lease it out, but on the other hand you’re
going to save on your cash flow. Another alternative to save on money when
it comes to equipment is to go into second hand shops. A lot of F&B places go out of business, which
is the reason why their equipments goes up for auction a lot of times and a lot of times
when you go to the auction places, these secondhand places, you’re going to be able to get them
for a lot cheaper than the actual original new cost. For example, with our ice cream shop, initially
when we first started we thought we’d need to buy all new equipment so we spent $30,000
buying a brand new Taylor soft serve machine, okay? And we bought two of those. That’s $60,000 that we spent buying a machine. Within three months we realized that these
machines are not what we wanted because they did not produce enough ice cream in the timeframe
that we need, which is the reason why we started looking into what are some of the money saving
tips and that’s when we found out that hey you know what, we can actually buy secondhand
equipment which is equally as good and we bought a secondhand equipment that produces
more and better ice cream for only $10,000 and we got this machine from an auction place. I’m like wow, that’s amazing. Now I’m sharing this goodie with you to be
able to save you some money when opening up your food and beverage shop. The third variable to consider when opening
up your shop that would save you tons of money and that can vary from here to here is the
opening inventory, and what I mean by that is when you open your shop you’re going to
have to buy a lot of ingredients, whether it be soft serve and tons of different powder
and tons of different milk or if it’s a restaurant you’re going to buy tons of meat and tons
of pasta, tons of sauces, and at the end of the day you need to be able to budget accordingly
because a lot of inventory has shelf life. When you do not manage these ingredients properly
then you’re going to be able to spend a lot of money just on food costs that goes to waste,
so when you’re opening up your shop budget accordingly, make sure that if you’re ordering
something in bulk, get them to deliver it multiple times a week, right? So then that way you can make sure that your
food is always fresh and on top of that, it actually decreases the amount of spoilage
and your costs for your shop. For example, because our ice cream shop was
so busy all the time during the summertime we continued to order 50-60 jugs of milk every
single week and before we knew it we were in winter season and when winter season hit
our sales went down dramatically and in turn, we actually wasted 20 jugs of milk because
we were not producing enough volume and that itself is a lot of money when it comes to
spoilage. For us, we need to make sure that we always
consider the different trends and how people are shopping and how people are consuming
our goods and we should always just buy in small quantities and get it delivered as a
needing basis, okay? So then that way we can decrease the amount
of spoilage which brings in a lot more money in your pocket. The fourth type of variable when it comes
to opening up your restaurant is the contingency fund. A lot of people do not account for this. This is actually a must have when it comes
down to it, although you’re going to see a bigger spend and a bigger budget that you
need. This is something that is crucial to your
success. Why I say that is because for any food and
beverage shop to take traction, to actually make traction, you need to be able to bring
your food out there in the world and it takes time for people to talk about your place,
it takes time for people to know how great your place is, and usually it takes a couple
months to pick up. If you do not have enough funding to last
that six month period until you gain that traction you’re going to be able to go out
of business. You’re going to compromise on your food offering
and the quality would go down, and then in turn it goes into like a backwards spiral
into something that is no good and it compromises everything that you have been building your
shop to stand for, which is the reason why having a contingency fund for your food and
beverage is super important. Please, please, please do not oversee this
line item when it comes to your budgeting. The last variable to consider when opening
up your shop is professional fees. Anywhere from franchise fees that we’re talking
about, that ranges from $30k to $50k, to accounting fees, to your architect, to your lawyer fee,
to your consultant, all these type of fees add up. It could go up to like tens of thousands of
dollars and if you do not account for these little costs which adds up then you can easily
run into the red, so you can easily be in a situation where you don’t want to be. Once again, contrary to the first three variables
which you can actually account for and actually save money for, these are the different things
that you should definitely always consider and always account for when coming to your
budget and when you’re budgeting how you’re going to set up your food and beverage shop. For us, when we first started our ice cream
shop we didn’t account for paying for a consultation, we didn’t account for the lawyer fees when
we were setting up our franchise and that itself cost us more than $40,000 and in turn
it is because, only because, we were lucky and only because we were able to generate
a lot of buzz from the beginning that we were able to afford all these professional fees,
otherwise I can tell you we wouldn’t be in business today. So make sure that when you’re accounting and
budgeting of setting up your shop, always account for professional fees. Doesn’t matter how little they are because
they always add up. So there you go, how much does it cost to
set up your F&B shop. Hopefully by now you understand that there
is no straight answer that I can give you in terms of how much does it cost to set up
your F&B shop because once again, there are so many different variables that come into
play. I tried my best to give you a ballpark range
initially, then we came into how big your size to project, how much does it cost to
build your F&B, and then we talked about the five different variables where you can actually
save money on and actually account for your budgeting and that way you’re going to be
in the best shape to budget for your food and beverage shop. Hopefully this has helped you and given you
some insight into how to prepare for your opening. If you want to learn a little bit more, I’ve
actually written down from step one to the end step, to a thriving shop all in the link
below, so go in the link below. These are basically stuff that I’ve learnt
from the past five years from actually selecting a winning menu to choosing the perfect location
to actually finding out what our customers like to actually finding the perfect location. All these things all in the link below so
make sure that if you guys want to learn more about how to build a thriving food and beverage
shop, check out the link below. If you guys liked this video, make sure that
you give me a thumbs up. Otherwise, if you have any questions leave
it in the comments section below and I’ll make sure to answer it for you. Otherwise, subscribe along the journey. I’ll see you guys next week.