If you want to open a restaurant, remember to check on the following
👉🏼 Food and Material costs should be less than 25% of Revenue
👉🏼 Rent should be within 20%
👉🏼 Utilities (electricity, water, fuel) could be another 10%
👉🏼 Salaries to staff should be within 15%
👉🏼 Other overheads including marketing and commissions no more than 10%
👉🏼 This way, you get to make at least 15-20% profit (EBITDA) on your revenue. If you’re not even making that, why are you in this business? Unfortunately, most restaurants don’t even make this and just survive at break even.
👉🏼 Check the average revenue of other restaurants in the same market or mall before opening the restaurant. If the average revenue - 10% does not cover your costs as per the structure above, rethink your business model.
👉🏼 Also remember that QSR, Casual Dining, Fine Dining and Cloud Kitchens work on different cost structures. Do not compare with models different than yours
👉🏼 At least 20% of your revenue should come from Deliveries if possible, and try that in addition to the food costs, you don’t spend above 30% on commissions, logistics, packaging, etc. for deliveries.
👉🏼 Know that these are upper limits, so if you hit an upper limit on one, try and stay below the cap in another to get at least 15% EBITDA.
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A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.
Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.
