I am meeting with someone next week about opening up my place. It is 1700 SF, and they want $2000 a month in rent + utilities and snow removal.

They also want a 3 year lease that can be assumed if a new tenant is found if I fail.

This is 25 miles west of Philly, so rates are higher, I guess, than many of you in the south.

But based on that info alone, what might you estimate I would need in monthly sales to make a go at it?

I know I have labor and food costs to worry about as well, so maybe you can at least give me your thoughts?

Thanks.

quote:

Originally posted by Papa Deuce:
I am meeting with someone next week about opening up my place. It is 1700 SF, and they want $2000 a month in rent + utilities and snow removal.

They also want a 3 year lease that can be assumed if a new tenant is found if I fail.

This is 25 miles west of Philly, so rates are higher, I guess, than many of you in the south.

But based on that info alone, what might you estimate I would need in monthly sales to make a go at it?

I know I have labor and food costs to worry about as well, so maybe you can at least give me your thoughts?

Thanks.

First: Is this figure triple net or all inclusive? It is common for a commercial lease to be triple net which is the rent + maintenence (all maintenance is on your shoulders) + property tax. That will push that $2000. per month up to a much higher monthly payment.

You are asking part of the right question: 'How much in monthly sales do I need?' The other part is, 'How many customers do I need to make those sales?'

I couldn't even begin to guess how much in sales you need in order to make it a go. I don't want to sound unhelpful or snotty with the question you asked, but your question is similar to someone saying that they found a place to rent in Seattle for $900.00 and then asking how much money they will need to earn in order to make ends meet.

What you need in monthly sales is $2000.00 + the cost of utilities + the cost of every other restaurant expense added together + the cost of your planned salary + the cost of your medical insurance, retirement savings, social security payments, etc. + the amount you intend to save in your business reserve account.

Once you arrive at that amount, then you will calculate how many customers you need to come through your doors each day in order to make those sales. Pick a reasonable average per person: $6.00 or $7.00 or $9.25, whatever .... You will need to talk with restaurants which are similar (fast food, quick service, full service, etc) to get an idea. You can even break up the lunch service from the dinner service averages. Once you have a good guess based on your gorilla research, divide that figure into the total amount of expenses. Then divide that number by the number of days you will be open each month. That will give you a rough idea of how many customers you need each day to make expenses.

By knowing the number of customers needed, it will allow you to quickly spot a problem with sales and begin to take corrective action in order to attract more customers.

Thanks Dave, I knew I was not giving all supplied info. Next week I meet with a restaurant supplier and planner that was recommended by Cookshack...

I can only guess a pp check based on my own experience from BBQ joints in our area. Usually "I" spend and average of about $9 per meal for lunch or dinner.

I am still very much in the "learning" and "guessing" stages of this.

I have run successful small businesses beforem but nothing along the lines of a restaurant....

At the moment, I know, that I have a ton to learn.

I know nothing about the restaurant business other than as an employee long ago.... but here's an observation that I think is valid:

It appears you've found a location (building, etc) and now you're trying to put a business in it, rather than the other way around. Write your business plan, determine your expenses, traffic needed, etc and then find a place (size, rent, location) that will fit that plan.

Not to sound offensive, but I think you have the cart before the horse.

My $.02

quote:

Originally posted by Qnorth:
I know nothing about the restaurant business other than as an employee long ago.... but here's an observation that I think is valid:

It appears you've found a location (building, etc) and now you're trying to put a business in it, rather than the other way around. Write your business plan, determine your expenses, traffic needed, etc and then find a place (size, rent, location) that will fit that plan.

Not to sound offensive, but I think you have the cart before the horse.

My $.02

valid points.... problem is that I don't have enough info to make all those assumptions. I actually have an idea about many of them, though....

When all is said and done, it's all a crapshoot, and one just tries to make it an educated crapshoot.

Dave Bugg has helped me immensely with his responses to my posts.

Thanks to all who repsond.

Been operating a restaurant for over 25 years-sucessful operations operate on the one third rules-one third of sales to food & supplies cost, one third for salaries including your own salary leaving one third for all overhead costs such as rent, utilities, repairs, etc.- get an estimate of all those items in the last third and multiply by 3 gets you a ballpark figure for sales needed-dont foget sales taxes in your calculations
Good luck
Herman

Papa Deuce:
Have you told your 'landlord' that you want some compensation for leasing his area?
I learned the hard way in the restaurant business that many times the landlord will pay for the improvements you must make, or, will give you many months rent 'free' if you sign the lease.
I am not sure of your area, but in mine, this is standard practice, but only if you ask.
Hope you find all the success you desire in the venture.
Accent

I have leased many commercial buildings. Some needed 3 phase power. I let the landlord pay the $10k for it. Other times, when I did a long term lease 5-10 years, I said I would make the tenant improvements, and I would get the first year rent free.

quote:

Originally posted by accent:
Papa Deuce:
Have you told your 'landlord' that you want some compensation for leasing his area?
I learned the hard way in the restaurant business that many times the landlord will pay for the improvements you must make, or, will give you many months rent 'free' if you sign the lease.
I am not sure of your area, but in mine, this is standard practice, but only if you ask.
Hope you find all the success you desire in the venture.
Accent

Not yet, but if I get that far, I will. Real estate is strange here... Property owners will let buildings literally sit unrented for years, rather than negotiate a lease.

One storefront I had interest in is now in its 5th year w/o a tenant. I asked them to let me have a 2 year lease vs. a 3 year lease and they would not do it... It is like that everywhere here.