80 Seat Restaurant / $6,000 Rent / $30 Per Person Check Average / $600,000 Gross //// What Could Net

Discussion in 'Professional Chefs' started by maxs, Nov 12, 2014.

  1. maxs

    maxs

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    I'm looking at opening a restaurant with the above projected figures. After paying the chef and possibly a manager, what profit would be left? 1%? 2%? 3%? more?

    Thanks!
     
  2. kuan

    kuan Moderator Staff Member

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    80 seats is one of those numbers where there are days you will get 20 covers.  Are you willing to be the chef/prep/dishwasher on those days?  If so, yes, you can turn a profit.
     
  3. cheflayne

    cheflayne

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    According to the "2010 Operations Report" by the National Restaurant Association and Deloitte & Touche LLP
     
  4. kuan

    kuan Moderator Staff Member

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    Did the survey mention anything about number of seats there chef?
     
  5. maxs

    maxs

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    5-6% on occupancy costs? Where's that, Duluth? I am in an east coast seaside town where restaurant rents range from 9-11% of gross; water bill is $350-$600 per month; utilities are between $850-$1200/month (gas+electric).

    I plan on being at the restaurant 40-50 hours a week (and doing administrative work in addition). Am not lazy and am a very good prep and line cook. I'm starting to feel that no matter how hard or smart one works, there is no money in this business as an owner unless one owns multiple restaurants...and that's a lot of work and stress.
     
  6. kuan

    kuan Moderator Staff Member

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    That's the average for all places, all sizes.  I don't know if you've traveled middle America but there are a lot of shacks with a table, two chairs, and a crock pot calling themselves restaurants.  I kid you not, I walked into one of these places when I visited Hannibal MO.
     
  7. cheflayne

    cheflayne

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    No, but don't know how that would impact percentages. Gross numbers yes, but percentages, not so much.

    Strictly my opinion at this point in time, I reserve the right to change it as more is revealed.
     
  8. chefwriter

    chefwriter

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    Is there a location you could buy? $6000 a month rent seems more expensive than a mortgage would be. 
     
  9. cheflayne

    cheflayne

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    Wise business percentages are not governed by geography as much as they are by gross.
    I would expect the gross to be much larger in an east coast seaside town than in Duluth.
     
  10. cheflayne

    cheflayne

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    Occupancy cost of 10% can be viable, but the 4% difference between 6% and 10% has to go somewhere. In the data previously mentioned from the NRA, the average food cost % was 32 and wage % was 33. Put 2% of the 4% difference on each. Now you have food cost of 30% and wage cost of 31% to balance out the 10% occupancy cost and thereby achieve your 1.8% profit.

    Percentages are not set in stone and can come in an endless number of variations, they just have to add up to 100%

    Practical reality is shaped by % and averages, but not a slave of of either. I flew in the face of text book numbers for years and achieved what most pragmatic forecasters would say is impossible, so by all means don't let my posted % deter you from your dream.

    If I had listened to those practical souls, I never would have opened a restaurant. What a shame that would be and what regrets I would have. Instead today I get to walk ankle deep in warm water and feel the squish of sand between my toes without looking back!
     
  11. chefedb

    chefedb

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    How many covers a day?  What are you paying for product (food cost) ? Is waste  all but eliminated?  These are just some added factors that play in to profit and lose.
     
  12. maxs

    maxs

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    This is a hypothetical restaurant I'd like to open...but not at 1.8% profit.

    So the # of covers is on my spreadsheet and varies from season to season and at $30/cover adds up to 600K.

    I have the added problem of not wanting to pay my cooks less than $14/hour because 

    a) that's not fair and b) at that rate, where I am located, you could never keep someone for more than a year.

    So in my locale rent is high (around 10-11% of gross typically) and wages are high. Food costs are probably the same as the rest of the country, but I don't know that for sure.

    ChefLayne, when you say "occupancy cost" does that include utilities?

    Thanks
     
  13. cheflayne

    cheflayne

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    In the NRA report, occupancy cost encompassed rent, taxes and insurance.
     
  14. cheflayne

    cheflayne

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    One of my concerns with your hypothetical restaurant is at 80 seat, $30 check average, sales of $600,000; that is not even a full turn per day but in order to insure that your service doesn't suffer if you get surprised and do three turns one night, you would have to staff with that triple turn scenario as a possibility which would make it hard to hit a reasonable labor cost. I would be scared of any 80 seat restaurant with a $30 check average that did sales of less than $1.2 mil.
     
  15. chefedb

    chefedb

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    Or to be in the right spot at the right time with the right concept and product.  Then a place might make money not  being a chain operation.
     
    flipflopgirl likes this.
  16. maxs

    maxs

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    Yeah, I'm probably being too conservative with my projections of customers. Any restaurant with the right concept and the right price point ought to do 80 covers even on a slow day (I suppose). But even if we did do that many covers, at 1 million in gross, there's only $18,000 in profits...just seems stupid. Even if I pay myself as chef $60,000, I would only get $78,000 before state, federal and self-employment taxes. I'm 52 years old and a damn good chef, but what's the point? Body will wear out and not enough income to save for retirement. Any suggestions on how to use my cooking/creative talents to break $100K?

    Thanks
     
  17. cheflayne

    cheflayne

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     I am not trying to be a jerk, just trying to keep it real for you
    Could you do this with the numbers being projected? I think you are way high on your estimate.
    Private Chef

    Executive Chef for hotel, casino, etc (but you won't be cooking)
     
    Last edited: Nov 13, 2014
  18. capecodchef

    capecodchef

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    I'd say your projections are off. We have 40 seats, a $13 check average (breakfast and lunch only) and will gross $600,000. Rent is half your number, insurance adds another 350/mo. Your gross should easily exceed twice mine.
     
  19. laperla

    laperla

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    You mention working 40 - 50 hours a week AND doing the paperwork. Try 80- 90 plus and you are getting warmer.
     
  20. youngchefkarl

    youngchefkarl

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    Sales are too low and rent is too high. Rule of thumb is that your rent should not be more than 10% of sales. Yours is 12%, not the end of the world. However, I'm sure you will have other debt in the form of a loan (maybe not). I would try to get at least in the 800k-1mil range.

    The goal of your profit is to be also around 10% of sales, which is very difficult. If you can get 5-7% which is the average then you'll make money, but probably not enough to make a large salary. Also like the others said, 40-50 hours won't cut it.....maybe after a few years.