In the year prior to September of 2012, nearly 1,000 new restaurants opened, according to a study by the NPD group. For many, that trend symbolized the revival of the economy in the United States and hope that things are going to get better. However, the restaurant business is a tricky one, and paying back restaurant business loans can be quite difficult. Because of that, some 60% of all restaurants, as determined by a Cornell University study, will actually fail and have to close down in the first year. This means that, if you are thinking about heading to the bank to get restaurant loans so that you can start your own, you should think long and hard about what it takes to be successful.
Though the logistical nightmare that comes with opening a new restaurant can cause all kinds of stress and difficulties, the reality is that doing so is quite expensive. While restaurant business loans can certainly give you the capital you need to get going, the cost to open might be higher than you think. A survey by RestaurantOwner.com found that the average cost to start is more than $490,000, and higher if you need to purchase land. This means that it can be almost impossible to pay back all of your loans, especially if you don’t have a great start right away.
Every site is different, so no two restaurants owners will have the exact same startup costs. However, if you want to open one, you should expect to have to pay for your location, cooking equipment, fixtures, labor, licenses and permits, and, of course, food and drinks for when you open. This list doesn’t even include the marketing costs that you might need to make sure you don’t have empty tables every weekend. Evaluating and totaling every expense can be a bit difficult and cumbersome, but doing so is vital before going to the bank to get a small business loan.
There are several common factors that play a part in making it impossible for new owners to pay back their restaurant business loans and keep their doors open. The list of problems include weak leadership, lack of focus, a poor choice of location, and the lack of a creative idea to attract customers. Any or all of those factors could make it impossible for a restaurant to succeed, so owners will have to find ways to avoid them.
The numbers might seem scary for anybody who is thinking about opening a restaurant, and they can certainly be intimidating. However, an entrepreneur with a good idea and the passion to put in the time to make it work could still find that opening a restaurant provides lots of great opportunities. Good refereneces: www.businessbacker.com