Create a budget for your startup restaurant

It’s a well-known fact that a lot of restaurant startups fail within their first year. The number you hear most often is 90%. One Fat Frog has good news for you: that number is inaccurate. No one really knows where the idea that 90% of restaurants fail in their first year came from, but recent studies say the number is much lower – about 27% according to Ohio State University. About 61% of independent restaurants fail in their first 3 years. So the numbers are scary but not as scary as you thought.

The important thing to know is why restaurant startups fail, not how many of them fail. There are a lot of factors, with economics being a big one. The reason believed to be the most common cause of restaurants going under is improper budgeting.

No matter how much money you raise through investors, you need to budget properly or your restaurant will hemorrhage cash from the beginning and you’ll never have a chance to get off the ground. Every phase of starting your restaurant costs money. It costs money to obtain permits, to get appropriate licenses, to construct or remodel the building, to buy restaurant equipment, to stock your kitchen with food and drinks, to pay your mortgage or rent, to pay your electric bill and utilities, to hire employees, etc. You get the point.

There are a lot of checks to write before your restaurant’s grand opening. That’s a lot of money spend before you make a dime. Keeping a proper budget is essential to not spending too much money at the outset. One way that One Fat Frog can help you is with the equipment purchases. If you buy used restaurant equipment, you can get the same supplies for significantly cheaper, which allows more money in your budget for your other expenses. One Fat Frog has a huge warehouse of more than 100,000 square feet and most of that equipment is used.

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