Restaurant financing: how much do you need?

How much restaurant financing do you need

Restaurant financing

Start up costs can vary greatly depending upon your concept, size, location, etc.  Most new restauranteurs do not have all the cash available upfront.  If you have a strong concept and at least 10-20% capital then there are some financing options available to you such as banks and private investors.  However, the first step to getting additional funds is to determine how much you need.  Here are some factors to consider when calculating your costs.

Buy versus build

Building a new restaurant from scratch can be very costly however it gives you more flexibility in your design.  Renovating an existing building can also be pricy depending upon what’s available as far as hookups, furniture, fixtures, and equipment.  If the existing assets can be used it can definitely help you save on costs.  Be sure to include all amounts related to purchasing existing assets and any renovations or additions required.

Inventory

Beginning inventory most likely will come at significantly high cost to get your restaurant stocked with the items it needs for operations such as food, beer, and liquor.  Inventory will be converted to cash through normal business operations but require significant cash upfront to get started.

Working Capital

Once you are ready to open your doors you will need cash in reserve to get you through the start-up period.  Working capital should get you through to your restaurant becomes profitable.  You should have about a years worth of working capital in reserve.

Employee Costs

Paying restaurant employees, whether they are part of the waitstaff or kitchen crew, is one of the highest costs a restaurant must face.  Be sure to account for all employee costs when calculating how much funding you will need.

For more information on restaurant financing contact us at info@sofrankoadvisors.com or 724-935-2151.

 

 

 

 

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