The 4 Hidden Costs To Know About Running A Restaurant
At one time or another, most amateur home chefs dream about what it would be like to own a restaurant. They want to share their cooking with the world and a restaurant could be a profitable way to do it. The reality of owning a restaurant, however, is very far from the dream that most people have. Everybody knows it is difficult and a lot of hard work, but most don’t understand exactly what goes into it.
People realize it’s expensive, but there are hidden expenses that most people don’t have any idea about. It’s those hidden expenses that can derail the success of a restaurant so they are worth knowing about. In this article, we will go over some of the lesser known ongoing expenses that you will be faced with when you open your own restaurant.
Photo by Mehmet Suat Gunerli: https://www.pexels.com/photo/people-sitting-inside-a-restaurant-3252051/
1 - Pest control
Pests are inevitable when you own a restaurant. The food waste is a major draw for all kinds of pests ranging from rats to cockroaches. You’ll need to have a strategy for dealing with them so you don’t run the risk of a pest problem that could damage your business.
Commercial pest control services often offer regular inspections and preventive treatments, as well as emergency services for sudden infestations. This is an ongoing cost that has to be budgeted into the cost of doing business as it is not a one time fee.
If you don’t go for any type of regular pest control measures, the cost of the infestation will be much higher to deal with. This is not only in terms of the direct cost of extermination services, but also the potential loss of business due to temporary closure and the damage to the restaurant's reputation.
2 - Maintenance and repairs
To keep the restaurant running smoothly, you need all of the equipment working. This means doing regular maintenance. It is a big expense, but the lost business when your ovens won’t work plus the cost to replace them is far greater. Make sure to have an appliance technician come regularly to run diagnostics and make any necessary repairs before the malfunction.
However, even with regular maintenance, breakdowns can and do occur. You’ll need to be prepared for sudden equipment failures that require immediate repair or replacement. For instance, a broken refrigerator could lead to spoiled food, disrupted service, and lost revenues, in addition to the direct cost of replacement.
3 - Technology and software
In the digital era, technology has become an integral part of running a successful restaurant. Whether it's the point-of-sale (POS) system that processes transactions or reservation software that manages bookings, these things have an ongoing cost associated with them.
A POS system is a critical component of any modern restaurant. It not only enables transactions but also tracks sales and manages inventory. Unfortunately, many of these systems can be buggy and can end up malfunctioning. Usually, it happens at the worst possible time.
Make sure to have an IT technician on call that can regularly update the software and be available in the event of a malfunction.
Beyond the POS system, there are other software solutions that restaurants often use. This can include reservation and table management systems, employee scheduling software, customer relationship management (CRM) systems, and inventory management tools. Each of these carries its own costs, including initial setup, subscription fees, training, and updates.
4 - Staff training
In the hospitality industry, your staff is a key element of your success. Investing in your staff will reap dividends and end up being cost neutral or even profitable over the long term. However, this is an ongoing expense that you will need to budget for.
Every time a new employee is hired, they need to be trained. This includes not just their specific role, but also understanding the restaurant's ethos, safety procedures, customer service standards, and operational systems like the POS.
Training shouldn't stop after the initial orientation. Ongoing development helps your staff enhance their skills, stay updated on industry trends, and increase their job satisfaction. Everytime the menu is changed, there needs to be a training session so the cooks all know how to make the new items and the front of house staff knows what they need to be able to sell them.
Although the restaurant business can be very gratifying, it is also a challenge. Hopefully, this guide has helped you understand what it entails so you can decide better if a restaurant would be the right fit for you.