If you’re ready to put in 100 hours of work per week and committed to delivering the best food in town then it’s high time you open a restaurant.
But success in this business can be notoriously elusive especially if you make some four common mistakes as observed in the Kenyan market.
Without wasting much time, let us focus on these mistakes and how you can rise above them to establish a McDonald’s of your own.
*1. Underestimating the Cost of Setting Up*
Unless you are planning to start a small kibanda somewhere in a dark corner of the country, a serious restaurant business requires one to invest generously. For instance you need to budget for:
*Equipmen*t: Ksh.120,000 (Sufurias, utensils, gas cylinders, juice blenders, microwave, refrigerator etc.)
*Restaurant Licenses*: Ksh.50,000 (Single business permit, food & hygiene license, food handler’s certificate, fire certificate and environment certificate).
*Set Up Cost*: Ksh.350,000 (furniture, lighting, interior décor, wash-room equipment, cleaning equipment)
*Supplies*: You will also need to budget for basic supplies such as Charcoal, grocery, cooking oil, flour, rice, sugar, salt, potatoes, milk to start with. Total cost Ksh.30,000.
*Rent*: Unless you have your own premises, then you need to budget for at least Ksh.30,000 per month to rent a large hall near a street with high human traffic.
If you’re planning to set up in the Central Business District (CBD) of a big city like Mombasa or Nairobi, then this cost may scale to a high of Ksh.100,000 per month or even more.
*Goodwill*: Goodwill is a fee that landlords charge arising from the reputation that a premises has built over the years.
For instance a landlord with an office-to-let along Kenyatta Avenue will tend to charge more goodwill than one along River-Road because of reputation and types of customers who use the latter street instead of the former.
Not all landlords charge this fee. But if you’re planning to set up your restaurant in the CBD, then better be prepared to pay a Goodwill of at least 1 million shillings or as high as Ksh.20 million.
Add all that cost and you will see that a small restaurant in an urban will require at least Ksh.500,000 to start and sustain. More money will be needed to keep it going as you work hard to build a clientele.
*2. Expecting To Break-Even In Less Than 6 Months*
Most businesses require at least 24 months to break-even and restaurant business is no different. The first year of operation is a time to make many mistakes and the second year is a time to recover from the impact of those mistakes.
Don’t be fooled that you can start making big money in a few months. Patience is a virtue that every restaurant owner should learn.
*3. Starting Big, Milking It Dry and Dying Small*
90% eateries start off quite well. The food tastes great, the smiles welcoming the customer are wide and the décor is in tip-top condition. However, just 6 months down the line, the services begin to deteriorate.
The taste that welcomed you fades away, prices climb, portion sizes start to shrink and the staff look sullen. The once impeccable décor slowly crumbles under the weight of under-investment. Eventually, the restaurant is milked dry and it bites the dust!
That’s a very common story in the Kenyan restaurant industry. Don’t be yet another victim of starting big and dying small. It’s far wiser to start small and grow gradually by investing more in great services, outside catering, well-trained staff and decor.
*4. Treating Chef and Serving Staff to Peanuts*
You have a stunning location, great customers and wonderful suppliers but then you resort to hiring under-trained workers so you can underpay them and save a few more cents.
Well, that’s equivalent to digging your own grave. Restaurant business, like any other service business, is highly sensitive to small changes in quality.
The moment you choose to compromise marks the beginning of your slow death. Moreover, underpayment of staff only increases chances of pilferage and negligence at the workplace – and this as you know means no good either.
In order to start a successful restaurant you need three things (1) A great chef (2) A great location (3) A great concept. Always over-estimate your capital needs and be ready to evolve to suit changing market environment.
Lastly, don’t be too cheap or too expensive – find a good working balance and abide by it.
Written By Justine Nyachieo
Business Man & Mentor