If you are a food truck owner and have been grinding away for a few years, chances are good that you are considering opening a restaurant. This could be in addition to or in replace of your food truck operations. Many of our clients start a food truck to test the market for their concept, to develop a following and to raise funds for their ultimate dream of owning their own restaurant. However, dreaming and doing are two very distinct and different things. How do you go about saving for your new restaurant?
1. Get a game plan. Before you know if this is even feasible you need to do the numbers. Research where you would like to open, how much it would cost to build the space, what you anticipate in revenue and expenses and if you have the capital to make it happen. Knowing just how much you currently have available and how much more you need to spend is the first step.
Ask for help. You probably already know others in the restaurant business or even better restaurateurs that are or were food truck operators. As long as they are not direct competitors, they would probably be happy to help with your planning. Asking those that have already gone through the process will give you a huge advantage to succeed.
EXTRA PRO TIP- Add 10% to your budget for unknowns. We have helped many food trucks with restaurant insurance and heard horror stories of permit problems, added construction costs and time cost delays. A 10% cushion may not even be enough, but better to have more funds available than not enough,
2. Build your savings goal into your daily operations. If you did the math and you come up with say $500,000 needed to open, figure out how to pull a set amount of earnings per day/week/month/year to reach your savings goal. Maybe this means finding a few creative ways to cut expenses or increase revenue. You will likely have to cut personal expenses as well, but being a food truck owner, this should not be anything new since you went through this process once already to open your truck. Think about it, if you can add $200 in revenue per day and cut $200 in expenses per day you are $100,000 closer to your goal per year! That's if you're serving five times per week. Get staff on the game plan. Maybe create incentives for increased sales and up-sales. There's a very good chance that they would like the opportunity to work in the restaurant with you. Get them excited about it and it will become part of their dream too.
3. Try not to rely on debt. Going into your plan thinking that a bank will lend you most of the money is a bad idea. Loans are very difficult to obtain, especially for restaurant start-ups. Instead, consider a peer funding option like Indiegogo or Kickstarter. Offering "pay back perks" like meals, branded attire, private dining events and experiences are sometimes much better options for raising capital than going to the big banks with open hands. Plus, these peer funding sites provide great promotional opportunities via social media and sharing. They charge an average of 6-8% of funds raised, but the value you may get in attention for your restaurant is well worth the cost.
4. Invest wisely. During your planned saving period you will need a place to park your money. Cash depreciates, so you will lose money by leaving it in a regular checking account. Savings accounts have little to no interest, so again you will be going backwards with inflation. The stock market has performed well, but bears risk. Consult with a professional on where to invest based on your risk tolerance. You should not build any earnings into your savings timeline, but consider it gravy if you have earnings that speed up the process.
Once you've saved enough, be sure you have someone you can rely on to run your food truck while you're knee deep in planning and building the restaurant. You'll need the income from the truck to help fund your project and pay personal bills! Do not dip into your restaurant fund to offset any dip in personal income, you will need every penny for your dream! Congratulations if you have started or will start saving for your restaurant. If you need any help with risk management or insurance questions, please reach out, we are happy to help!