So, you want to open your own restaurant?

We’ve all heard the restaurant scare stories: 90% fail in three years, it’s impossible to make any money, the customer is fickle, you have to clean the toilets yourself, your employees steal from you, your customers steal from you…

Ok, we get it — but, if you still want to do it, here are some basic guidelines on how to make it work. To me, the trick seems to be getting rent to be “8% of turnover” — if only I could get my apartment to consume such modest proportions my personal “turnover” — which, in England, means “revenue”…by the way.

clipped from www.ft.com

The key to achieving the profits that will ultimately make this – and any restaurant – possible, he believes, is the rent. “For each of my sites, I have chosen slightly run-down streets but ones which I believe have a great deal of what I call resonance. They have got to have a lot of atmosphere. Where we have been able to do this, we have done deals where the rent is about 8 per cent of turnover.”

Merrony then explained the impact this has on his bottom line. “We are serving about 300 customers a week which means sales of 8,500 to 9,000 a week. My food cost is about 30 per cent of sales and my wine a little higher because I don’t want to make them too expensive. I employ a kitchen porter and two waiting staff and after Tracey and I have taken a decent salary, the restaurant is making about 2,000-a-week profit. Rather unromantically, restaurants are in the business of renting out seats and our fixed costs mean that we do this at about 2 a seat.”

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