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Anyone here opened a restaurant since the economy tanked?

post #1 of 16
Thread Starter 

In the process of trying to open a little place here in central Florida. Im looking at the financing piece now, and was wondering if anyones recently done this.

 

I'm long on experience, have some cash, but am struggling wih collateral..and of course when you mention the word "restaurant" to a banker they run screaming for the hills.

 

I'm looking at 7a, and 504 SBA loans. I am going to try for a bank loan, but I highly doubt I will get it.

 

Would like to hear any feedback regarding fianancing or start up tips in general.

 

Has anyone leased equipment for a start up? If so, what do you think of it.

 

Is there an affordable POS system out there?

 

Thanks in advance for any feedback.

post #2 of 16

My experience with SBA loans is that in order to get one, you have to prove that you don't need it, and that they are not really for start up but more for expansion, and that we had a difference in opinion on the definition of small, I guess I should have sought out the Minuscule Business Administration when I looked for a loan.

 

I wouldn't recommend leasing equipment only because there is a ton of used equipment that is practically brand new out there due to lots of shuttered businesses and the prices are at least 50% off the cost of new. I bought a "used" hood system that still had the shrink wrap film on it, it obviously had never been installed, for 66% less than what it would have cost me new.

 

As for an affordable POS system, I would say pen and paper. Hand written tickets may mean more book work, but if you are the book keeper, the labor doesn't cost you monetairly, which can be extremely helpful in cuuting opening costs.

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #3 of 16

No experience with SBA loans, but I have been in business for over 14 years now.

 

Leasing:  Those boys are just like everyone else, they want their pound of flesh.  Look at the rates, the periods, and the buy-back/buy-out clauses. Sometimes they do make good sense, and sometimes they suck royally.W

 

What kind of equipment are you looking at?  9 times out of 10 it makes more sense to buy/take over a shutdown restaurant  and bring it up to snufff again--certainly will take less time and money than starting from 4 cement walls.

 

If you've been in the business, you know what to buy used and what not to, when and how to hit the local auctions, and how to approach the shylocks--umm.. the "Used food eqpt." people.

 

Banks will sit up and notice you once you've kept your doors open for longer than 2 years

and are making some headway into your loans.  We started out place in '96, not the best of times, and certainly not with a competant Provincial Gov't--which had serious consequences in our first crucial years.

 

...."This whole reality thing is really not what I expected it would be"......
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...."This whole reality thing is really not what I expected it would be"......
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post #4 of 16
Thread Starter 

Thanks for the feedback!

 

I do not want to lease equipment, just like I dont want credit with anyone..my mentor taught me to pay em when the get it unloaded and checked off..Leasing drops my start up costs greatly, but adds another line to my P+L...I figure I'm gonna pay about 10% interest to buy, and probably 20% to lease..but with the lease it frees up as much as $50K on start up loan.

The issue is what I HAVE to do to increase my chances of getting a loan.

 

I'm taking the SBDC seminars, getting the free counseling, and also about to start using SCORE for some additional guidance.

 

I got my eye on a couple of very promising locations..ones a lease (thinking 7a), and the other is a sale (504)..

 

My concept is a southern style grill..comfort food, but not a soul food dive (which I love, just dont want to own)..so, I'll need basic equipment..broiler, chef table, convection oven, fryer, etc.

 

I'm not doing a build out,...way too expensive...I'm looking at locations that are closed restaurants. Also they must have a grease trap, and a hood.

 

For the lease location I need 100K to go in comfortable...for the purchase (the guys dying to dump his place..its dropped from 299K to 180K in 1 year) I'd need about $300K..

 

I just want a shot in this business...I've spent my life making other people money...just want my turn at bat.

 

Really wish I had an owner mentor...I know how to run a restaurant, but this buying thing is a new world for my uneducate behind,

 

 

post #5 of 16

Not that I always agree with my accountant or lawyers but you just described right down to the letter why those I work with would tell you that you should lease to start. Who cares if there's another line on your P&L!  Your going to pay your accounting fee's either way.  Let them earn their keep and while we are at it this is where you should be getting your advice, Professionals in your area that can advise you on average rents and other issues, not from unknown entities on the internet. A few thousand up front in professional fees can really pay off later.  

If leasing frees up 50k it's a no brainer. If things go (.) (.)'s up you can only be so broke but starting off with 50K less puts you that much closer to failure. One of the biggest mistakes independent start ups make is failing to have enough reserve cash to operate several months  with out turning a profit. Considering what is going on in the Gulf Of Mexico and Florida tourism that time frame might be very generous. I'd wait six months and watch how many more go under in that time frame in your target area.

I'll wager that in the next year real estate across the board in Florida will take another B I G plunge.

If you are taking over a previous venture remember to consider carefully that the stigma from the prior establishment can linger like a bad stench. If the other owner has actually put 180-299k in the place (which is it??) and is still failing that should be a serious warning.

Be cautious. Plan well and save buying equipment for once you get established unless you can buy it at auction. The bottom line is the more cash you can keep in your pocket for the first few years the better. Don't get wrapped up in interest rates at this juncture unless they are excessive. You spread those costs out over time.

If you don't have a lot of restaurant experience that you can document, stellar credit and plenty of cash on hand then IMO it's not very likely a seminar is going to help you get a loan big enough to get started. That's a sign of the times but restaurant loans have never been easy.

Best of luck in your venture but remember to be careful of what you wish for.  ;)

I think the most wonderful thing in the world is another chef. I'm always excited about learning new things about food.
Paul Prudhomme
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I think the most wonderful thing in the world is another chef. I'm always excited about learning new things about food.
Paul Prudhomme
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post #6 of 16

i dont think loan is a good idea. but we need to take loan with a high interest. i knew one who fail to deposit the loan money during the last session of his loan. he was a foreigner and total investment, restaurant everything were croked. so be careful.

thanks

popular toad

post #7 of 16

Look for a place that serves bad food that is on the ropes maybe you can work a deal out with the owner or a place that has already shut down that has most of its equipment. I'm in Florida also and there are a lot of restaurants going out of business. I walked into a fully equipped kitchen walk thur traffic and few months of free rent. Down side is minimal. I open in a few weeks and even though I feel great about the menus and pricing but the economy scares the shit out of me.

In this economy I wouldn't invest a lot of money into a restaurant their is too much down side the M3 money supple is contracting in layman terms less money in the system. Compiled with unemployment rate unoffically in the 19 to 22%

post #8 of 16
Thread Starter 

 

Not that I always agree with my accountant or lawyers but you just described right down to the letter why those I work with would tell you that you should lease to start. Who cares if there's another line on your P&L!  Your going to pay your accounting fee's either way.  Let them earn their keep and while we are at it this is where you should be getting your advice, Professionals in your area that can advise you on average rents and other issues, not from unknown entities on the internet. A few thousand up front in professional fees can really pay off later.

 

 

By not wanting another a line on my P+L, I meant I didnt want another expenditure. In a perfect world I would pay for equipment of front, but to be more attractive to a bank I may have to do some things I'd rather not

 

 

 

I'll wager that in the next year real estate across the board in Florida will take another B I G plunge.

If you are taking over a previous venture remember to consider carefully that the stigma from the prior establishment can linger like a bad stench. If the other owner has actually put 180-299k in the place (which is it??) and is still failing that should be a serious warning.

 

This particular restaurant has been closed for 2+ years. The prioir restaurant paid premiom $$ for the spot, then dropped a lot of moeny into a remodel, the economy tanked, and they crashed. Ive watched the property on Loopnet for almost 2 years. It started at 229K and has dropped to 224K..but the rep for the owner told me off the record dude just wants out and will take 180.

 

 

As for an affordable POS system, I would say pen and paper. Hand written tickets may mean more book work, but if you are the book keeper, the labor doesn't cost you monetairly, which can be extremely helpful in cuuting opening costs.

 

I am comfortable with that, but my concerns are the time I'm putting in transferring numbers from a register Z tape is time away from doing what I should be doing...also the POS gives me real time labor, hourly breakdowns on sales, and a P-Mix(that I dont have to do manually)

 

 

 

I really appreciate everyones time, and I hope y'all will continue to offer me some pearls of wisdom from your own experience...I know how to run restaurants, but this getting one open deal is all new for me..thanks.

post #9 of 16

Forget to add to my post. That the UN is looking to drop the US Dollars of a reserve currency. If that happen the dollar value will drop like a rock in a deep pond and send us into a full flung depression. Google UN to replace dollar as a reserve currency. Best bet OPM other peoples money

post #10 of 16
Thread Starter 
Quote:
Originally Posted by Chef Tomain View Post

Forget to add to my post. That the UN is looking to drop the US Dollars of a reserve currency. If that happen the dollar value will drop like a rock in a deep pond and send us into a full flung depression. Google UN to replace dollar as a reserve currency. Best bet OPM other peoples money



umm ok?

post #11 of 16

You bring up at great point with the grease trap. THe EPA is lurking with a wide brush on them. Watch out and IMO stay away from it unless you have it written in the lease that the lessor maintains the location to all local, state and federal codes related to your business.remember its a lease, when you leave most every permenate fixture stays. My quotes where 20-35K for a trap, I ended my venture with that cost.

Good luck..I would ask the SBDC if you can buy used equipment under their secured loans.

 

Cabotvt

post #12 of 16
Thread Starter 

Im an effort to not have to drop $7-10K into a POS system I stumbled across this software. has anyone used it? Mnow anything about it?

 

http://quickbooks.intuit.com/product/accounting-software/retail-pos-solutions/

post #13 of 16

when i had to take a course in Quickbooks a few years ago, i found it pretty user friendly. i'm sure it's gotten even better in 10 years. still need to do physical inventory every now and again, though.

post #14 of 16

 Whats the healthcare bill going to bring. I have spent a few bucks on a reading of the bill. It is writen not to be understood and without hard timelines. If yuo have to pay  HC on part time, full time then yourself could be expensive. Or pay some 7.8% fine that could be costly for a startup. On the POS system HP has touch screen monitors out now cheap, you can even get a free app on the android phone. No need to pay big bucks for POS, IMO. The phone is a great choice and you only need a server, computer and a WIFI, which can be offered to your guest as well.

 

mod edit: watch the political stuff.

post #15 of 16

G-n-G -- lots of places out of business or struggling. If you want POS there are several used equipment outlets. As a startup I'd use a manual method. POS is nice, but not necessary. That said, there have been several POS units on craigslist here in Tallahassee, and really great bargains.

post #16 of 16

Hey, I'm starting up a new restaurant in the middle of no where....People will come if you have the right concept and do your market research,,,,,what does this community need? What is not available to them? Start out being "The Niche" like FoodPump and monoplolize on your own scale. Your not a threat to any big business and your in demand!

 

As far as financing goes ...go with in good shape used equipment...shop around do your research. There is a lot of used restaurant supply houses willing to negotiate.

The market did tank ..but here in Canada it is on the incline...the only way to go is up!

 

The Gov here is crying for new business ...it supplies jobs...maybe look into a first time business owners loan?

 

Good Luck with that

 

Gypsy

My feet are firmly planted in mid air
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