Entrepreneurship & Small Business

Start Up Restaurant Business Loan/Financing

  • Last Updated:
  • May 17th, 2019 3:38 pm
[OP]
Newbie
Oct 19, 2018
5 posts
1 upvote

Start Up Restaurant Business Loan/Financing

Hi, I am in the middle of opening a restaurant. My contractor bailed with money and I found out the property has some HVAC and wall issues which are amounting more and more than I though (around 100k).
I am worried because all this is happening and not sure how I can pay for everything. I’m looking into business loans but they want me to be in business for 1-2 years.
Is there any advice on my predicament?
(I have the money for the HVAC and walls but then 8 don’t have the money for Reno’s it equipment )
30 replies
Penalty Box
Apr 19, 2017
828 posts
645 upvotes
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[OP]
Newbie
Oct 19, 2018
5 posts
1 upvote
riseagainstthemachine wrote:
Mar 7th, 2019 2:41 pm
do yourself a favor and get out of the restaurant business.
“Running away from your problems is a race you’ll never win”
Deal Addict
May 23, 2017
1835 posts
880 upvotes
Znx100 wrote:
Mar 7th, 2019 3:54 pm
“Running away from your problems is a race you’ll never win”
you will realize what I am getting at when your restaurant is closed in a year and you are $500k - $1 million in debt. Think twice before opening a restaurant. I was in the food industry for years, went to chef school, red seal, the whole nine. Thought about opening a restaurant and after a few friends tried and failed I switched jobs and now out of the industry. First you will have a passion for it, then as money becomes a problem food cost/quality will go down. the the bad yelp reviews ect. I wish you the best but please be very very careful.
Got that Zoomer account!
Deal Addict
User avatar
Jan 22, 2009
1800 posts
496 upvotes
Montreal
riseagainstthemachine wrote:
Mar 8th, 2019 9:48 am
you will realize what I am getting at when your restaurant is closed in a year and you are $500k - $1 million in debt. Think twice before opening a restaurant. I was in the food industry for years, went to chef school, red seal, the whole nine. Thought about opening a restaurant and after a few friends tried and failed I switched jobs and now out of the industry. First you will have a passion for it, then as money becomes a problem food cost/quality will go down. the the bad yelp reviews ect. I wish you the best but please be very very careful.
Thinking and doing are two different things.

To OP, keep the drive alive, ignore all the naysayers. Good luck!!!
Deal Addict
May 23, 2017
1835 posts
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williamsauga wrote:
Mar 8th, 2019 11:25 am
Thinking and doing are two different things.

To OP, keep the drive alive, ignore all the naysayers. Good luck!!!
This is very true. I dont mean to discourage the OP.
Got that Zoomer account!
Jr. Member
Oct 27, 2018
112 posts
46 upvotes
Sometimes ok to lose a battle than a war.
Penalty Box
Apr 5, 2013
3974 posts
1273 upvotes
markham
the dirty truth about the restaurant business...

...margins are very thin, hours are long.
...the real reason people got wealthy from restaurants years ago was the "skim". Owning a restaurant was a great way to make tax free money. (or launder money..but thats a whole different subject). It used to be a cash business, as with most business's ..but with small cheque average, and 500% markup from wholesale food to end product..the opportunity to make tax free dollars was there. No franchise fees, no watchdogs, the only person privy to total sales and hands on the money was the owner. A paycheck in cash could be made through unreported sales..as long as 10-15% expenses of food costs were not reported..a skim of 10-15% could be had...it was common up until the advent of plastic. The same applied with liquor sales. ..Having said this, do the math..if you had a place that did $1500 a day..the owner could easily skim $150-200 a day..that easily is $50k a year...cash , no tax!

Gone are the days of cash sales...the skim has disappeared..everyone pays with plastic, and its all tracked.

While I don't condone tax evasion..this is the honest truth about it....think about it.in today's world...a restaurant does $1 mil in sales a year..decent profit on that is about $80-100k..after tax , that is about $60k. take home...really? for an $200k+ investment , risk, and 100 hours a week??...oh and if you have a franchise...you better hope you are in the $2 mil plus range because another 4-8% will be going to them....so , in this day and age...is the risk really worth it?...something you really have to do the math with.
Banned
Jan 26, 2019
60 posts
33 upvotes
cardguy wrote:
Mar 9th, 2019 8:03 am
the dirty truth about the restaurant business...

...margins are very thin, hours are long.
...the real reason people got wealthy from restaurants years ago was the "skim". Owning a restaurant was a great way to make tax free money. (or launder money..but thats a whole different subject). It used to be a cash business, as with most business's ..but with small cheque average, and 500% markup from wholesale food to end product..the opportunity to make tax free dollars was there. No franchise fees, no watchdogs, the only person privy to total sales and hands on the money was the owner. A paycheck in cash could be made through unreported sales..as long as 10-15% expenses of food costs were not reported..a skim of 10-15% could be had...it was common up until the advent of plastic. The same applied with liquor sales. ..Having said this, do the math..if you had a place that did $1500 a day..the owner could easily skim $150-200 a day..that easily is $50k a year...cash , no tax!

Gone are the days of cash sales...the skim has disappeared..everyone pays with plastic, and its all tracked.

While I don't condone tax evasion..this is the honest truth about it....think about it.in today's world...a restaurant does $1 mil in sales a year..decent profit on that is about $80-100k..after tax , that is about $60k. take home...really? for an $200k+ investment , risk, and 100 hours a week??...oh and if you have a franchise...you better hope you are in the $2 mil plus range because another 4-8% will be going to them....so , in this day and age...is the risk really worth it?...something you really have to do the math with.
yep.
buying yourself a job more or less.
Deal Guru
Aug 2, 2010
14524 posts
4288 upvotes
Here 'n There
cardguy wrote:
Mar 9th, 2019 8:03 am
the dirty truth about the restaurant business...

...margins are very thin, hours are long.
...the real reason people got wealthy from restaurants years ago was the "skim". Owning a restaurant was a great way to make tax free money. (or launder money..but thats a whole different subject). It used to be a cash business, as with most business's ..but with small cheque average, and 500% markup from wholesale food to end product..the opportunity to make tax free dollars was there. No franchise fees, no watchdogs, the only person privy to total sales and hands on the money was the owner. A paycheck in cash could be made through unreported sales..as long as 10-15% expenses of food costs were not reported..a skim of 10-15% could be had...it was common up until the advent of plastic. The same applied with liquor sales. ..Having said this, do the math..if you had a place that did $1500 a day..the owner could easily skim $150-200 a day..that easily is $50k a year...cash , no tax!

Gone are the days of cash sales...the skim has disappeared..everyone pays with plastic, and its all tracked.

While I don't condone tax evasion..this is the honest truth about it....think about it.in today's world...a restaurant does $1 mil in sales a year..decent profit on that is about $80-100k..after tax , that is about $60k. take home...really? for an $200k+ investment , risk, and 100 hours a week??...oh and if you have a franchise...you better hope you are in the $2 mil plus range because another 4-8% will be going to them....so , in this day and age...is the risk really worth it?...something you really have to do the math with.
Right on. 99% of restaurants are really only a way to provide yourself a job and that's about it, along with a huge amount of risk and investment.
Member
Apr 20, 2018
469 posts
55 upvotes
Mississauga, ON
I thought of opening a pastry shop but now I don’t want to... even though I got the cash to do it

Startup cost is high, food costs getting higher, same for salary, long hours and holidays and all the work for simple average salary ... not worth it

I’m trying to get out of the food service industry unless I find a career in a food corporate type of business.. I’m looking at changing industry or open a non-food business which is tough to figure in today’s business market
Deal Addict
May 23, 2017
1835 posts
880 upvotes
raptors87 wrote:
Mar 13th, 2019 4:09 am
I thought of opening a pastry shop but now I don’t want to... even though I got the cash to do it

Startup cost is high, food costs getting higher, same for salary, long hours and holidays and all the work for simple average salary ... not worth it

I’m trying to get out of the food service industry unless I find a career in a food corporate type of business.. I’m looking at changing industry or open a non-food business which is tough to figure in today’s business market
Like I said above, as soon as I saw what the industry was like, I got out. It is not worth losing your savings, time with loved ones, to make pennies. This is why i told the OP to get out while he can. He already has problems and is in debt, not worth going into more debt but I guess there is a point of no return where he needs to see it through. I wish OP the best but history shows that this is the worst kind of business to open and flourish.
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