If you intend to open a new restaurant or kitchen, enthusiasm for the idea is important... but the numbers are more important. Focus on the numbers.
1- Don't open a restaurant just because you saw a crowded one.
You see the customers and sales, but you don't see the cost of raw materials, salaries, rent, waste, and expenses.
A restaurant with high sales might have low profit, and a restaurant with lower sales might achieve better profit because it controls its costs.
2- Study the customer before choosing your idea.
Who is your customer?
What do they buy?
What is their average spending?
And what makes them choose you over the competitor?
Don't create a project based solely on your taste... create it based on a real market need.
3- Don't choose the location because the rent is cheap.
A cheap location without your customer might be the most expensive decision for the project.
Study the traffic, competitors, accessibility, parking, and the nature of the area and its existing audience.
4- Don't spend all your capital on the opening.
Calculate equipment, decor, rent, licenses, inventory, systems, hiring, and marketing.
And most importantly: leave enough liquidity for operations after opening.
Because the project doesn't end the day you open the door... that's the day the real expenses begin.
5- Don't price based on what the competitor sells it for.
Create a fixed recipe, determine the weight of each ingredient, calculate the cost of the meal, and then set the selling price and appropriate profit margin.
The competitor's price is information to help you... not a calculator to determine your profit.
6- Know your monthly expenses completely.
Salaries, rent, electricity and water, raw materials, packaging, maintenance, marketing, app commissions, and other operating expenses.
Because if you don't know how much the restaurant costs you... it's hard to know how much it's making you.
7- Know how much you need to sell every day.
Calculate the break-even point and know the minimum sales you need to achieve daily and monthly to cover your expenses.
Don't wait until the end of the month to discover that you were selling... but not profiting.
8- Consider the worst-case scenario before the optimistic one.
If sales in the first 3 or 6 months are lower than your expectations, do you have enough liquidity to continue?
Or are two weak months enough to put the project in crisis?
9- Don't just ask: How much will I earn?
Ask:
How much will I invest?
How much will I risk?
How much sales do I need?
When will I get my capital back?
And if sales decrease... how long can the project withstand it?
And in the end, remember:
The feasibility study is not intended to tell you your project is good... its purpose is to tell you whether to put your money into it at all or not.
It might tell you: Start.
And it might save you a lot of loss and tell you: Don't start.
And if you don't want to get into all these calculations... relax and seek a specialist.
Mohamed El Shenawy
Consultant for establishing, operating, and developing restaurants and catering. Founder of Bait Al Matam Company and some restaurants within the Kingdom.
I help you study your project before implementation, build an operating system from scratch, hire staff, price products, control costs, and set a clear operating plan.
I help catering project owners calculate meal costs and pricing, determine the appropriate daily price for entering tenders, control costs, and assist in solving operational problems.
Before investing in your restaurant... invest in the decision first.