A friend of mine is thinking of moving to the area and asked me what he should consider for start-up costs on opening a bar/restaurant around here. Since I don't know shit about opening a restaurant, I figured I'd turn to tdub.

Obviously there's things like finding a place to rent or buy, furniture, inspections, permits, etc, but what else is there? How much do each of these things typically cost? I imagine he'd be aiming for a smaller place, something the size of Foundation Bar or The Rockford, and would like to operate either downtown or in the NCSU area if that helps at all.

Thanks tdub!

7/23/2011 4:45:26 PM

does he already know what it costs to open and run a bar/restaurant, and he is asking about costs specific to raleigh? or, he has not run a bar/restaurant before and wants to just piss away a fuckton of money?

7/23/2011 4:57:25 PM

$ 500,000

7/23/2011 5:25:59 PM

If he has to ask these questions, he probably shouldn't be trying to start a restaurant.

7/23/2011 5:49:57 PM

Quote :

"does he already know what it costs to open and run a bar/restaurant, and he is asking about costs specific to raleigh? or, he has not run a bar/restaurant before and wants to just piss away a fuckton of money? "

He currently owns two restaurants but doesn't know what the costs are for this area. I can give him vague answers but I think he wants more than that

[Edited on July 23, 2011 at 5:55 PM. Reason : s]

7/23/2011 5:54:36 PM

This is sure to end well.

7/23/2011 5:55:01 PM

^ Now now, he already has years of experiencing owning restaurants, just not in Raleigh.

7/23/2011 5:56:58 PM

I have a feeling that your friend might have more specific questions that you aren't conveying. Your question, as you phrased it, is more or less unanswerable.

7/23/2011 6:16:31 PM

Quote :

"a place to rent or buy, furniture, inspections, permits, etc"

So, it seems the question is about the unique needs of starting a restaurant in Raleigh, considering the above factors as well as unmentioned factors.

Obviously some items are basically trivial. Land costs more or less than where your friend has experience. That is extremely easily quantified... particularly if someone is doing this for a living.

My perception was that the ease of doing business in the area is relatively good. I mean, there's something about the Triangle that has attracted high value businesses.

7/23/2011 6:30:26 PM

I guess the problem I have is I don't know squat about what retail space costs in this area and it seems not too easy to just google up some answers like it is with residential real estate. I'll probably end up just driving around and calling up companies leasing in the areas he's interested in to see what their leasing rates are.

7/23/2011 6:47:34 PM

http://www.empire1792.com is a good start. Chains typically don't do well downtown, as well as anything that serves chain like food. If he wants it to be successful I'd recommend dining in the area for about 3 months preferably on the border of a season. Usually what seems to work currently, and for the past five years, is a mix of fresh bar like food made from scratch with a selection of low cost beverages to attract good looking college kids, as well as a selection of higher end beverage to attract the yuppies trying to sleep with the college kids.

You occasionally see places that only cater to one or the other, but the most successful ones tend to cater to both.

7/23/2011 7:24:37 PM

I can go ahead and tell him Pizza joints wont do well (see Sauce Pizza)

Diners wont do well (the one on glenwood is le suck business wise

Steak joints wont do well downtown...


I agree, it needs to be a new concept, different dining experience ala 5 Star or even The Big Easy/Oxford.

the hardest part is going to be finding a building that isnt $texas to lease.

7/23/2011 8:16:04 PM

^

Great point about needing a fresh concept, that's a good example in a nut shell.

Pizza can do well if you differentiate. See Mellow Mushroom, Mia Bella, and Lily's, but if it's like 99% of the rest you have no chance.

7/23/2011 8:53:43 PM

Quote :

" Usually what seems to work currently, and for the past five years, is a mix of fresh bar like food made from scratch with a selection of low cost beverages to attract good looking college kids, as well as a selection of higher end beverage to attract the yuppies trying to sleep with the college kids."

This is basically the sort of concept he's interested in doing. It'd probably be something similar to this: http://tottonyc.com/

I warned him downtown Raleigh is $texas so I suggested maybe looking into Hillsborough Street as well, especially since with his timeline it'd probably be around the time they complete some of the mixed use projects down there.

7/23/2011 9:16:50 PM

^omfg I would kill to have good yakitori in raleigh

I imagine a good beer an meat on a stick place would work well around campus but not so much downtown. That said even good atmosphere and food don't always work around campus. It seems like the dumpling and noodle bar is dead everytime I drive by.

[Edited on July 23, 2011 at 11:45 PM. Reason : ]

7/23/2011 11:45:12 PM

my money is on Hot Box Pizza going out of business in a year or two btw.

I think it's hard for Hillsborough places that are even just a little out of the way. East Village, for instance, has prices much lower and I don't think it gets as much business. But the night scene is different, so you need to know your strategy.

Quote :

"It seems like the dumpling and noodle bar is dead everytime I drive by."

Someone was telling me a story of how this place got started by a cook who was alienated from another place. It has some pretty bomb dishes and atmosphere. But I would still put money on it going out of business.

Oh, and RAMEN

I know like 10 people who all agreed that Raleigh needs a Japanese ramen place. PM if you want to be put in touch.

[Edited on July 23, 2011 at 11:51 PM. Reason : ]

7/23/2011 11:48:16 PM

If he has two restaurants already, can we at least get a link to his website(s)

7/24/2011 1:43:09 AM

it really depends on the scope of the restaurant but I'd say around $1m to do anything semi-note worthy. but if he's trying to start up a pizza joint in north raleigh or something it could be substantially less. to give you an idea, my dad built/developed at least 5 on Glenwood South doing fit-ups in existing buildings and they were well over $2m. (Bogarts, 42nd Street, Haven/606, Tobacco Road, etc.). also some on Fayetteville st. (Sono, Yanceeys (now Oxford), and G Patel's new project can't remember the name) that were way, way more. So if your boy wants to do something on that scale he's gonna need cash plus a ton of credit/equity.

[Edited on July 24, 2011 at 2:12 AM. Reason : $texas]

7/24/2011 2:11:23 AM

^3 yes I would looooooooooooooooove for him to open a ramen shop but he says ramen's a bitch to deal with

^2 This is the closest thing to a website he has: http://r.tabelog.com/shiga/A2503/A250303/25002554/

^ Awesome, good to know. I figured it was going to be $texas but wow, $1 million! He better start investing his money

7/24/2011 9:05:30 AM

I would highly recommend NOT opening a restaurant on Hillsborough near campus

that's a guaranteed failure

7/24/2011 9:55:07 AM

If that were true how do restaurants like East Village survive? Though I agree with you it's a tough market.

7/24/2011 10:19:04 AM

haha yeah for real. maybe you can get the space where Marakesh Pi Bar Pack House is right now in a few months/weeks.

In all seriousness, only something very low budget with a very targeted group of patrons will survive on HB Street (like Shakedown Street, which attracts hippies, or Sadlacks, which attracts hobos)

7/24/2011 10:22:00 AM

Shakedown is only alive because of it's night life. It is a tough market. If you're not focused, you're going to fail. But there's also no reason to go >500k. Depends on the property and what it was doing before hand, but low capital means lower risk too.

7/24/2011 10:50:23 AM

^^^ for every East Village, there are a dozen [insert failed Hillsborough St restaurant]


....and I wouldn't exactly call EV a restaurant. sure, they sell food, but I guarantee the vast majority of their sales are alcohol

[Edited on July 24, 2011 at 11:40 AM. Reason : s]

7/24/2011 11:39:01 AM

yeah... there is EV, Mitch's, PR's, Sadalacks... and everything in between keeps flipping. And note- those that lasted are more of a social hangout atmosphere than restaurant

7/24/2011 11:49:17 AM

Tell him to rent the space where Bada is when it goes under in a few months

7/24/2011 12:25:42 PM

It really depends on the building and what he wants to do. I understand that he may be in the very early stages of planning, but he needs a more focused idea. If he is lucky and can find a place with a kitchen (vented to the outside) already in place and no major interior or structural changes needed he will need, very conservatively, about $150,000 startup; and that is for a very small space. Inspections and permits aren't that expensive, they just take time to acquire.

[Edited on July 24, 2011 at 12:51 PM. Reason : ]

7/24/2011 12:51:04 PM

Downtown Raleigh needs something to replace the brass grill. A good, cheap lunch spot (wraps, panini's) with great fresh sides, like fruit, pasta, hand cut whole fries.

They were pretty successful, but the building was sold or something like that and forced them to close.

7/24/2011 3:59:02 PM

Quote :

"It really depends on the building and what he wants to do. I understand that he may be in the very early stages of planning, but he needs a more focused idea. If he is lucky and can find a place with a kitchen (vented to the outside) already in place and no major interior or structural changes needed he will need, very conservatively, about $150,000 startup; and that is for a very small space. Inspections and permits aren't that expensive, they just take time to acquire."

construction costs will be ~$100/sf depending on specifics
kitchen equipment package will be ~$70k - again, depending on what is existing and the stuff you buy used
design will cost ~$15k
then you have start up costs, capital, labor, marketing, etc...

$300k is much more realistic

7/24/2011 4:30:14 PM

I agree... I was saying if he was fortunate enough to have everything in place he would still need 150k.

7/24/2011 10:44:59 PM

open one in fayetteville = gold mine

7/24/2011 10:47:58 PM

Quote :

"Pizza can do well if you differentiate. See Mellow Mushroom, Mia Bella, and Lily's, but if it's like 99% of the rest you have no chance."

huh?

i know tons of NY pizza places that make it without being substantially different. 99% is a huge overstatement .

7/25/2011 9:51:37 AM

There are so many variables that I can't imagine him getting any good info out of this thread that he already doesn't know.

Cheapest way is too obviously get a place that's already restaurant/bar ready (was already a restaurant/bar, plumbing ready, leftover kitchen/bar appliances, etc.). I've got a friend who opened up a decent sized restaurant for $75,000, but he went into a building that was recently renovated restaurant with brand new everything...so my friend didn't have to buy shit. Just had to do a little re-decorating (but not much...previous place was French/Moroccan and his place was going to be Authentic Mexican) and a few kitchen modifications.

The guy who did the restaurant before him (who I also knew and bartended with), spent $500,000 in re-doing everything.

So that makes a huge difference. I always recommend that you try and move into a place that's almost a turn-key with the exception of decorations. The kitchen equipment and plumbing/electrical requirements for DHEC are crazy expensive. If you can avoid most of that, you're saving a ton of money.

On average, I would say a small bar/restaurant would be about $250,000-300,000, mid-sized $500,000, and a larger one $800,000 - $1 million.

7/25/2011 9:56:42 AM

I think it's obvious that land + structure + equipment + business costs for starting a restaurant = easily around the million $ mark

But of course, the land, structure, and probably most of the equipment has value that's not a major part of the risk (meaning you go under, someone else just buys it). I could be convinced that you could go into a restaurant with less than or equal to $150k risked, but that would be for a pretty small joint.

As ^ was saying, it's easy to put way way way more out there than what I've mentioned. Unless the guy running it had decades of experience and I was darn sure it was going to be the next big place around here, I would be doubtful they would ever make that kind of money back.

7/25/2011 1:56:55 PM

What's the resale like on a failed restaurants equipment?

7/25/2011 2:07:03 PM

It depends.

LOTS of times its just included with the new restaurant. As in, when you see a building up for lease, lots of times it will say "restaurant equipment/kitchen appliances included." I always browse restaurant listings, and I see this 90% of the time.

Other than that...it's pretty heavily discounted. Most used restaurant equipment is at least 50% off if buying straight from a failed restaurant. If you buy it from a used restaurant equipment dealer, usually around 30% off.

If you have the money, I'd shy away from used equipment...but a lot of people don't have that option.

7/25/2011 2:28:53 PM