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> We had started with $60,000; after six weeks, we were down to $3,000, and there was still so much to do. I don't think he did nearly enough research into how
by acchow 9y ago
> We had started with $60,000; after six weeks, we were down to $3,000, and there was still so much to do.
I don't think he did nearly enough research into how much it costs to start a restaurant.
- MuffinFlavored 9y agoApproximately how much would you say it costs? Could he have gotten a small business loan?
- deleted 9y ago[deleted]
- deleted 9y ago[deleted]
- binarymax 9y agoAn order of magnitude higher than 60k, if your goal is to compete in the market he was targeting. For 60k he could have opened a pizza or sandwich shop.
- bduerst 9y agoYou'd have a hard time even opening a Subway with $60k
- adventured 9y agoBet on closer to $200,000, with room for $250,000.
- mgkimsal 9y agoI googled subway franchise, found http://www.franchisedirect.com/directory/subway/ufoc/915/ http://www.franchisedirect.com/directory/subway/ufoc/915/ Low end estimate is $150k required up front, and high end of $320k. However, in that low end - $85k estimate for leasehold improvements. $15k for initial subway franchise fee. Local sandwich shop opened up a few years back and... while I don't know all the numbers, he didn't put in $200k up front. I suspect it may have been more like $40-$50k, between initial lease, equipment, stock, etc. Small town, passing traffic, little competition, he's done well enough that he's expanding - doubling his size and moving a bit up the street. He's also a very pragmatic guy, and the sandwich biz has been in his family for a couple generations, so I have to think they're at least moderately profitable.
- drewmol 9y agoThey recommend at least $30k in liquid assets, but I'm sure that depends on the market. $80-$310k minimum net worth. I agree with your statement, though this was interesting. http://www.businessinsider.com/what-it-costs-to-open-a-subway-2015-3 http://www.businessinsider.com/what-it-costs-to-open-a-subwa...
- hbosch 9y agoThe article states no one would loan him money, since he was a first time restauranteur with zero experience. He cashed out his pension.
- astura 9y agoNo loans/outside funding was available. >I contacted the banks to apply for a business loan, but I didn’t qualify. I looked into a few angel investor groups, but it turned out that they didn’t “do” restaurants. I even considered Dragons’ Den. As it turns out, no one invests in first-time restaurateurs, no matter how mind-blowing they think their cooking is.
- jlarocco 9y ago> Could he have gotten a small business loan? Not without a ton of experience running profitable restaurants.
- Ice_cream_suit 9y agoI know someone who sunk over a million dollars into a seafood restaurant in my city. A year later, he is bankrupt, has lost his house and his marriage.
- ufmace 9y agoI don't know much about running a restaurant, but I figured he'd be in big trouble as soon as I read that number after reading the condition of the place. I've done remodelings, and I'm pretty sure that just remodeling that place alone would eat up the entire $60k. I have to figure that bootstrapping a new restaurant would run at least that much on its own, between laying in food, kitchen equipment, hiring staff, doing marketing, permits and taxes, etc.
- mikeash 9y agoI know almost nothing about the restaurant business and I haven't even read the article, and my first reaction was still that this number must be missing a zero. I recall stumbling across the franchise agreement for a frozen yogurt place once. They wanted proof that you were able to invest something like $400,000 in the venture, and that's a way simpler setup.
- Fezzik 9y agoI had the same reaction. I was looking at investing in franchises and they range from initial cash investments if $400k to $600k for one restaurant. And, like you hint at, these are behemoths that have networks of fine-tuned resources. Also, this information is astonishingly easy to find, so getting the gist of what opening a restaurant costs is stupidly simple. For example Dairy Queen requires: Investment Range: $779,675 – $1,729,160 Liquid Capital Requirement: $400,000 Net Worth Requirement: $750,000 https://www.dairyqueen.com/us-en/Company/Franchise-With-Us/Store-Types-Markets/ https://www.dairyqueen.com/us-en/Company/Franchise-With-Us/S...
- mikeash 9y agoThanks for putting some concrete numbers behind my vague recollection!
- adventured 9y agoI'm surprised there isn't a big WeWork for restaurant start-ups. A large space converted into numerous kitchens, that can be rented for relatively inexpensively (no large upfront cost to buy equipment or the building, no large initial lease, etc). The WeKitchen owner would have its own inventory of kitchen equipment that could be rented and moved as needed, to facilitate a lot of various types of kitchen arrangements. The idea would be strip as much cost out of the initial part as possible for the start-up (given their odds of early failure are ~97%). Most of them would still fail, the WeKitchen business would get paid their upfront monthly (or quarterly) fees as the restaurants come and go (and there's a perpetual supply of people wanting to try restaurant businesses, this would increase that supply by lowering the cost / risk; it could also accelerate experimentation). It could also enable a lot of other types of food businesses, such as tilt-up bakeries, rather than only restaurant-style. The overall system would focus on orders to go, aligning with the increasing rise of food delivery services.
- crispytx 9y agoYeah, you can't even open a Subway for $60,000. Opening a restaurant is generally a bad idea, but he obviously underestimated the cost of opening a restaurant.
- saalweachter 9y agoMany of my dreams have died after I did a back-of-the-envelope calculation of startup costs and revenue potential.
- payneio 9y agoToo true.