How to Open a Restaurant with no money?

Maybe you feel stuck working at a restaurant for years and you are researching online ways to open a restaurant with no money which is a question I received from Joseph. Joseph sent us a message on our website. You can do the same, go to our website MakingDoughShow.com, scroll down and submit your question and I’ll be happy to cover it in a future show. 

Joseph is passionate about cooking and he asked me how he can open a restaurant with no money. 

Let’s talk about why you need money to open a restaurant! 

We have 2 scenarios: 

Build Out a new restaurant 

Buy an existing restaurant 

Building out a restaurant from scratch can cost anywhere between 50K to 70K.. 

It would involve a landlord giving you somewhere around 90 days after which the rent will start. 

You have 90 days to BUILD the restaurant OUT. I mean, flooring, gas pipes, plumbing, makeline, walk in and other refrigeration, plates, forks, stove, AC unit, POS, bar, tables, chairs.. Everything. You get the idea!  I strongly not recommend a Build Out if you are new OWNING restaurant. 

Owning vs working at a restaurant is very different. 

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Ok. we narrowed down your options to 1: buy an existing restaurant. You have a few options when it comes to buying an existing restaurant:  The restaurant is closed and it’s an asset purchase The restaurant is operational and it is failing = at break even point or below break even point = you make 0 to negative amount of money at the end of the month in terms of PROFITS. 

When we bought our first restaurant, it was making around $450K a year which is good bit of pizza if you consider and it was a few hundred thousands of $ BELOW breakeven as in, after making hundreds of thousands of $ you have 0 profit. 

These are your 2 options and that is why the owner is selling! 

Let’s talk about Asset purchase. Here there are also 2 options: 

Asset purchase means you are purchasing the physical assets of the restaurant. Ovens, makelines, furniture, cooking appliances, tools and etc. 

This amount varies depending on the asset you are purchasing

NINJA Tips: 

You can hire an equipment appraisal person to come in and appraise the asset! As in, the owner and the broker say it’s 35K and maybe the actual value of the asset is $25K and you pay an equipment appraisal person $400 and that can save you a few thousands of dollars.

We bought a restaurant for 40K and the assets looked wonderful and we had to re-purchase and replace the makeline, the AC unit, 2 refrigeration units within the first MONTH. If I could go back, I would definitely hire a kitchen equipment appraiser. 

If the restaurant is below breakeven at the time of purchase, you MUST have a very strong marketing plan in place friend or you will be decimated.

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// WHO: Hengam Stanfield is the co-owner of two restaurants in San Antonio alongside his husband Matt. Their background is in engineering. They tripled their restaurant sales in less than 5 years with 0 prior restaurant experience.They believe every restaurateur deserves owning a restaurant that does not own them.