learn from them
If you’re considering opening your own restaurant, you might be thinking, “How do I get started?” or “What can I expect?”. Well, I can tell you a few things you 100% want to avoid. These are 3 of the biggest mistakes I made when opening my most recent restaurant, Hot Tongue Pizza in Los Angeles in hopes that somebody might learn from them.
Doing a full build-out
I recommend to everyone that they should find a second-generation restaurant. Meaning, a building that had a restaurant in it before. A best-case scenario would be if it’s the kind of restaurant you’re trying to open.
I thought I could convert a Subway sandwich shop into a fully functional restaurant. Well, it turns out Subway really isn’t a restaurant. You want a place that has a type 2 hood system, good electrical, hand sinks, three-pot sinks, a grease trap, and mop sinks.
Ideally, you want to find a restaurant that allows you to move your equipment in and start cooking.
The dining room can be made your own with time and minimal money. Save yourself the heartache of having to replumb the whole unit, rewire and redo every detail from the floor up. It takes more time, more money, and more inspections.
I wasn’t aware of the concept of “turnkey money” or a “turnkey business” beore undertaking HOT TONGUE. A turnkey business is a business that is ready to use in its existing condition. All you have to do is turn the key to unlock the door to begin operating. So, say for example that you found a great restaurant that fits your needs and is ready to use, and the landlord wants $75K to sign the lease, but all you need to do is basically move in and call the health department, I’d say that’s a steal and saves you much more time, money, and stress than undertaking a full conversion or build-out.
Not negotiating my lease
I only received 6 months of free rent with $26K in tenant improvement allowance (TI money). What I should have done is make sure the landlord paid for specific expenses like the hood, gas, and some plumbing, since you definitely can’t take that with you when you leave and is also a huge benefit to whoever owns the building.
The $26K in TI money sounded like a lot but barely covered anything once I started the buildout.
The biggest thing I would change for the next time around would be to make sure that no rent is paid until construction is finished. That I wouldn’t pay a dime until I had a dime to pay. This would have saved me tens of thousands of dollars.
When negotiating a lease, make sure you really take a hard look and maybe even spend some coin to have a broker or lawyer look at it.
Learn How to Open a Pizza Shop: Basics to Build-Out
Picking the wrong general contractor
I chose my general contractor based on 2 recommendations and the price. It was one of the worst decisions I have ever made. He was a liar, a cheat, and a terrible person to be in contact with for over a year and a half. The whole thing was toxic and should have been avoided.
Be sure to check out their work beforehand and get references, at least three! The sub-contractors he used were just as bad, and when it was all over I was paying for work to be redone by other companies. It was literally a nightmare I couldn’t escape. It ended up costing me so much time and so much money.
Make sure you choose your General Contractor with caution!