HOWTOSTART AND RUNYOUR OWNRESTAURANTIfyouwantto knowhow...Going forSelf-EmploymentEnjoythe sense of achievement andsatisfactionthat comesfrombeing your ownbossBook-keeping& Accounting for the SmallBusinessHowto keepthe booksandmaintain financialcontrol over yourbusinessThe Small Business Start-Up WorkbookAstep-by-stepguideto starting the business you'vedreamedof.Preparing a Winning Business PlanHowto winthe attention ofinvestorsandstakeholdershowtobooksPleasesendfor a freecopy of thelatestcatalogueto:How To BooksSpring Hill House, Spring Hill Road,Begbroke,OxfordOX51RX, UnitedKingdomemail:info@howtobooks.co.ukwww.howtobooks.co.ukHOWTOSTART AND RUNYOUR OWNRESTAURANT.CAROLGODSMARKhowtobooks Published by How To Content,A division of How To Books Ltd, Spring Hill House, Spring Hill Road, Begbroke, Oxford 0X5 1RX. United Kingdom. Tel: (01865) 375794. Fax: (01865) 379162. email: info@howtobooks.co.uk http://www.howtobooks.co.uk All rights reserved. No part of this work may be reproduced or stored in an information retrieval system (other than for purposes of review) without the express permission of the publisher in writing. The right of Carol Godsmark to be identified as the author of this work has been asserted by her in accordance with the Copyright, Designs and Patents Act 1988. 2005 Carol Godsmark First published in paperback 2005 First published in electronic form 2007 ISBN: 978 1 84803 053 4 Cover design by Baseline Arts Ltd, Oxford, UK Illustrations by Nicki Averill Produced for How To Books by Deer Park Productions, Tavistock, Devon, UK Typeset by Pantek Arts Ltd, Maidstone, Kent, UK NOTE: The material contained in this book is set out in good faith for general guidance and no liability can be accepted for loss or expense incurred as a result of relying in particular circumstances on statements made in the book. The laws and regulations are complex and liable to change, and readers should check the current position with the relevant authorities before making personal arrangements. ContentsAcknowledgementsixForewordxiPrefacexv1Running Your Own Restaurant1Why runyour own restaurant?1Howsuitable are you?2Seeing yourself as a restaurateur42Choosing Your Restaurant5Decidingwhat kindof restaurant5New trendsin restaurants73Location, Design andLegal Requirements9Location,Location, Location10Spotting currenttrends12Firststeps to take on the property ladder13Franchisinga business16Local governmentand your business17Scrutinisingtheexterior andinteriorof a property18Kitchenlayout18First impressions24Licences24Music26Smoking27Complying with Acts28Your checklist314Financing Your Business33Creating income33A business plan35Forminga company36Calculating menucostingsand prices37vHOWTOSTARTANDRUNY OUROWNRESTAURANTTips for attracting finance43Raising capital and business partners/investors43Working in a partnership44Capital expenditure45Nextsteps in findingfunding. .47VAT49Payroll51Insurance52Creditcards55Legal tips55Business advice organisations565Running a Safe Business59Foodsafety regulations60Food storage61Food poisoning and avoiding contamination62Staffhygiene65Environmental health666Design and Equipment for the Kitchen and Restaurant70Design71Is your restaurantfunctional?72The hall and bar73Therestaurant74Thekitchen83Chinaand tableware90Service937Marketing Your Business95Finding your target market97Choosing your restaurant'sname97Signage98PromotionalMaterial100Advertising103Themedia profile108Critics112Theguides114Business expansion123v iCONTENTS8Staffingfor the Well-Run Restaurant131Theimportanceof service132Finding staff134Motivation137Thestafffinterview139Otheremployment tips143Employing people145Kitchenhierachy terminology explained151Thekitchen career153Kitchenandfrontof housestaff working together155Dresscode, smoking, behaviourandcommunicating155withcustomersManagementskills160Staffrotas1619Designing Menus164Theimportanceof the menu165Themenu: foodconsistency165Creatinga menu166Using first-rateproduce168What tocook andwhy to cook it169Menu anddrink pricing172Createcontentedcustomers172Menu writing andcompiling175Special diets180Instructing kitchenstaffon following your recipes18210Choosing Suppliers185Howtolook for key suppliers186Kitchensupplies andsuppliers188Whatsomechefsandrestaurateurs want andachieve189Sourcing alternatives191Food for thought192Quality andprovenance of produce193Usefulcontacts for sourcing produce195viiH O WT OS T A R TA N DR U NY O U RO W NR E S T A U R A N T1 1Wine and Other DrinksGetting wines rightThediverse wine listWine andfoodPricing wineWinevocabularyWater, coffeeandteaTradingStandardsguidelines for selling alcohol12The Day to Day Running of Your RestaurantThe daily patternFront of houseThekitchenWhy do it?13Customer Relations and Being a CustomerCustomer satisfactionHandlingcomplaintsPromoting customersatisfactionBeing a customerTop tipsPostscriptGlossaryUsefulContactsBibliographyIndex198199200204206207209211214215217222226227228229230233234238239242244245viiiAcknowledgementsResearching this book has unearthedmany enthusiastic,dedicated profes-sionalpeople who have generously contributedtheirtimeandexpertiseand whom I thank most sincerely:PeterGordonof Providores, London; KitChapman, theCastleHotel,Taunton,Somerset,andBrazz Restaurants;JonathanCooper,AmanoCafe, London; Jake Watkins, JSW, Petersfield, Hampshire;Raymond Blancand TraceyClinton,ManoirAux Quat'Saisons;LaurenceMurphy,FatOlives; Ray Farthing,36On TheQuay;Chris Allwood, Allwood's WineBar;AlistairGibson,BrookfieldHotel;all of Emsworth,Hampshire;LarryStone,wine director,Rubicon,SanFrancisco,California; JohnHayler,PlanningDepartment,ChichesterDistrictCouncil;LawrenceFoordandSarahParker,TradingStandards,CDC;JohnWhite,EnvironmentalProtection,CDC;DavidKnowles-Ley,EnvironmentalHealth,CDC;JulianMitchell,Christie&Co,London;BrianDuckettandPaulMonaghan, Howarth Franchising, London; Lornaand Peter Walters, solic-itors,Streathers, London;Andrew Turvil,EditorofTheGoodFoodGuideandtheWhich?PubGuide; EmmaRickett, TheAA; FrancesGill,Harden'sGuides;PaulCordle,The MichelinGuideofGreatBritainandIreland; AlexChambers,Les RoutiersGuide;Soraya Conway, ZagatSurvey; SarahGuy,TimeOut Guides;GeorginaCampbell's JamesonGuide-Ireland; JulianShaw,SmallBusinessServicestatistics;JoannaWood,CatererandHotelkeeper;SimonHenrick,Brake catering;ElizabethCrompton-Batt,CharlesSecrett,MarkHaynesandstaunchfriendsandalliesAnnaFleming,Chrissie Bates, Jocelyn andPeterSampson,NoelRoss-Russell,CarolineGodsmark,RuthCarverandotherswhohaveshownmuchpatience,goodwillencouragementandunderstandingincludingLouise,Jackie, RennieandGaryReynolds andGuildof Food Writersco-members.IXThis page intentionally left blank ForewordOwningandrunninga restaurantwill be, Iguarantee,themostexhaust-ing,nerve-wracking andtiringthingyouwill ever do.If it goes well itwillalso be the mostsatisfyingandrewarding partof yourlife- muchlike rais-ingchildren.Carolhasclearly laidoutall thepitfalls youwillencounterandthestrategiesyouneedtohavein place, andif you readthisbookcover to cover well before you embark ona lifeas a restaurateur you will berewardedwith foresight. It'sa hardlifeanditcanbea greatlife- butgetprepared. Read this book.PeterGordonThis page intentionally left blank DedicationTo Jonathan, Matthew andCaroline who lived the restaurantlifetothefullThis page intentionally left blank PrefaceAreyoupassionateaboutrestaurants?Doyouhankerafteropeningyourownrestaurant? You wouldbeenteringa very buoyantmarketasmorepeoplearechoosingtoeatoutthaneverbefore. Thereareover51,000restaurantsnowopenforbusinessinBritain,anincreaseof morethan1,000in less thana year. This is restaurantboomtime.Therise in people eating outis due, in part, to thestructureof households.Weareacash-rich,time-poorsocietypreferring tomeetupwithfriendsandfamilyin restaurants ratherthanslaving over a hotstove at home.Thanks toan increasing numberof wide-rangingtypes of restaurantsoffer-ing a greater variety of foodtosuit every budget,singles, familiesandoldercouples in thesocial demographicmix now eatoutonan increasingly reg-ular basis. One in threeof us eats out once a week -or more. Thecustomerisnowmorediscerning,abletodemandbetterquality, price,consistencyandchoice. Otherwise they vote with theirfeet.Openingandrunninga restaurantis an aspiration many people have. Theydream of ditchingthedull job andenteringa world of creativity andhospi-talityandbeingtheirown boss.Oritmaynaivelybeseenasa moneyforoldropeventure,tossinga salad orturninga steak undera hotgrillbeingaboutas vexed as thecooking actually gets. Theymayalso thinkthatcus-tomerswillbecomingthroughthedooronday onewithoutmuchefforton the new restaurateur's part.Restaurantsare partof the hospitality and entertainmentbusiness-it isdescribedas puretheatre-butitis a toughbusiness.Itis alsoamostrewarding,stimulatingone,bothona personallevelandafinancialone ifthe businessis approachedand runwith prudence,professionalism,control,dedicationanda dash of imagination andflair. Andyou have tolike people.Asa restaurantjournalist, criticandchef(Iamalsoa restaurantconsult-ant,guideinspectorandpastrestaurateur)Ihave researchedandwrittenx vHOWTOSTARTANDRUNY OUROWNRESTAURANTHowto Startand RunYourOwnRestaurantfromanexperienced,practicalbase. Thechapterscover aspectsof therestauranttrade from location andlicence applications tofinanceand professional advice.Howto StartandRunYourOwnRestaurant alsocoversequipment,mar-keting,restaurantreviewsandstaffingtosuppliers,menus,wines,thedaytoday runningof therestaurant,complaintsandhowtodealwiththem, buildingup a loyal tradeand -crucially -puttingyourself in yourcustomers'shoes.Thebookisfullof uptodateinformation forthenovice restaurateur.Italsooffersadvice tothosealready inthebusinesswhomay wishtotradeuptomeetcurrentcustomerexpectations.Itincludesusefultradeaddresses,anindexandawholehostof toptipsthroughoutthebookbasedontheexperiencesof seasonedchefs, restaurateurs,suppliersandothersin the profession whom I have interviewed for this book.If yourpassionfor runninga restauranttakes hold,Iwish youeverysuc-cessandfulfilmentinoneof theoldest,morerewardingtradesintheworld, the restaurantand hospitality trade.xvi1Running Your OwnRestaurantBecomingarestaurateureitherintheUKortakingtheplungeabroadisafantasymanypeoplehave.Inreality,though,thethoughtisoftenputonthebackburnerduetolackofknowledgeonhowtoproceed,orbecausetheleapfrombeinganemployeetobecomingself-employed,isdaunting.WHYRUNYOUROWNRESTAURANT?Asanemployee, your work mightbeunrewarding,unstimulatingandpre-dictable,oryoumay belockedintoa profession thatnolongerinspires.Youlongtodevelopacreativeandbusinesssideyoufeelyouhavestrengths in andthe restaurantworld hasalwaysattracted you.1Perhapsbeingina partnershipwithfamilymembersis appealing,ortheurgetocontrolyourowndestinyis a motivatingfactor.Couldyou workwith a friendwho has agreed to enter into partnershipwith you?Beingagoodcookcanbejust thecatalyst somepeopleneedtochuckintheday jobandopena restaurant. Theirpartnershopefully agreetothenew ventureby also throwinginthecorporatetowel. But you havetobea very goodcook tosustain thebusiness week in week out.Orperhapsyouareagoodfrontof housemanager/businesspartner,abletoofferexcellenthospitality andtomanagestaff,theaccounts,theorderingandthecustomers.Thegoodnews is that more and more people are eating out. Thegratifyingresultis a mushroomingof restaurantstosuitevery culinary whim.Thebadnews is thatthis business is notsuitedto all, despite strongaspirationsto own and runa restaurant.HOWSUITABLEAREYOU?First examine your strengthsand your character -and those in partnershipwith you - by asking yourself thesequestions:Are you fed up with your jobandlooking for a change of lifestyle?Doyousee yourselfopeningarestaurantinabeautifulspotforaneasierlifestyle?Do you want to be your own boss andkeep theprofits?Are you really positive aboutcreating a new business?Are you motivated, organisedand self-disciplined?Haveyoutakenonboardthefactthatyouaresaying goodbyetoasecure pay packet andfringebenefits?Have you discussed with your family how this willaffectthem?As your busiest periodis weekends, how does this tally with familylife?HOWTOSTARTANDRUNY OUROWNRESTAURANT 2R U N N I N GY O U RO WNR ESTAU R AN 1Are yourfamilycommittedtothischangeof lifestyleandwill they backyou wholeheartedly?Doyoulikepeople? Haveyouskillstodealwiththeidiosyncrasies ofboth customersandstaff?Are you a goodcommunicator?Are you prepared for perhaps a long haul beforethe business issuccessful?Doyouandyourbusinesspartner(s)sharetherighttemperamentsforthe hospitality business?Are youa problem-solver? Adecision-maker?Areyouconfidentenoughtosellyourbusinessplantobanks,cus-tomersand the media?Canyou take advice? Learn newskills?Canyou delegate?Canyou prioritise?Howgoodare youat coping with stress?Doyou have good health?Doyou have a warm personality? A hospitablenature?Doyou have thestaminato work long hours?Are youflexible?Calm? Reasonable? Positive?Howdo you really feelabouttheservice industry?Thesequestionsneedtobeansweredhonestly. Yes,itisalonglistofsearchingquestions. You mayhaveneverbeentestedonsomeofthesestrengths butyou will needthemajorityof themtoruna successfulbusi-ness.Itis worthanalysingyourpersonalityandthoseofotherswhoareenteringthebusinesswithyou, both professionally andpersonally tosee ifyouall have thenecessaryattributes.3HOWTOSTARTANDRUNY OUROWNRE S T A URA NTThis analytical list is notmeant to putyou off becoming a restaurateurbutmerelyguide youtobecome moreaware of theskillsoneneedstoaspireto.Ifmanyoftheanswersareinyourfavour,otherattributeswillbeachieved along the way.SEEINGYOURSELF ASARESTAURATEURThinkaboutwhat kindof a restaurateur yousee yourself as. You mightbeonewhooffersacceptable foodandis inthebusinesspurely asamoney-making venture.Oryoucouldbea restaurateurwhosees thetradeas awayoflife. You mayseek tochange,mature,explore newideasandlearnfromotherchefsandrestaurateurs, butalso, throughjudicious manage-mentto, stay afloat financially.Your restaurant will reflectyour personality.Being a restaurateur is a hard, unrelenting,competitive way of lifebutitcanbe hugely satisfying, rewarding, pleasurable, entertaining,intenseandstim-ulating. Thepeople you work withareanimmensely importantfactor inmakingthishappen,aswellascreatinganatmosphereforcustomerstorelax in byofferinggood foodwhich is thoughtfullyandskilfullyprepared.All humanlifeis here. Being a restaurateur requires creativity andpassion,boundlessenergy, commitmentandenthusiasm. Dispensinghospitality iseither the way of life you choose when running a restaurant -or not. If not,is this the right businessfor you?Shouldyoudecidetojointhisway of life,youwillbeenteringoneoftheoldest professions in the world, one thatis very much partof ourlives in allcultures. Pure theatre.4Choosing Y our RestaurantAstheBritishpublic,followingglobal trends,areeatingoutmoreandmore,thetypes andstyles of restaurants have diversifiedtomeetdemand.As mentionedin thePreface onein threeof usare eating outat least oncea week.DECIDINGWHATKINDOFRESTAURANTYoumightwanttorunafastfoodrestaurant;amid-rangerestaurant;afamily-runone.Orperhapsa pasta/pizza eatery; a small restaurantinthetownorcountry;anupmarketonewithall thefripperies.Orwillyoubejoining those who take ona pubandcreate one with good,medium-pricedfoodwithout all the extras?25HOWTOSTARTANDRUNYOUROWNRESTAURANTMaybe you lean towards a restaurantserving ethnic food; a daytime open-ingcafeortearoomserving freshlymade lunchesandteas;a mainlyfishrestaurantoraninformal oneofferingall mannerof inexpensive foodforthe passing touristtrade.Astherestauranttradeisso diverse, youwillhave todoa lotof researchbeforesettling onanarea. Is therea glutof pizza/pasta restaurants alreadyin theneighbourhood? As thisis chain territory, thereis already a plethoraof thesetypes. Ordoyouthinkyoucanoffereven betterpizza andpastathanthosealready onofferandpricethemcompetitively? Thinkoftheibuying power, advertising, big business backing and think again.AsI'vementioned,independentgastropubsare taking ontherestauranttradebothintownandcountry,customersflockingtothemintheirdroves.Itstartedin1990,whenLondon's TheEagle inClerkenwell re-inventedthetraditionalpubbyofferingmainly modern,British,gutsy,unfussyfood. Topingredientsareusedwithaminimumofchefsinanunforced,unpretentiousatmosphere.Itis unfancy, simple, yeteffective,and memorableif in the right hands.Repeat business is guaranteedif you've got the rightfeelandtheright food,agoodselectionof wines by theglass andbottleanddecenton-taplocalbeers. And, it goes without saying, good, knowledgeable, friendlystaff.Will you welcome childrenintoyourrestaurant? InBritainchildrenarelargely seenas a bit of a nuisance, unlike our Europeancousins who tend towelcomechildrenintotheirrestautantswithopenarms.InFranceandothercountries,a familywith children isn't shuntedinto a special area as isthenorminBritain,especially inchainrestaurants.Instead,they aregen-uinely welcomedandgiven anordinarytableanywhere intherestaurant,not just in the back recesses.Childrenare treatedlike customers(as theyshouldbe!)andeat thefoodtheirparentseat. Theyare notfobbed off withchicken nuggetsandchips.Asa result,thesechildrengrow upwitha moreroundedunderstandingoffoodandhow tobehave ina social setting,as theirparentsactually talk tothemratherthanjust reprimandthem.Itis surely time tocreate thesameprinciples for our children and not ban them from restaurants.6C H O O S I N GY O U RR E S T A U R A N TAs MatthewFort, foodjournalist for theGuardian Weekendandpast restau-rantreviewer notedona visit toa hotel restaurant: 'It'shotel policy tobanchildrenundertheage of12, a policy thatI overhead being enthusiasticallyendorsedby a party at a nearby table. Itsent me intoa towering rage. Howtypicallymiddle-aged,middle-class, blinkered,selfishandBritish. Icanthinkof nojustificationformarginalising childreninthis way, particularlyas, in my experience, they canoftengive their elders a lesson inmanners.'I totally agree. To paraphase John Lennon, give children a chance.NEWTRENDSINRESTAURANTSNew, good restaurants are cropping upin surprising parts of the UK. Whatis lacking are good neighbourhoodrestaurants for everyday eating as foundin many other countries.DelicatessenswithrestaurantsDelicatessenswithattachedrestaurantsarealsoontheincreaseandcaneitheropenalldayandeveningor,dependingontheirlocation,onlyduringtheday tocatch thecity's business trade. They have croppedup inLondon,Bristol,Brighton,Chichester,Manchesterand Totnesandinother towns in Devonto great acclaim.Al l -da yc a fe sOthertrendsincludeall-day cafesservingexcellent breakfasts, elevenses(whereelse in theworld except Britain?), brunches,light lunchesandteas.Theymayalsoopenintheeveningas a moreupmarketrestaurantandmaximisethepotentialof thespace tocover thehighcosts of maintainingthe site.Followingthe trendsThesenewtrendsmay beagoodroutetotake. Takeintoconsiderationwhere youare based. Is therea passing trade? You couldoffergoodloose-leaftea, thebestcoffeeanda goodrange of simple, easily-prepared dishesforthosein a hurry. Considerwhether you appeal totheshopper,orthoseon businessin thearea.7H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TTheNewZealand chef. PeterGordon, wellknown for hisfusionfood,is aprimeexample of howtodothiswithstyle, wit, verve andsimplicity. TheProvidores,theaward-winning Londonrestauranthejointly ownswiththreepartners,isaunionof restaurant,all-day cafe,meetingplaceandwinebar.Thecasual, professionally run placeoffersthe lot -laksas, tortillas,soups,freshlybaked breads,bowlsof nutsandolives, sardines, soy braisedduck,NewZealand venison, smoothies, teas,coffees,freshlysqueezed juiceset al_.in thedownstairs TapaRoomfrom9 am to10.30pm. TheProvidoresupstairsoffersanequally eclecticfusionmixofdishesonitsconstantlychanging menu.Beyond the citiesCanthis mix be achieved outside large cities?WestSussex'sChichesterhasa similar (bar thebreakfasts)restaurant. TheDiningRoomis a wine barcumrestaurantofferingnotonly tapas butalsoDanishopensandwiches. Includedonthemenuarecharcuterieandspe-ciallyselectedcheeseplates,salads,starters,game,beef,lambandfishmaincoursesandomelettes.Inshort,theownersmadeadecisiontoappealtoabroadmarketincludingpre-theatrediners.Anditworksbecauseit has researchedits marketand has respondedto it.Small,family-run restaurantswithminimalseatingandofferingterrific,authenticMiddle-Easternfoodareprovingtobeimmenselypopulartoo.Pricesarelow,andtheatmosphere,createdbyhookahs,lowsofasandArabmusic, maketheserestaurantspopularplacestoeat.Sofar,thesearespringingupineastLondontogreatacclaim,andthetrendwill nodoubtfollowtocities withanurbanmix of nationalities.8Location, Design and LegalRequirementsHavingnarroweddownthearea whereyou wish torunyourbusiness youmustthendecidewhethertobuyorrenta property.Firstyou'llneedtocontactcommercial propertyestate agentswhowillofferyou theirconsid-erable wealth of local knowledge. For example:Whatare the trendsin the restaurant trade?Will you need planning permission?How do you negotiate the property ladder?39Youwillalso needtotalk toenvironmentalhealthofficersaboutrequiredstandards for runninga restaurant.Thischapterdeals withthesesubjects andalso provides tips forscrutinis-ing properties, buying, renting,franchising andleases. Italso deals with:local government issues;refusecollection;alcohol and public entertainmentlicenses;fire regulations;disabled law;theSale of Goods Act;thelaw concerningSex DiscriminationandRace Relations Act;the HotelProprietor'sAct;water supply andpest control advice;kitchen layout;ventilation;thevexed questionof music andsmoking;anda final check list.LOCATION,LOCATION,LOCATIONThepopularconceptionforatrulysuccessfulrestaurantis thatthethreeLsaresacrosant.Inacity thisis trueascustomersareclose by, whetherthey live, work or are staying in hotels near to your restaurant.Bycontrast,someof themostsuccessfulrestaurantsareinremoteareas.So howdotheycreatea good,solidcustomerbase? Thankstothesuperbingredientscooked toa high standardandthesheer beauty of thelocation,people will make thedetour toa well-run, perhaps seasonal, restaurant.10 HOWTOSTARTANDRUNYOUROWNRESTAURANTL O C A T I O N ,DESI GNANDL EGALREQUI REMEN T SComparetherestaurantGordonRamsay in London'sChelseawhere youneedtobookmonthsinadvanceandthehighlypopularTheThreeChimneysontheIsleofSkye, a40-seaterrestaurantdownasingle track.Oneis aboutas remoteas it getsontheBritish Isles, theotherby contrastone of the most central.Whateverthelocation, what really mattersis how thebusinessis runoncethe rightlocation has beenchosen.NarrowingitdownYou'vedecidedon yourarea andare thinkingof buyingor rentingaprop-erty. Visit it a numberof timesondifferentdays andtimesof theday. Thiswillgive youa betterflavourof thearea, thetypeof people, theactivity,andwillalsogive youamoreinformedview of theproperty.Doesthelighting needimproving, the decorationupdating,the entrance made morewelcoming and accessible?Ifpossible,sitforatimeintherestaurantsyouhavenarroweddownandimaginea businessworking inthebuilding.Doesitsuityourplans? Isitenhancedby a view, a character? Are theproportions right?Outlineyour planstofriendsorthoseintherestaurantbusinessandtalkoverthespace withthem. Theymay beable tothrowlightona particularproblem thathas so far eluded you. Or they may give goodadvice as to whynotto open such a place in the area.Putyourself in your customers'shoes. If competitorsare basedin thesamearea, aretheretoomanyof thesametypeof restaurantas yours? You maystruggleforbusinessunlessyouoffersomethingquitedifferent.But,equally, you may pick upoverflowfromsuccessfulnearby restaurantsif thepublic see thearea as a place for eating out.There is usually a goodreasonfor a gastronomicdesert.LookatGuildfordinSurrey. Veryfew goodrestaurantsandnothingworthamentionintheGoodFoodGuide. Why? EasycommutingintoLondonwheremanycom-mutingresidentsprefereating outis oneexplanation. Expensivepropertyisanother.11HOWTOSTARTANDRUNY OUROWNRE STAURANTS P O T T I N GC U R R E N T T R E N D SConsumereducationaboutfoodcontinuestoincrease thanksto travelabroad. Theemphasis on food, drink, produce and hospitality in the mediaisalso continuingatanunprecedentedpace. So thequestionyou mightask is 'why can't I get that here?'Expectationsareconstantly rising. Thereare many pricelevels tochoosefromas well as styles of cooking, restaurantdesignandatmosphere. Whowould have thoughtbasement premises could be sold as desirable places toeat in?Stepup Wagamama, therunaway successfulslurping noodlechainwhich establishedtheirrestaurants in basements. Their style of fast, casualandgoodfoodis a runaway hit.Buta wordof warning: few otherbase-mentrestaurants do achieve this. Or upstairs restaurants. People like to seethe whole place at street level.Some currenttrendsto look out for:Highinnercity rents, thanks to corporate businesses vying for hotprop-ertyspotsandwillingtopayovertheodds,havemeantthatrestaurateursare now looking atsuburbs,smaller townsandthecoun-tryside for properties.Individualneighbourhoodrestaurantsare making a comeback thankstothepublic'sdisaffectionwith brandedrestaurantsandpubsas they arelooking for a more personal approach.Dueto drink-drive regulations anddifficultieswith parking, neighbour-hoodrestaurants have theedge over their drive-tocompetitors.Conveyor beltethnicfood -Japanese,Chinese, Thai, Indian-is alsogaining favour with younger eaters.Gastropubshave beenincreasingly popularinLondonforatleast 14yearsandaremaking theirmarkintherestof theUKandIreland.There is more profitin quality foodthanin drink.Run-downpubsare popular premises to buy and turninto wine bars orcafes with theemphasis on bistro-typefood.12L OC A T I ON ,DESI GNANDLEGALR E Q U I R E M E N T SThereis a bigresurgenceindevelopinginnercityareas anddock areassuchas Bristol, Liverpooland Newcastlewith restaurantsopening uptofilldemand.Small,simple,verycasual,minimalcomf ortcombineddeli-cafesareopeningincitiestoattractthebusinesscrowdduringof f icehoursandearly evening.Small nicherestaurantsare openingin medium-sizedandlarge towns.Fast/casualrestaurantsareingreatdemandnotonly bycustomersbutby venture capital investors.Contemporarilydesignedrestaurantswithcleanlines,woodenf loor-boards,goodlightingandmusicattractcustomersandwillcontinuetodoso, say agents.Carpetedpremises,andnotbeingable toseeinsidepremisesf romthestreet,are bigturnof f s.Thef irst24-hourcafesaretoopenoncederegulationof licensinglawstakes place.Onein three Londonerseat outat least once a week. Therest of Britain isslower to react butthis is set to change thanks to trendsin working/leisurepatternsandan older population who canaf f ordto eat out.FIRSTSTEPSTOTAKEONTHEPROPERTYLADDERFirstget yourself a solicitorwhospecialises incommercialpropertytrans-actionsforeitherrentingorbuyinga property.Drawupa businessplanandthenget it approved by your bank.If youare renting, preparea goodpresentationpacktowinthelandlord'sapproval.Usesomegraphicstoinjectthatwow factor,particularly ifthepropertyis in Londonas thatis expectedin thecapital. Outof townpres-entationdoesn'tneedtobeassophisticated,accordingtocommercialpropertyagents.Doputinthepresentation:theanticipatedcovers, thespendperhead, ifyouintendtoturntables(i.e. thesametabletobeusedseveral timesatone sitting)and the proposedaccounting.13HOWTOSTARTANDRUNY OUROWNRESTAURANTGothroughtheYellowPagesorbuyacatering magazine suchasCatererandHotelkeepertosee whotheagentsareinyourarea. Goodagentswillget toknow you, theclient, insteadof a scattergunapproachof introduc-ing youtomassesof propertiesthatdon'tsuityour wishes. Be sure youmakeitclear totheagentwhatkindof propertyyouareseeking.Butbepreparedtobeflexiblewhenviewing propertiesas youmaysurpriseyourself.Firstandforemost,however, theremustbeanexcellent understandingofyour market. This comes firstbeforeentering into any contract,despite theexcitementof fallingin love with a property. Doyou fit into this area? Whowill your customers be?Rentingthep r o p e r t yIf rentinga restaurantpremises,measuretheproperty yourself. Theareagiven by estate agents or landlords could be less and the rentshouldthere-fore to be lowered. Negotiate a lower rent if taking outa long lease.Ifthepropertyneedsrepairsormajorredecoration,ask fora rent-freeperiod or discount until these are carriedout.Always get an agreement in writing for all dealings with landlords or estateagents, especiallyfor any major alterations you wouldlike tomake totheproperty.Check onplanning permissionwith your local council if puttingupnew signage or change of useof a property.Buyingleaseholdorf r e e ho l dFindanarchitectwhose practicedealsinrestaurantdevelopment.Getthemto visit theproperty with you todiscuss any alterations you may liketo make and be guided by his or her expertise.Checkonplanningpermissionwiththeyourlocal councilrechange ofuse,signage andaccess to property via new doors, for example. Instructasolicitor to act for you.14L O C A T I O N ,DESI GNA N DL E GA LR E Q U I R E ME N T S+ TOP TCommunicationis vitalbetweenbuyer and seller.Keep people up tospeed.Discusswithenvironmentalhealthofficersbasicrequirementssuchashandbasinsforstaff,refrigeration,kitchenextractors,fireextinguishers(seepage 66 fora fullerviewof theEHO's role andexpectations).QuestionstoaskBeforebuying or rentingan established restaurantask:Is thearea saturatedwithsimilar restaurants?Aretheownersexperiencingrestaurantburnoutorare thereotherrea-sonsfor thesale/change of lease?Is there localdevelopment whichwill adverselyaffectthearea? Or,con-versely, addto thecustomer potential?Howold is thebusinessandfor how many years hasit beenprofitable?Whatis theprofitmarginfor thepast few years?Whatpercentageof repeat businessis there?Dothe books look accurate? Dotheassets outweigh the liabilities?Ask your solicitor'sor bank manager'sadvice.Haveall renovations beenundertakenwith thenecessary approval?Leases:abriefguideTheaverage leaseholdlease is 25 years withotherleases at20or15 years,butotherleasescanbenegotiatedwiththelandlord.Afreeholdlease'sfinancechangesonly with thecostof borrowing.Landlordsarelooking forlong-terminvestmentsandif thetenanthasnotrackrecord,thelandlordmayaskforarentdepositofayearinadvance ora bankguarantee.15H O W T O S T A R T A N D R U N Y O U RO W N R E S T A U R A N THowever, thetenantmayask fora rent-freeperiodif moneyisbeingspenton the property such as for rewiring, redecorating, new plumbing.Thelease should bea fullrepairing andinsuring one with five year rentreviews, the rentonly increasing, never decreasing.Theamountof rentincrease can be calculated on profitsor acompara-ble methodof calculation.Abreakclause isadvisable. Thisisa walk-away sumshouldtheleasebe broken.A sub-letclause should also beincluded.Itis of course advisable toget professional advice with a lease.Theshorterthelease, theless security there is for the restaurantand itsborrowing power.A longerlease couldbe usedas securityagainsta loanas well as give apsychological feelingof security.Askataxadvisor aboutsettingoff a large rentdepositagainst taxes asthe periodof non-profit making needs to be taken into account.Getthe rentrightas this is key toa successfulrestaurant.Theproperty andtimingf rom viewingtosigningacontractFromviewing tosigning via legalities andlicensing your property canvaryfrom eight to12 weeks depending on thecomplexities of the property andtheavailability of your finances. Itcanalso beaffectedby your council'sefficiency.If therestaurantis a shellandneedsplanning permissionandlicensing itmay take threeto five months.Changeof use can take one month.Good communicationis vital with all parties involved.FRANCHISINGABUSINESSThemarket for franchising a restaurant business is still within thefastfoodarenawiththelikesofDomino'sPizza,DunkingDonutsandBaskin16L O C A T I O N ,DESI GNANDL EGALRE QUI RE ME NT SRobbinstochoosefrom.Mid-marketfranchising hasbeenconsideredbybetterqualitycompaniesbutlittle hasappearedtodate.Franchisingcanapply toany type of restaurant.Theconcept behindfranchisingis takinga provenformatand, torepli-cate it, a franchisee invests in thesettingupof thepremises(McDonaldsset-upscan be up to 250,000 to kit outone of theiroutlets)andsharesthe profits.Itis a very safeway of openinga restaurantif thespiritof beinganentre-preneurdoesn'tappeal.Customerscomefromday oneas theyknowandliketheproduct.KentuckyFriedChickenis acase in pointversusBert'sFriedChicken. Ninety-five percentof franchises are profitable in year five.Butitis notfor thework-shy. Ittakes extremely hardwork, the franchiseeis regularlycheckedand the rulesof operationare verystrict.Thetrendtowardsfranchising hassloweddownquitedramatically,how-ever, thanks to goodemployment duringa stable economic cycle.LOCALGOVERNMENT ANDYOURBUSINESSYou needtoestablisha relationshipwithyourlocalauthorityforplanningpermission,buildingregulationsandany structuralchanges you wishtomaketotheproperty.Are youconvertinga property?Custom-buildingone?Itis vital togettheiradvice and/orpermissionbefore embarking onany building.Getapproval for changeof usepermission if converting a property.Considerconsultingaprofessionaltosortoutthepaperworkiftheprocess is complicated -and for your sanity.If youwish tolodgea complaintagainst your local authorityif youfeelthehandlingof yourapplicationwas badlyundertaken,contacttheauthorityfirst,thena higherauthorityif still dissatisfied. Yo. may. wishtodiscussthepossiblestepswithyoursolicitorora professional plan-ning consultant.17SCRUTINISINGTHEEXTERIORANDINTERIOROF APROPERTYView propertieswithafine-toothcombattitude. To help you tonegotiateyourpricehaveasoundchecklistandalistofitemstodiscusswithbuilders for quotations:Are there cracks or any visible structural problems?Are theceilings flaking? Any damp patches?Istheflooring,particularlyinthekitchenareas,suitableandingood condition?Is there good drainage?Doestheflooringslope, or have holes, is it uneven, are therechanges offloorlevel?Are kitchensurfaces and equipment surfaces in soundcondition?Is thereadequate lighting or does new lighting have to be installed?Dostairs have handrails?Are windows in good order? Check for rotting wood.Is the roof sound?Does the whole propertyneedto beredecorated?Is there good ventilation?Is there an adequate supply of hotwater anddrinking water?Is appropriate fire safety installed?Ifequipmentsuchas fridgesandcookersareincludedinthedeal,arethey moveable toclean behind,in good working order, well maintainedand clean?KITCHENLAYOUTTo provideasafeworking environment,andtoavoid crosscontaminationof foodat all stages, thedesignof your kitchenandservice areas is of greatimportance. Yourlayout should be builtaroundtheoperationandnottheother way around. Pointsto considerinclude:18 H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TLOCATI ON,DESI GNANDLEGALREQUI REMENTSThesame basic rules apply irrespective of size or scale of the establishment.Anolderbuildingsuchasaseventeenthcenturycottagewitharestaurantmay nothave theperfectlayout. Takethisintoconsiderationwhenlookingatpropertiesanddecideif theareascanbemadetowork -or not. Can staffin the working area carry work outsafely?A logical flowof operationof delivery, storage, prepping,cooking, serv-ing,disposalof waste,rubbishstorageandcollectionwithasmanyclearlydesignatedareasforeachstageofworkisnecessary toavoidcrosscontamination.Forexample,a boxisdeliveredandis putdownonthecounterwherechickenis being prepared. Notonlycan thebox havedirtonthebottombutit may now have picked up raw chicken bits. That box may be moved toanotherpartofthekitchenandthecrosscontaminationisnowinitssecond stage.Thekitchencountermay also becontaminatedfromdirtonthebox,thebox perhapshavingbeenputdownon thepavementpriorto beingtakenintotherestaurant.Allofthiscanbeavoidedifalogicalflow-andcommonsense -is adhered to.Is space limitedso thatefficiencyis impaired?Is cleaningdifficult?Is theresufficientspace for people towork at benches(counterstoyouand me)andother fixed equipmenttoallow otherpeople to pass?Thelayoutofcookers,ovens,fryers,refrigerationandotherhotmachinery with or withoutmoving partsmustbe taken intoaccounttoavoidcongestion.VentilationrequirementsGoodventilationprovidesacomfortableworkingenvironment,reduceshumidity,removescontaminatedgreasyair,steamandcookingsmells. Italsopreventscondensationandwill ultimatelyhelponredecorationandmaintenance.19H O W T O S T A R T A N D R U N Y O U RO W NR E S T A U R A N TCost-cutting canresult in hightemperaturesandhumidity with increasedriskof foodpoisoning.Goodmaintenanceis essential toremaineffective.Externalductsrequireplanningpermissionin mostcases andneedtobepositionedcarefullyto avoid falloutwith neighbours.There are three main types of ventilation:1.Naturalventilation: only suitable for small-scale operations, this systemisseldomidealas itrelies onopenwindows anddoors, is subject toweatherwhimsandis leasteffectiveinhotweather. Meshscreeningisnecessary to keep outflying insects.2.Extractonlysystem: asimple, inexpensive techniquewhichusesanextractorfantodrawouthotorstale air,cooking fumesandsteam.Usefultoensurethatcooking smellsare preventedfromspreadingtootherrooms.3.Combinedextract/inlet system: the mostefficientsystem with thefullestcontrol,it balances theflowof air inandoutof thearea. Thedesign isbasedona combinationof ductingandfanexhaustingthehot,dampandsometimesgreasy air fromthearea withcontrollable replacementfreshair.HygienefacilitiesAdequatewatersupply,wash basins,sinks,washing upequipmentandgood draining are of paramount importance in setting up your restaurant.WatersupplyanddrainageDrinkable(also knownas potable)water mustbeusedtoensurefoodisnot contaminated. Inaddition:Only drinkablewater can be used to make ice cubes.Waterfromastorage tank or private water supply hastobemonitoredona regular basis.Innew premises,drinking water installationshouldbe disinfected. Yourlocal authority or architect can advise.20L O C A T I O N ,DESI GNANDL EGALR EQ U I R EM EN T SDrainagefacilities mustbedesignedandconstructedtoavoidtheriskof contamination offoodstuffs.All sink, wash basinanddishwasherpipesshoulddischargedirectlyintothedrainage system througha trappedgully to preventfoulodours.Asthisisacomplexareawithfloorchannels,deepsealgulliesandsewers, docontactyourlocal authorityfor further information.SinksandwashingupequipmentAdequatefacilitiesforfoodpreparation,staffuse,crockery, generalclean-inganddisinfectingof worktoolsandequipmentallrequireasupplyofhotandcold water, andmustbeeasily cleanable and well sited.Lavatoriesmustnotbe next to foodhandling space.Handwashingfacilitiesmustbeprovidedinprepareaswithhotandcold water andmaterials for cleaninghands.Sinks for washing foodmustbeseparate fromhandwashing sinks.Separatehandwash basins are recommendedto be placedin each workandfoodserviceareaincludingthebar,andpreferably attheentranceof thekitchen.Stainlesssteelwashbasinsarestronglyrecommendedbutglazedceramic basinsare acceptable. Domesticsinks are notacceptable.Wash basins withfoot, knee, 'automatic operated' tapsor mixer taps aredeemeda goodidea butare notnecessary.Positionhanddryerscarefullyso thatdirtandbacteriaaren'tblownaroundfoodareas. As theyareslowandinefficient, perhaps putting offfrequenthandwashing, disposable towels are your bestbet.Oneormorecommercialqualitystainless steelsinksarerecommendedforthemainsinks withone or moredeepsinks for potwashing.Inlarge catering premises separate sinks are requiredfor each of the fol-lowing: vegetables,salads, meatandfish.2 1H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TAdishwashingmachinewithafittedwatersoftener(forcertainhardwaterareas)is recommendedforall butthesmallestoffoodpremises.Commercialdishwasherstake very little timeincomparisontodomes-ticdishwasherstooperateandaredesignedwitha simpleinteriorandsimplecontrols.A doublesink with doublestainless steel(never wooden)draineris alsorecommendedandmay beusedinsteadof adishwasherbutwhy behard on yourself?Thebar might have a glass washing machine and/or a sink (single/double)with double drainer.Aseparatesinkfor mops, bucketsetcshouldbelocatedoutsidethefoodarea.Thesearerecommendationsonly. TakeadvicefromyourEnvironmentalHealth officer,particularlyif you have small premiseswith littlespace.R e f u s e s t o r a g eEven smart restaurants like Rick Stein'sSeafoodRestaurant in Padstow havedifficultieswith rubbish due to lack of space outside. If you do have the spacedo position free standing bins well away fromthe view of diners as this can beveryoff-putting.Somerestaurantsdon'tfollowthisaestheticallypleasingadvice. If you want repeat business place bins strategically if possible.Don't allow food waste and other refuse to accumulatein food rooms.Waste must be in closed, sound, easy to cleancontainers.Free-standingor wall mountedlidded holders for plastic bags shouldbeprovided,or a footoperated plastic lidded bin lined with a plastic bag.Remove fullbags, andclean containersandsurroundingarea frequently.Refusestorage and removal must be arranged and designed to be protectedfrompests(thosepesky flyinginsects, cats, dogsandfoxesinparticular)and mustn't contaminate premises, drinking water or equipment.Eithersiterefusestorageexternally witha roofed shieldif space allowsor in a non-foodarea with plentyofventilation.22L OCAT I ON,DESI GNANDLEGALRE QUI RE ME NT SKeep wheeliebins clean andclearly marked with therestaurantname.Forlarger businessesbulkcollectionofrefusecanbearranged.OnelargeLondonrestaurantmixesupitsrefusecollectionanduses120local authority paid bagsa week ata costof over 1,500a year. Pigswillbins, bottlesandboxesarecollectedbyanotherfirm. Thepigswill is'cooked' in vats by steamandfed to pigs.Contactyourlocal authorityforwhatisonofferasthetypeof serviceofferedvaries as well as charges. Contactthemtoofor disposalof whitegoods(fridgesandfreezersfor example).PestcontrolKeepingthoseinfestationsof rodents, insectsorotherfoodpestsoutisapriority:Anyinfestation will leadtocontaminationof foodandfoodsurfaces,damageof food stocksand the building.Tocombatthis, themaintenanceof highstandardsof cleanliness, goodhousekeeping,foodstorageandproofingofthebuildingshouldbeundertaken.Bothcountryandtownhave verminproblemswithcockroaches,mice,pharaohants(tiny brownants)andrats,all of whichcanbedealt withby local authority or private contractorexterminators.Thecleaner yourrestaurant,andthatmeansbehindfridgesetc wherevermin love to congregate, theless problems you'll encounter.+ TWGlosspaintencouragescondensation.Artexceilingsarenot accepteddue todiffi-cul tywithcleaning,andpol ystyrene oracoustictilesareunlikelytobe passed.Ceiling tilesshould be fireretardant.23FIRSTIMPRESSIONSFirst impressions of your restaurantare vital.Is it welcoming andwell kept?Is it well lit?Is there any cracked paint?Are the windows clean, theentranceswept and door handles polished?Are the menuand times of opening visible?Is theentrance to the car park clearly signed?If you have a garden andpaths are they well maintained?Iftheseareignored,customerswill ignoreyouandgoelsewhere. Iftheproperty looks dirty, they'llwonder what the kitchens and toilets are like.All propertiesneedthebasics over andabove theobvious such as a diningarea,kitchenandloos:officespaceforpaperwork,goodstoragespaceotherthanthekitchen for supplies including wine, rubbish(where tostoreit untilcollection), stafflockers or storage area for personal belongings.+TOP TK e e p youre ntrance clutte r-fre e fore asyacce ssforable -bodie danddisable dcustomersalike.LICENCESAlcohollicencesUnder theLicensingBill2003, significant changes were made by thegov-ernmentincluding thatit is councils, notthemagistrates' court, who nowdeal withlicences.24 HOWTOSTARTANDRUNY OUROWNRESTAURANTL O C A T I O N ,DESI GNA N DL EGA LR E Q U I R E M E N T SA premiseslicencewill berequiredby pubs, restaurants, businessesoffer-inghotfoodbetween11pmand5am,hotels,guesthousesandotherplaces thatsell alcohol.A personal licencewillbeneededbyanyonewhoallows thesaleof alco-holandisvalidfortenyears. Therearevariousdutiesonholdersofpersonal licences andthecourtcancancel your licence if you areconvictedof certainoffences.To get a personallicence you mustbeover18, nothave any relevantcrimi-nalconvictionsasspeltoutintheAct,possessanapprovedlicensingqualificationandpay therequired fee.Thefourlicensing objectives are:1.Preventionof crimeanddisorder.2.Preventionof publicnuisance.3.Publicsafety.4.Preventionof harmtochildren.PremiseslicencesA premiselicencecanbegrantedeitherforaone-offeventor indefinitely.Applicantshavetosubmita planof theirbuilding,anoperatingschedule(abriefdescriptionof howthepremiseswillbeoperatedsafely)anda fee,expectedto be in the regionof 500 maximum.Contactyour localauthor-ity to find outthecost.TemporaryandoccasionaleventsLicenceswill notbeneededforsmalleventswhereless than500peopleare likely to attend, and theeventlastsfor less than 72 hours.Someonewitha personal licence willbeable toholdupto50 temporary oroccasionaleventsayearatotherpremisesthatarenotlicensed.Non-personal licence holders will be able to hold up to five temporary events a year.25H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TA Temporary Event Notice must be given to the Council beforean eventof this sort can be held and the police may object to it on crime anddisor-der grounds.Contactyour districtcouncil for guidance on how toobtain a licenceandyour local trading standards officerfor alcohol measurement guidelines.PublicEntertainmentLicencesIf music, entertainmentor dancing are to be held, a PublicEntertainmentLicence may be required. Contact your Environmental HealthOfficerwhowill also give advice on prevention of noise nuisance.Notificationof AccidentsEmployers mustcontact the Environmental HealthOfficeabout any fatal-ity,majorinjury,accidentordangerousoccurrencethathappenson theirpremises,undertheReportingofInjuries,DiseasesandOccurencesRegulations1995.FireCertificationSometypesof foodbusinessesrequirea FireCertificate.Consultyourlocal Fire PreventionOfficer.MUSICAs a restaurantcritic I receive letters on many aspects of restaurantsfromdisgruntledcustomers,withmusichighupontheirlistof pethates.Oftenthemusicis played,seemingly,forthebenefitof thestaff: veryloud and inappropriate. When I do suggest it might be turned down, I amoftenlookedat withcontempt. Themessageis thatIaminterruptingtheir party.Musiccanofcourseenhancetheatmosphereofarestaurant,puttingpeopleinthemoodforagoodtimeassoonastheyenterthedoor.Conversely, it can alienate customers. If they need toshout tohave a con-versation, clearly this is unacceptable.26L O C A T I O N ,DESI GNANDL EGALR E Q U I R E ME N T SIfyourrestaurant'satmospherecreateshushedtonesyoumay wishtoinjectsomesuitablemusic,butdolistentoyourcustomers.Oftensilence, thatrarecommodity,is golden. Andappreciatedinourincreas-ingly noisy society.If you play recordedmusicin therestaurantyou will needto have a licencefromthePerformingRightsSociety. Thetariffappliestoperformances inthe UKof copyright music within theSociety'srepertoireat hotels,restau-rants, cafes, fastfoodoutlets, banqueting suites, functionrooms,boardinghousesandguesthouses.Currently,only theatrerestaurants,theatrecafesandsimilar premises are exempt.Email: musiclicence@prs.co.uk, contactwww.prs.co.uk orcall(0800)0684828 for advice.Forlive musicsee Licensesabove.SMOKINGThereis currently(2004)nolegislationbanningsmokinginrestaurants,pubs,cafesandsimilarestablishmentsas inIreland,butdokeepan eyeopenfor this legislation which is a hottopic in government circles.Mostrestaurantsoperateasmokinganda nosmokingarea witha banoncigarsandpipes.Othershaveanoutrightbanandsomeallow smokingaftera certaintime.Some restaurateursadda noticeonthemenuforcus-tomerstorespectothersdining neartothemin the vague hopethata civilattitudewill come to thefore.Therearegoodairextractionsystemsavailable whichmayremovethosenoxiousfumesthatliterally get upthenosesof non-smokers. Thedebate isaheatedone,withmanycustomersopposedtoany smokingon premises.Increasingnumbersof customersenquireaboutsmoking before bookingandwill notbook if smoking is allowed. Andvice versa.Staffsmoking is a real problemtooas they congregate(usually) outsidethekitchendoorinviewof passing trade. Thisis unacceptableas itgivesthe27H O WT OS T A R TA N DR U NY O U RO W NR E S T A U R A N Twrongimpression. Smokingplays real havoc withgetting themost out offoodandwine as it dulls thepalate. If your chefssmoke what does this sayabout their tasting ability?Non-smokingstaffarepassive smokers,a healthrisk whentaking onarestaurant job. Couldlegislation followas this is a human rights issue?COMPLYINGWI THACTSDisabledaccessand facilitiesDoconsulttheplanningdepartmentregardingdisabledaccess,spacewithintherestaurantandtoilets designedfor wheelchair access. Anexist-ing restaurantinaneighteenthcenturybuilding, for example, maynotneed to have a ramp butany new builds have to conform to disability laws.Amendmentsto TheDisability DiscriminationAct1995 which came intoforcein October 2004 requireyou toaddressany physical features whichmake it difficultto use your restaurant. These include:steps, stairways, kerbs;parking, exterior surfacesand paving;building entrances and signage;toilet and washing facilities;publicfacilities;liftsandescalators.Insomecases it may be unreasonablethroughcostor planning legislationto make these changes. Contact your local authority or the Papworth Trust:www.papworth.org.uktofindoutaboutrequirements,guide dogs for theblindandotherissues thataffectdisabled people.Forfurtherinformationlog on to www.disability.gov.ukThere are eight-and-a-half milliondisabledpeople in the UK, withone infourcustomersbeing disabledorclose tosomeone who is. Thefollowingarerecommended:28L O C A T I O N ,DESI GNANDL EGALR E QU I R E ME N T SThinkandplanaheadtomeettherequirementsof yourdisabledcustomers..Don'tmakeassumptionsaboutdisabledpeoplebasedonspeculationand stereotypes.Communicatea positivepolicy toprovidingservices todisabledcus-tomersandstaff.SaleofGoods andTradesDescriptionAs a trader you mustbeaware of theSale of GoodsAct which implies thatthereisanunexpressedcontractwhenyouacceptacustomer'sorder.Thecustomermay eitherdemanda replacementby rightorrefuseto pay.Someexamples:Ifthegoodsdon'tcorrespondwiththedescription,eg, roastchickenwhich has beenpoachedinsteadof being grilled.If artificial creamis offeredinsteadof freshcream.If thefoodis inedible.Evenif thecustomerhaspartly orwholly consumedthefooditmakes nodifference. The Trades DescriptionAct makes ita criminaloffencetomis-describe goods or services. Watch outfor thefollowing:wording on menusand wine lists;describing foodanddrink tocustomers verbally;describing services, eg. cover andservice charges or extras;describing services onoffer.Thedefence,if someoneis chargedunderthe Act, is toprove thatreason-able precautions were taken and:theresult of pure mistake;theresult of information fromsomeoneelse;29thefaultof someone else;theresultofaccidentorothercausebeyondthecontrolofthepersonconcerned;thepersonchargedcouldnotreasonablyknowthedescriptionwasmisleading.For TradingStandardsalcoholrequirementsseeChapter10(wineandotherdrinks).DiscriminationTheSex DiscriminationActandtheRaceRelationsActbothlegislateagainstdiscriminationon groundsof colour, race, creedor sex.Refusingservice tocustomersof particularcolour,race,creedor sex.Refusingservices byimposingunjustifiableconditionsorrequirementsforthese same groups of people.Victimisationvia refusalof entry, providinga poorservice to ethniccus-tomerswhich is inferiortothoseofferedtothegeneral public,or whichmay only be available at a pricepremium.TheHotelProprietors ActThehotelpremises'managementis undernoobligationtoserve anyoneunlesscustomersarestaying ina hotelorsimilar establishment. Reasonsforrefusalcouldbe:There is nospaceleft.Thepersonis drunk.Theperson is undertheinfluenceof drugs.Thecustomer is notsuitably dressed.Thepersonis a knowntrouble-maker.Theperson is anassociate of a known trouble-maker.30 HOWTOSTARTANDRUNY OUROWNRESTAURANTL OCAT I ON,D E S I G NANDLEGALRE QUI RE ME NT SThepersonis underthelegal minimumage forlicensedpremisesordoes notfit intotheage policy set by thepremises.UndertheLicensedPremises(Exclusionof CertainPersons)Act1980thelicenseehas therighttorefuseentrytopeoplewho are drunk,vio-lentanddisorderly,quarrelsomeor appear unableto pay.Itisanoffencetosellintoxicatingliquortoadrunkpersonorthoseunder18 years of age.PRICEMARKING(FOODANDDRINKON PREMISES)ORDER 1979Pricesoffoodanddrinkmustbedisplayedinaclearandlegibleway bypersonssellingfoodbyretailforconsumptiononthepremises, butthisdoesnotapply tomembersof a clubortheirguests,instaffrestaurantsoringuesthouses,howevercommunicativeandcivilisedthatwouldbe.Privatecatering menusare also excluded butthefollowingprovisions mustbe taken intoaccount.Menuanda drinkslistmustbeat theentranceor beable tobereadfromthestreet.If partof acomplex,thelistmustbeshownattheentrancetotheeatingarea.Bothfoodanddrinkmustbeincluded. Tabled'hote(setmenu)pricesmustbegiven. VAT mustbeincludedanda service and/or acover charge mustbeshownas an amountor a percentage.Inself-servicepremiseswherethecustomerchoosesfood, pricesmustbeshownat theentranceunless theycan be seenat thecounter.YOURCHECKLISTAskyourself:Have you registeredyour premises?Do the design and constructionof your premises meetlegal requirements?Have youconsideredall thehealthand firesafetyrequirements?Do you and yourstaff understand theprinciplesof goodfoodhygiene?31Have you andyourstaff hadfoodhygiene training?Haveyouconsideredwhatfoodsafetyproblemstherecouldbeateachstage of thebusiness?Haveyou putthe necessaryfoodsafety procedures in placeandare youmaking regularchecks toensuretheyare working?Do you describefoodanddrink accurately?Doyou needtoapply for a licence tosell alcohol?Have you registered asself-employed?Doyou needto registerfor VAT?Are you keeping recordsof all your businessincomeandexpenses?Are youkeepingrecordsof youremployees'payanddoyouknow howto pay their tax and NationalInsurancecontributions?32 H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TFinancing YourBusinessAsKitChapman,restaurateur/ownerof TheCastleHotel, Taunton,Somersetandof theBrazz brasseries, andcountlessothersin thebusinesssays, 'making money is the first priority.'Otherreasonsforopeningarestaurantcomeintotheequation.Theyincludecreatinga restauranttosuityour personality,offeringhospitalityandbeing in a traderathermoreinterestingthantheaverage thanksto itshigh profile, sexy image. Is openinga restaurant a romanticideal or a prof-itable business proposal? Can the two meet?CREATINGINCOMETheadviceofsuccessfulrestaurateursistoneverlosesightofyourlivelihood -and thatof your partners,familyandstaff. Wise words. It is so334H O W T O S T A R T A N D R U N Y O U RO W N R E S T A U R A N Tseductivebeing yourown bossinthisentertainment/foodworld thatit isquite easy to lose the prime plot: your income.Curbyournaturally generousinstinctswithfriendswhentheyvisityourrestaurant. Itis all very wellofferingwineonthehouse, a meal,coffees.Theymaycometoexpectit,suchishumannature.Instead,becomeshrewdand beaware of margins andcurb your bountiful nature.Take a leaf outof corporateindustries'practiceandhave a loss leaderonthemenu.Shoparoundfor good, quality produceandequipmentratherthansuccumbingatthefirstshoppingexpeditiontothejauntiestfridgewithall thebellsandwhistles. Negotiate.Haggle.Itstill doeshappeninthewesternworld.Bearmedwithgoodinformation,prices,andanunderstandingof themarketwhendealingwithany partof therestau-rant's finances.Inthehoneymoonperiodthecuriosity value of a new restaurantbringsindiners.Oncethisis over thefinancepartof thebusinessmay needtoberevised, andlong-termstrategies withstages of development built intothe picture.Stepstodevelopinga financialbaseSomerestaurantsdon'tlosethathoneymoonperiodbutcreateenoughinteresttoattracta growing bandof loyalandnewcustomers. Theycon-tinuetodevelopa working financialbaseandhave putintopracticetheartof producingconsistentquality food, goodservice, conviviality, atmos-phereandvalueformoney.Constantlyanalysing,updatingandre-inventing yourbusinessis as importantas neverlosingsightof theartof hospitality.This financechapter deals with:raising capital;creating a business plan;forminga company;34FI NANCI NGY O U RBUSI NESSplanning overheads;trading projections;financial records;and tips.Itdeals withissueslike raisingcapital,businesspartneradvice, capitalexpenditureandstepsinfunding. Accountancyandgettingtogrips withgoodbook-keeping practice,legalities, insuranceand VAT are otheressen-tials for soundfinance.Thechapteralso discusses service charges, menusupplementcharges andwhat theseextras, hidden or not,say aboutyourbusiness.Helpwiththenationalminimumage payments,pensionsandotherstaffissues are in Chapter8.ABUSINESSPLANFirst, youneedtowork outyour initialproposalof thetypeof restaurantyou wish to run. Forexample:Its name, location,concept.Who your customers will be.Whatis on your menuand your drink list.Yourstaffingand purchase costings, rental andprojectedincome per day.Businessplans are recommendedby mostexperts,thebanks in particulardemandingthemforfurtherdiscussion.However,manyentrepreneursoperatewithoutthem.Butif youare not100%surethatyourrestaurantplan will work without one, thenthinkof a business planas being anasset,yourstrength.Theseplansare,of course,nota guaranteeforsuccess butbyidentifyingthestrengthsandweaknessesof youridea, you will greatlyimproveyour35H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N Tchancesof succeeding. Theplan, however, needs updatingas it is a work-ing tool. It'syour map tosuccess. But therecomes a time to stopplanningand to put your goals intoaction.To buildon the initial proposal follow these steps:Executive summary: describe the business in general terms in approx-imately one page.Overview: yourmission. Whatare you looking toachieve? Why do youthink it will work?Introduction: yourrestaurant'spurpose, yourexpertiseandhistoryandthoseof your partners, yourstaff(shouldyou haveacheflinedup,forexample),andyourcriticalsuccessfactors(whatis goingtomake it work).Businessenvironment:yourmarketresearchintoyourtypeofrestaurant, its potentialrelocation,problemsandpossiblesolutions,the competitionand an expansionpotential(runningoutsidecatering,forexample).Make your presentation professional-looking. A messyjumble ofideas randomly puton paper will notimprove anyone'schances of get-tingtothenextstageof discussions.Instead, chooseabusiness-likefont,putideas underheadings,check thespelling andpresentitin atitledfolderwith perhapssomeclear drawings. Makeseveralcopiestohandout.FORMINGACOMPANYIf you decide to operate as a company, you will have to pay corporationtaxandmake company tax returns. ThecorporationtaxselfassessmentfromtheInlandRevenuedeals withthis.Soonaftertheendof theaccountingperiodthey will send you a noticeasking you to make a company tax return.You mustnormally pay any taxdueby nine monthsandoneday aftertheendof theaccounting period.If you have notyet completed your companytax returnyou must make an estimate of what you think is due and pay that.36F I N A N C I N GY O U R BU SI N ESSSenda completedtax return, including youraccountsandtaxcomputa-tions, to theInlandRevenue by thefilingdate whichis usually12 monthsaftertheendof theaccounting period. If thereturnis notdelivered by thisdate, a penalty will occur.Maintainproperbusinessrecordsand keep these for six years aftertheendof theaccounting period.Speaktoyouraccountantortaxadvisor todecideontheaccountingperiodandtellyourtaxoffice. Work outthedatesby whichyou needtopay tax and make your company tax return.Planahead to make sure thataccounts andtax computations are preparedingoodtimefor this, butalways communicatewithyourtaxofficeif youfall behind. Make sure it'sa two-way dialogue for peace of mind.CALCULATINGMENUCOSTINGSANDPRICESGettingmenupricing wrong has beenthedownfallof many a new restau-rantand,as a generalruleof thumb, successful restaurantswork ona65percentgross profit(GP),excluding VAT. Onceyouhave calculated thecostsof any dish,multiply themby 3.3. You can'tgo toofar wrong but, ofcourse, there are exceptions to the65 per cent gross profitrule.Tocalculate your grossprofitmargin, itis firstnecessary toworkoutthecostof eachdishonthemenu.Butfirst,getpricelistsfromwholesalecompaniesandothersuppliers including pricinggoodsatretailshops,farm shops, specialist mail order food companies andother sources such asvan drivers delivering produce in the area.If youare going tospecialise infreshfish,forexample, are thereany goodsuppliersintheareaordoyou needtosourcequalityfishfromfurtheraway? Askforadvice fromafriendly,trustworthy restaurateur whotheyuse, look up fish suppliers in theYellowPages in your area andfurtherafieldlike LondonandBrixham.37Workingout thecostsCalculate everything thatgoes into that particular recipe including the gar-nishesif usingany, thebutterthefishmightbecookedin, the VAT andtimeinvolved tomake thisdish.Itobviously takes longertomakea reallemon tartthanscoop out bought-inice cream.Askyourselfthefollowingaftercalculating therecipecostsandmenuprices:*TOP TIfbuyinganexistingbusiness,approach thebusinessfigureswithcaution. Theymaynotalwaysbeasbuoyantas theyappear. Studythemwitha finetoothcomband ask pertinentquestions.Atthebeginningof yourbusiness,therecouldbeadegreeof wastagewhich will have an impacton your GPmargins,but .this will be resolved intimewith goodmanagementpracticesonce the businessgetsgoing.Someitemswill be cheaperthanothers to prepare.Dooffsetmoreexpen-sivedishesby lowering theGPonthesedishesandincreasing theGPonthecheaperdishes.Forexample,itis hardtomake65 percentGPonsomedisheswhich usemoreexpensive meat,game,shellfish, fish andfoiegras. Thisis loss-leader practiceandwillhelptoincreasethesales ofthemoreexpensiveitembutshoreupthecostby makingalargerGPoncheaperdishes.Beforethenetprofitis calculated thecostof overheads is deductedfromthegross profitincluding wages andrunningcosts, leaving you with an averageprofitoftento15 per cent. Then deduct the loan repayments, interest and tax.Bearinmindthatinterestratescanvary,andtheamountspaidtostaff,theownerandpartnersareequallyunknownattheinitialstageof the business.38 H O W T O S T A R TA N D R U N Y O U R O W N R E S T A U R A N TCan the market withstandmy pricing?Whatis thecompetition like?FI NANCI NGY OU RBUSINESSWi n e b a r / r e s t a u r a n tt r a d i n g p r o j e c t i o n sMon -ThursMorn i n g cafeT/o lun ch*Lun chEve n in g me alW i n ebarTotalFri d ayMorn i n g cafeT/olun chLun chEve n i n g me alW i n ebarTotalSaturd ayMorn i n g cafeT/o lun chLun chEve n in g me alW i n ebarTotalSun dayBre akfst/brun chLun chW i n ebarTotalCove rs2020152020Cove rs3020204050Cove rs3510454550Cove rs204030Cost34.5010255.50Cost34.5010257.50Cost44.50i o25i oCost8.501510Multi ply by44444Multi plyby11111Multi plyby11111Multi plyby111Total2403606002,0004403,640Total90902001,0003751,755Total140454501,1255002,260Total1706003001,070Totalforthe we e k8,725Mon thlyave rag e 37,808*T/O:takeoutlunch39H O W T O S T A R TA N D R U N Y O U RO W N R E S T A U R A N TMonthly costsRent/ratesWagesFoodWineUtilitiesLoan servicing2,5008,00010,0006007502,500LaundryBreakagesPromotion300200500Total25,350Monthly average less monthly costs 12,458 less VAT @ 17.5% = 10,602Covercharges,menusupplementcharges andservice chargesThese charges can soundtwo alarm bells in customers' minds: once whenlooking at themenuandseeingextracharges for bread,steeppricingforvegetables and the so-called optional service charge. Thenext time is whenthey ask for the bill and see hidden charges added on the total.You may lose customersin thefirstinstance,as seasoneddiners-outcanspotthoseextrachargesa mile off while scrutinising themenu. Theywillthink twice about going through your doors. Theresentment that is causedwill rocket when those hiddencharges are there in black and white on thebill. Those customerswho feel they have been rippedoff will hardly return.Customers naturally prefer to know in advance about all the charges.CoverchargeTheold-fashionedcover charge is sadly alive and well. It is mainly found intouristhotspotswhere unsuspectingtouristsfromhereandabroad maynotnoticeit. Therestaurantcovers itself by saying it is for linen, glassesandstaff.Really, any excuse will do. Butthenthatsame restaurantwillcharge for breadand add a service charge. It is an iniquitouscharge whichI and countless other customers -and, to be fair, many restaurateurs -findtotally unacceptable.40F I NANCI NGY O U RBU SI NESSExtrachargesAmedium-rangePortsmouthfishrestaurantIhave reviewedhasanicelittlegreedypolicy: chargethemfor thesauces togo withthefish,chargethemfor thebreadandthevegetables onalready high pricesandslap on a15% service charge.Theprice per head for a very dull two-coursemeal of no particularexpert-iseatthisrestaurantis thepriceforasuperbthree-coursesetmenuwithwell-chosenproduceatGordonRamsay'sRoyal HospitalRoadLondonrestaurantat lunchtime. Nocontest.AnotherrestaurantinthesameareaasGordonRamsay'shasasetmenubutmany of thedishes featured attracta supplement,boostingthe price bysome 20-25 percenton thetotalbill. Thisis unacceptable practice. Fine,maybe one or two dishes -the Scotch fillet of beef, the North Sea lobster-willbemoreexpensivetobuyin,butwithall thesesupplementsitis farbetterandfairerto have ana la carte menu.If youfeelyoumustcharge for breadthenmake sureitis excellent bread.If youfeelyoumustcharge forany extras,doofferthevery best produce ifyou want repeat business.Servi cechargeTheservicechargeis a vexedquestionand,beforewe go intoit, there isnolegalcontrolonhow youcharge forservice. Thischarge,addedtothebillbefore VAT isadded,is usually12^ 2percentofthebill,althoughitdoesrise to15 percent. Theword'discretionary' usually goes beforethispercentage.However,mostpeoplepay upwithoutfussanddon'tquerythesaid service.This is a very commonpractice andin lower priced restaurants this may bea fixed amountaddedtothebill,butin many restaurantsitis that..0.1/ 2 % .Some restaurants pass it on totheirstaff(waiting andkitchen)if wages arelow,andthisis promisedat thestartof employment, orit is seen as part oftherevenue if staffare better paid.41H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TMoststaff,however, preferthetipsandadistributionof thecharge.But,increasinglyin this moresophisticatedandenlightenedeating-outclimate,customersarecatchingontothefactthatif theypaytheservicecharge,they don'tleavea tip. Why pay twice? Theyassume thattheservice chargeis just that: themoney going directly to thewaitingstaff.Customersare within theirrightsnottopay theservice charge if they havebeenletdownby poorservice. This, of course,may notbethefaultof thewaitingstaffbuttheslowness of thekitchen.Myadvice is toremovetheservice charge withoutquibbling if thecustomerasks forit.V o l u n t a r y ser vicech a r g esThere is greatconcernwithinthehospitality industry thatmany dinersarefeelingtheyhave beentrickedintopaying twiceforservice byrestaurantswholeave creditcardslipsblankfor tips. Trading standardsofficersreportthatmanycustomersare beingcaughtoutbecauseof thewidespread useof creditcards.Asurvey was doneinLondonbytradingstandardsinspectorswho foundthathalf of the68 restaurants visitedleftthecreditcardslip openfor a gra-tuity despitealready addinga service charge.Restaurantsthatimposevoluntaryservice chargesareinbreachof acodeof practice broughtinalongside theConsumerProtectionAct1987 whichseeks toabolishthechargesand have them incorporatedin a singlebill.Ifrestaurantsfailtoshowthecostofeatingoutclearly andlegiblythiscouldresultinfinesof 5,000. TradingStandardsarenotlooking tobanservicechargesbutwanttoensurethatcustomershavearealchoiceofwhether to pay -or not.C o n cl u sio nAn optional service charge is acceptable, butthepractice of leaving a creditcardslip blank for a tipwhen thecustomerhasalready paid service is not.42F I N A N C I N GY O U RB U S I N E S SA dupedcustomercan see it as one themostobjectionableaspectsaboutdining outandit can sour a very good restaurant experience. Avoid follow-ing this -sadly, widespread -underhand,greedy practice.TIPSFOR ATTRACTING FINANCETo attract financing it pays to have the following:sales goals;customerprofiles;economic environment(is there an economic slump or boom?);knowledge of trends in the restauranttrade;analysis of competition;marketing strategy;key person resumes - you and your partner'(s) strengths and background;your chef's background andexpertise (if you have a chef onboard);cashflow projection;revenue projections;taxes -VATincluded;financingrequirements:amountneeded,detailed budget,repaymentoptions;bankdocuments.Again, this vital paperwork need to be well presented in relevant titledfold-ers and handedout with confidence.RAISINGCAPITALANDBUSINESSPARTNERS/INVESTORSAimtoraise moremoney thanyou need. You oftenhave only onechanceof raising moneyso take a close look at what you think you will need. It isverydifficulttoask thesamesourcethesecondtimearoundformore43H O WT OS T A R TA N DR U NY O U RO W NR E S T A U R A N Tfunding.If yourfiguresare tooconservativeit may ultimatelymeanthatyour business propositionis not viable.RaisingthemoneyThebank is notyour only portof call. Therecould be betterandcheaperwaysof raising finance. Work outexactly how muchyou needandfor howlong. Re-mortgagingyour house(shouldyou have theluxury of owningone)would notbesuitableif youneedmoney for theshort-term.If youneed money to buy equipmentdo look at renting and leasing options.If you do chooseto go down the bank route, shoparound. Thecompetitionbetween banks to do business with you can be buoyant so you may be able toaffordtolook aroundat thedeals onoffer.Butnegotiate too. Don't acceptthe proposals for what they are. Stipulate your needs andoffera rate of inter-est to the time you can start paying back the loan. It never hurts to ask.However, banks can be wary of lending money tonew restaurant venturesas thetrack recordis less thansuccessful.There is no rule to say that you have to bank with the bank that gives you aloan. Perhapsthere are betterdeals at another bank. And if the loan comesfroma bank that doesn't have a high street presence or is too far awayfromyour business to make it practical to pay money in, for example, then this isyet another reason for banking elsewhere. And the bank which has lent youthe money will respect your good business sense.WORKI NGINAPARTNERSHIPAre you going into businessalone or with a partner?Or will you be form-inga company with investorsorlenders? Thelatter is theroutetaken bymostsmall restaurants. Trytoachieve majoritycontrol with partnersorinvestorsas minorshareholders.Butyou have toconvince them that youare capable of running such a business.Keep the people who matterin the know. Your partners -should you haveany -must be completely up todate with any transactions you may have44F I NANCI NGY O U RBU SI NESSmadeonbehalfof thebusiness.Communicationis all whendealing withpartners, and those who fundyour restaurant, if you wish to stay in business.Chooseyourpartnersorinvestorswithgreatcareandthought.Discussyourplansingreatdetail. Aretheyonthesamewavelengthas you?Dotheyhave thesameaspirationsandgoals? Whatstrengthsdothey possess?Beaware of theinvestorwho wishes torunthebusinessbecauseheor sheknows better. Thiscanonly leadtotearsanda messy falling-out. Lookforinvestorsand/orpartnerswhorespectyourstrengthsandweaknessesandvice versa. Clearly definetheareas of responsibilityat theonset. These mayshiftasthebusinessprogressesbutdodiscussthesechangesinfullwhentheyarise.Whenenteringintoa partnership,outlineandprotectpersonalinvestmentas well as theagreedsplit of assets andliabilities. Getit downon paperandgeta lawyer. See Legal Tips in thischapter.CAPITALEXPENDITURELet'slookatthecapitalcostsbeforethesearchforfundingbeginsandworkoutfiguresfor eachcost. Remember,if your figuresare tooconserva-tive, it is difficultto return to thesamesource for morefunding. There willbeguesswork involved as notall figurescanbeestablishedcorrectly, henceacontingencyfundisneeded.ThepropertyThelists belowforcapitalexpenditureforarestaurant/barcanbemadespecificandappropriateto your business:rentdeposit,on-goingrentor costtobuy;renovationsincludinglabourandmaterials;buildingcostsandlabour;plumbing,electrical labourandmaterials;decorincludingany artefacts;45toilet upgrade;accountant's and bookkeeper's fees;bar constructionand furbishing;chairs, tables, service area costs;floorcovering, window blinds/curtains;lighting;heating, air conditioning, kitchen extractor fan;fire extinguishers.Kitchen and restaurantequipmentYou may need:kitchen equipment large and small including rental equipment costs;glass, cutlery, crockery;coffeeespresso machine -lease or buy;cleaning costs including vacuum cleaners, window cleaners;rubbish removal costs;linen, napkins, glass cloths, kitchen uniforms, waiting staff uniforms;laundry costs;music system, speakers, recorded music and performing rights costs;cash register;opening stocks: food, alcohol, cleaning materials;opening party costs.AncillarycostsThese will include:telephones;gas and electricity; HOW TO START AND RUN YOUR OWN RESTAURANT4 6F I N A N C I N G Y O U R B U S I N E S Sofficeequipment;printing for menus,cards, publicity handouts, bill heads;advertising;promotion;graphics;menuresearch including travel;exterior lighting and menu boards.Accountancyandothercostsincludinglegalf e e sBudget for:accountant'sandbookkeeper'sfees;legalfees;rates;insurance;permits: fire, health, business licence;licencefees;staffcosts -waiting, kitchen, cleaning,office;breakages;operating capital;contingencyfund.NEXTSTEPSINFINDINGFUNDINGWithyourcapitalcostfiguresunderyour belt,andarmedwithabusinessplanandyourinitial tradingproposalworkedout,it'stimetopersuadeothersto fundyour venture.Whetherthecapital is via thebankora private investor, thelenderis look-ing forthesurvivalof thebusinessinordertorecouptheloanandtheagreedinterest.47H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TThelenderneedstobesatisfiedthatthebusinesshas therightpeople atthehelm, its locationis soundandthatgoodresearchintothe projectedcustomer base has beenundertaken.B o o k k e e p i n g a n d a c c o u n t a n c yItis essentialto initiategoodbookkeepingpracticesfromthe beginningofthe business so that investors, accountants and the InlandRevenue can seeat a glance thecash flow, expenses, and profit andlossmargins.Placeall transactions oncomputeras this will give therestaurateurimme-diate information on theoperation: thesales, its mix, stock turnover,salespertableandwaiter(very usefulforchecking factsif needed),foodanddrink cost percentages.Computersalsooffera cost-effectiveway of reducing paperwork butbook-keeping (nowadays usually puton a software package) is still essential, so doadd the cost of employing a bookkeeper/accountant into the capital costs.Chooseanaccountantwho hasexperienceanda liking for therestauranttrade. Doa cashflowforecasttogether.BookkeepingandaccountancyrequirementsRecordcashandbank records,weekly sales of all aspects of thebusiness(foodandalcoholsales forexample)andweekly payments(suppliers,wages, rent etc).Recordtheweekly incomeandexpenditureonprintoutsorsummarysheetsso thatmanagementcansee ata glance where themoney is goingout and coming in.Theaccountantwill also requireinformationregarding VAT, tips, creditcard andcash sales, wages, purchases,operating costs(rent, rates, utilities,telephone, laundryforexample),drawingsfor investorsandownersandcapital costs (maintenance, repairs, improvements).48FI NANCI NGY O U RBUSI NESSThisanalysis of breakingdownthebusinessintothesumof its partscanbeof immensehelptosee wherethebusinessis going,itsstrengthsandweaknesses,itsseasonalswings.Itcanalsobehelpful incombatingfraudandtheft.See tips, page54.Attheendof thefinancialyear(March31), twosummariesneedtobeprepared: thetrading profitand loss accountsshowing the gross profit, andthenetprofitandthebalance sheetshowing thecompany'sfinancialposi-tion. Thelatter shows theassets owned and thedebtsowed. Thedifferencebetweenthetwo is thecapital valueof the business, representingthecapi-tal invested by theowner/investors and theretainedprofits.VATValue Added Tax(VAT)isataxchargedonmostbusinesstransactionsmadeintheUKortheIsleof Man.Somesee therestaurateurandotherbusiness menand womenas perhaps unpaidgovernmenttax collectors.VAT is also chargedon goods andsome services importedfromplaces out-side the EuropeanUnion,and on goods andsome services coming intotheUKfromthe otherEUcountries.All goodsandservices thatare VAT ratedarecalled 'taxablesupplies'.Youmustcharge VAT onyourtaxable suppliesfromthedateyou first needtobe registered.Thevalue of thesesuppliesis called your 'taxable turnover'.There are currently three rates of VAT:17.5% -standard-ratedsupplieson mostgoodsand services5% -reduced-ratesupplieson fueland powerusedin the homeand bycharities0% -zero-ratedsupplieswhichare non-chargeable.Examplesare mostfood, books, newspapers andchildren'sclothing.49H O W T O S TA R T A N D R U N Y O U RO W NR E S T A U R A N TRegisteringfor VATYou must register for VAT if you are in business and your taxable turnover,not just your profit, goes over a certainlimit.Thecurrent VAT registrationthresholdis 58,000(October2004)butyou can opt to registerfor VAT if your taxable turnover(theamountgoingthroughthebusiness, notjust theprofit)is lessthanthis,if what youdocountsas a business for VAT purposes.If your taxable turnoveris below thelimit you can apply for voluntaryreg-istration if youcan prove what youdois a business for VAT purposes.Thebenefits of registrationunderthe limit include increasedcredibility foryourbusiness but,onceyouareregistered,youwillhave toaccountforoutputtaxonall your taxable supplies whichare notzero rated. Butalso,you can take credit for any inputtax on those taxable supplies.Youwillalsohavetosendin VAT returnsregularlyandkeepproperrecords andaccounts so that VAT officerscanexamine them if necessary.VATaccountingForsmall businesses, therearea numberof simplifiedarrangementstomake VAT accounting easier:Cash accounting: if yourtaxableturnoveris under 600,000a yearyoucanarrangetoaccounttoCustomsfor VAT onthebasis of cashreceived and paid rather than the invoice date or time of supply.Annual accounting: if your turnoveris under660,00a year youcanjointheannual accountingschemeandsendinjustonereturna year,rather than the quarterly returns which most businesses do.Baddebt relief: if you supply goodsor services toa customerbut youare notpaid, you may be able to claim relief from VAT on thedebts.Flatratescheme:youmaybeeligibleifyourturnoverisunder150,000. Ithelps saveonadministration duetonotaccountinginter-nallyfor VAT oneachindividual 'inandout'. Paymentisover a setpercentageof the totalturnover.50FI NANCI NGY O U RBU SI NESSTentoptipsforsimplifyingVATforsmall businesses1.Registeringfor VAT mayhavemajorimplicationsonyourpricingstructureso always calculate these intoany costings.2.Apply to register in plenty of time so that you get the help availabletoyou,andalsoget your VAT numberingoodtime for printingonto cards, invoices etc and for other purposes.3.Be clear about the impact of VAT on your growing business turnover.4.Goodbookkeeping is vital for overall business management. Checkdocuments you receive. You must have a VAT invoice toclaim backVAT.A statementis nota proper invoice.5.Alwaysentercashreceiptsinyour books before usingthecashtomakepurchases.6.ManybusinessestakeadvantageoftheVAT they'vecollected,makingitwork forthembeforebeingpaidtoCustoms.PaytheVAT intoa separatebankaccounttoaccumulateinterest. Besuretokeepthe VAT collectionsforpaymentonlytoCustomsandExcise andnotfor other purposes.7.If youfindyourselfunabletosendyour VAT returnorchequeontime call Customson 0845 0109000 and tell them why.8.Considermaking a part payment to reduce the surcharge payment.9.Alwaysquoteyour VAT numberoncorrespondenceor delays/con-fusionwill occur.10.If you are notsure, ask. It'sin both your andCustomsandExcise'sinterests. If in doubt, shout!PAYROLLRecordsmustbekeptofallstaff,whetherfullorpart-time.Avoidthetemptation to pay unrecordedcash for labour as penalties for incomefraudare severe. Thefollowingare necessary to keep records:51name andaddress of employee;their tax code numberand National Insurancenumber;tipsearned:restaurateursareresponsibleforall incomeearned, tipsincluded;tax inspectors can estimate tipearnings if no service charge is included.INSURANCEInsurance is a very simple concept. Your annual payment will provide coverforyour businesswhichneedsinsurancefor building, contentsandliabil-ity,thelatterforanylitigation(dispute,lawsuitbroughtagainstthebusiness, for example).Evenif you are able tocover thecostsof replacementor repairor any lossthatmay occur,suchas a shelf giving way witha hundredplates tumblingtothefloor,it would beirresponsiblenottobeinsuredagainst any prob-lems regarding guests'legal actions.Your biggestrisk may befromthecustomersthemselves, however delight-ful,withitems being brokenorsimply taken. Thisdoesapply tootostaff.There is also the possibilityof customers or stafffalling in your restaurant,andthe building itself needing monitoringforsafety.Insurancedetailstolookout forThedutyof disclosure is vitally importantwhenconfirming andagreeingtotheconditionsof thepolicy. Theinsurermustknow whatyou wishtocoveras thetype of policy requiredmustbeanaccurate reflectionof yourbusiness. Be clear andspecificandask for written confirmation in all areasof your cover. Ask your local authority about insurancerequirements.Do spendtime and efforttalking to the right insurers -ie thosedealing inrestaurant/hotelbusinesses -and gettingseveral quotes.Or get in touchwith an insurancebroker. Ask those who are in the restaurantbusiness whothey mightrecommendtoreceive quotesfrom.Ask questions. Andfactorthecost of insurance into your overall costings.52 H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TF I N A N C I N G Y O U R B U S I N E S SPublicliabilityPublicliability covers injuryand propertydamage caused by your personalnegligence and/or businessnegligence.ProductliabilityProductliability relates toany productsyou provide butspecificallytofoodyouserve, eitherbought-inorcookedon thepremises.Shouldacustomerfinda nail in a roll(yes, it happened to me), you areliable.ManagerliabilityManagerliabilitycoversyouforstafflookingaftercustomersintheabsenceof theowner.Customers,wheninsueingmood, will notonly sueyou and your business butalso thestaffrepresenting you at thetime.GettingtherightcoverYour policy mustinclude fire, storm,tempest(however ancientthistermi-nology is), burglary, malicious damage, glass andothercovers.Additionalcover whichyoumay wishtoconsideris businessinterruptionwhichreplaceslostincomeintheeventof aclaim whereyourbusiness isinterrupted. Generally figures are basedon your yearly income. Thiscouldbebecauseof physical damagetoyourpropertyandreplaces lostincomewhen you are unable tofunctionas a restaurant.Doask forcover which guarantees youpaymentona weekly basis for cashflow purposesandnotpaymentoncetheclaimis knownsomemonthsaftertheevent.Obviouslybeaware that if yourbusiness is yoursole income, billsneedtobepaidregardlessof aninterruptiontoyourrestaurant.Paymentsshouldbemadeuntilnormalbusinesscanproceedandyouhaveregainedtheincomeyou wouldnormallyexpect. Theseare basedonlastyear'sfiguresforthetimeof yearandnotnecessarilyduringyourbusiestperiod.Evenwhen the work to repair or replace is complete, it shouldpay on adescend-ing scale until your business returnstonormal.53H O W T O S T A R T A N D R U N Y O U R O W N R E S T A U R A N TYour building and contents insurance should reflectall contents and all build-ingsindependentofoneanother.Insuranceisbasedonreplacingandrepairing, noton the market value or saleable value, so ask a builder or valuerto provide you with anestimate. Thenadda percentageon tothis figure forremoval of debris, architect'sfees(if applicable) andany other costs.+T O P TAn insurancepolicyisalegal,bindingcontractwithtermsandconditions,soitisup toyou tomakesure that allitemsyou wishtoinsureare covered.A workers'compensationpolicyshouldbediscussedwithyour insurer.Ifyou havea personalaccidentandsickness/incomepolicyitis advisabletocontinuewith this.Fraudand theftin the restaurant businessLookoutfor the following:Short-changingandovercharging.Issuingfoodwithoutan order-complicity betweenkitchen andwaitingstaff.Deletinganorderas a 'nosale'orcancelledorderandpocketingthemoney.Stocksold forcash.Selling stock tootherbusinesses.Useof stolen credit cards.Runningoff more thanone transactionat a time for thesame sale.Suppliersaddingthedateintothetotal,short-weighingandover-charging.Suppliers delivering shortordersandcharging for completeorder.Theftof food, drink, equipmentandmoney bystaff.54F I N A N C I N G Y O U R B U S I N E S STocombatthissomelarge restaurantsareinstalling CCTVcameras overtills.Doinstallautomatedtillsystems.Stocktakeregularly.Havinga fool-proof system against fraudis notpossible so be vigilant.CREDITCARDSIntoday's market, payment by card is thepreferredmethodof payment. In2003, thenumberof creditcardsintheUKpaymentmarketswas thehighestever recordedandmore than half of all adults regularly madedebitcard purchases.Accepting credit cards brings thefollowingbenefitsto your business:Morecustomers through your door if they see theircard is accepted.Nocash restrictions can mean thatcustomers spendmore.An increased turnoverandprofit.Yourbankingbecomesautomated,makingproceduressimplerandfaster.Ourincreasingly cashless society demands the use of credit and debit cardsin mostrestaurants, althoughsomequickturnaroundrestaurantsonlywork on cash as card costs are too high to merit the expense.Negotiatecharges with the cardcompaniesand renegotiatethose charges ayearaftertrading. Theymay see a good,profitablecompany in the makingandwish to partake of your success long-term.LEGALTIPSDon'tput yourpersonalassetsatriskIfyouarestartinga businesswithoneormorepeople,youcanchoosepartnership,limitedliability partnershiporlimitedcompanystatus.Inapartnershipall partnersarejointly liablefor debts.If youcomeupagainstalegal problem you will be risking your personal assets.55PutitinwritingDoputall yourbusinessdealsandagreementsin writing.If you have averbal agreement get confirmation in writing. A verbal one is oftendifficulttoputintoeffectif problemsarise. A writtenrecordwillalso preventpeoplefromtrying tochange their mindsor giving you a differentstory ata laterstage.Itpays toget advice early onGetlegal advice early onas it will pay in thelong run. Problemscan ariseinthelong-termif thisis neglected. Ask foranestimateof thecost if youseeka lawyer's advice. If forming a company, shoparoundfora solicitor'spackage deal.Get someone torecommendasolicitorSolicitorsspecialise in many areas of thelaw andthereare manydifferenttypesof law so thiscanbea dauntingstep. Recommendationsfromothercompaniesarea goodstart.Doask solicitorsfor testimonialsandrefer-ences andfollowthese up.Keepup todate withchanges in thelawEmploymentlawisconstantlychangingsokeepuptodate.Everyemployermustprovidea statementof employmentclearly layingdowncertaindetails. Itcan bein yourintereststoincludepolicies thatarenotneededby law tosafeguard you.BUSINESSADVICEORGANISATIONSBusinessDebtlineOf course, thehopeis thatgoodfinanceandaccountancy practices havebeenadhered tofromthe beginning in putting your business together. Buttheremaybeworryingtimeswhensomegood,practicaladvicefromexpertswould helpenormously. Thepsychological boostof justtalking tosomeone who deals with financial problems is quite energising.56HOWTOSTARTANDRUNY OUROWNR E S TA UR A NTFINANCINGY OU RBUSINESSContactBusinessDebtline(0800197 6026),a nationaltelephoneservicethatoffersfree,confidential andindependentadvice tosmall businessesontackling cashflowproblemsby:preparinga budget for your business;prioritising all yourdebts;dealing with courtproceedings;understandingbankruptcy;avoiding repossessionof your homeandbusiness;dealing withtax matters;negotiating withcreditorsandbailiffsanddealing withmostotherdebtandcashflowissues thatyou and your businessmayface.FederationofSmallBusinessesTheFederationofSmallBusinessesis theleadingorganisationfor smallbusinessesin theUKandcampaignson theirbehalftoimprovethefinan-cialandeconomicenvironmentinwhichtheyoperate.Alongsidethisinfluentiallobbying, FSBmembersalsoenjoya unique protectionandbenefitspackage providinginstantaccess tolegal andprofessional adviceandsupport.Forfurther details visit their website: www.fsb.org.ukOtherorganisationsTherearetwootherusefulcontactsas well as governmentagenciesandorganisations thatcan help you make the right businessdecisions.TheSmallBusinessService(SBS)isanorganisationwhichoperatesanumberof schemesandinitiatives thataredesignedtohelpsmallbusi-nessesinavarietyofways. Theyencouragebusinessestobemoreinnovativeandtoexploit newtechnologies,helpgetfinancemorereadily,andcanprovidewaysforbusinessestomeasureandimproveefficiency.Their website is www.business.link.gov.uk5 7HOWTOSTARTANDRUNY OUROWNRESTAURANTTheSBS alsooverseestheworkof thenetworkof localBusinessLinkofficesthatoperatethroughoutEngland.Similarservices are BusinessGateway for LowlandScotland, Business InformationSource inHighlandScotland,BusinessConnectinWalesandtheLocalEconomicDevelopment Unit for NorthernIreland.TheBusiness Linksprovide independentandimpartial advice, informa-tionanda rangeof services to helpsmall firmsandthosestartingupnewbusinesses. Call Business Link on(0845)600 9006.TheBritishChamberof Commerce(BCC)is the nationalface of theUK'snetworkof accreditedChambersof Commerce,andcampaigns toreduceburdensonbusinessandcreatea morefavourablebusinessenvironment.For furtherhelp contact the BCC'swebsite: www.britishchambers.org.uk58Running a Safe BusinessRunningasafe,hygienicbusinessisoneofthebiggesttestsarestaura-teurhastodeal with. Thischaptercovers therestaurant'sfoodhygiene,staffhand