Is 15% Profit Worth Staying Open?
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- čas přidán 23. 05. 2024
- Is 15% Profit Worth Staying Open?
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I’ve owned restaurants for over 15 years. People who want to do it ask me all the time for advice and my first response is always “don’t do it”. Tough tough industry.
Also he’s complaining about 15% margins in a brick and mortar? Most restaurants I worked at would have killed for that.
Soon there will be no places to eat even big corporate chains are failing
@@charlesweaver9297 New ones come along all the time. That's the nature of the business.
@charlesweaver9297 really? I foresee a future where the only place to get food is processed at an establishment first. Most likely government run or heavily regulated(is there really a difference?).
So you essentially refuse to give any practical advice...
A 15% margin is fantastic, and may be more stable than a food truck
in the truck hes not beholding too a landlord.. plus hes 50 percent profits hes better off buying more trucks
If that's gross profit that's pretty bad, if it's net profit that's very strong for a restaurant. Most are around 3-4% net.
I worked at a place back in the day that made 5% after expenses...
I was briefly interested in operating a food truck. When I found out I'd have to charge $9 for a hotdog in a city with an average wage of $16/hour, I thought "what an absurd business model," and abandoned the idea.
Is it 15 net profit or gross margin? As a net profit it’s great, as a gross margin is the dead end almost in every business.
15% margin is awesome for a brand new restaurant business. Keep growing buddy!!
15% is very strong for ANY restaurant. The hospital is taking out his eyes, but they know they provide a captive customer base. His challenge is in expansion and hiring, not that specific deal.
@@adamseidel9780 agreed. I worded wrong. Meant to say even more impressed since it’s new. He’s crushing it! Just needs to fix customer concentration issue.
a business can run a 1% loss indefinitely and never have to shut down.
It's not strong if gross margin
Some business owners do not consider their salaries when discussing profit margins or they are underpaying themselves. Both are very likely.
"We own it so we should actually LIKE it when we show up"
So glad Dave is sharing his wisdom
Really?
@@Omar_Zazzle where's your wisdom?
"There's a lot of volume (at the hospital)", but I didn't hear him say anything about the volume at the truck. Couldn't 15% of "a lot of volume" be more valuable than 50% of a much lower volume? I'd think they should have discussed actual profit amounts instead of simply talking about percentages.
$8000/mo rent is outrageous!! I'd get out too!!
Great content... He needs a good RETAIL broker to negotiate for him. Iam a retail broker and the hospital taking way too much of their revenue.
Leave the hospital and keep the truck. The truck can travel to/near the hospital if the customer volume was high enough. Being mobile has its advantages.
If you could handle 2 locations, it would seem like you would want to keep that location that is consistently generating revenue and maybe bump the prices a little and add a second one with the free standing building. Maintain consistent cash flow and profit.
Perhaps he should negotiate with the hospital about lowering the rent, and be prepared to relocate based on their reply.
Maybe his BBQ guy left because it’s miserable to be the only person carrying a business. What happens when you’re sick or want to take a holiday? I’ve worked departments with only 2 people skilled at managerial and only 3 people skilled at production. 4 bodies total and it was MISERABLE. Everyone was overworked and no one could get adequate time off because the whole place would fall apart. The guilt trips were phenomenal.
Now I’m in a position where I can take a day off and there are 5 other people who can do anything I can do, but most things can wait until I come back and it’s blissful.
A hospital is stable income - you just need to figure out how to increase revenue..... Weekend bulk sales to staff, etc. Use the kitchen for catering/commissary use.
Use the storefront as marketing for the catering.
I've found out that just because you pay your doctor doesn't mean the hospital doesn't want their cut. NON-profit hospitals really care about their customers.
21% is absolutely crazy. Rent should be no more than your 1 or 2 busiest days gross revenue. I’ve done a ton of restaurants, I can tell why he feels is not worth it. Only grossing 500k but paying 105k in rent is absolutely wild. Usually that’s what I’m paying to gross 1.1-1.3. Rent here is $40/sq ft and I aim for 3k sq ft.
I thought 20% is fair.....😂😂😂😂
Agree. We don't spend more than 10 to 12% of revenue on rent. One of my stores in a shopping centre is classified as "casual leasing" which allows us to fill empty stores for as long as we like for 1/5 th the rent. Moved the store 3x times in 8 years but saved atleast 600k in rent in that time.
Most grocery stores run on 5% profit.
I lost money in the first 2x years with my game retail store while we built good will and marketed the business and then reinvested all our profits for the following 2x years into the store to build further stock levels. Worked a FT job while it grew (And still work it 8 years later) - my shop is a bonus at the end of the year while my job is security for my family (Mortage etc). Best way to do it in my view. If my business ends up becoming irrelevant we can just finish it up and move on 🎉😊 ... good little cash injection for what ever we want.
Cool, how were you able to work the FT job and maintain the business?
@frostykeys4469 Long... ass... days... start FT Job at 4 am, leave at 1pm (Store Opens at 9 so staff member till 2pm until I arrive. Man counter to save wages until close at 5pm (7pm Thursdays)... still have weekend off with my family and pay wage for weekend staff..... rinse repeat. 😎 ... all the hard yards are done now. We have cash flow and goodwill.
I am down now to just 2 days at the shop as I have all of it accessible from home. I run the whole business off my mobile phone. I can log into the POS and look at the day, access cameras, and order from home. I mainly go in to make sure it looks nice and tidy, do some merchandising, leave instructions for a few days etc. 🤠
That's really good for food service.
8k in rent for Ashville is probably cheap.
Dave missed the lead...he said he is making a 15% profit at hospital (which is good) and 50% profit on the truck BUT he is negative. Well if you are negative then your profit at both locations is ZERO! Maybe he isn't calculating his numbers correctly or not understanding capital depreciation but first thing I would ask is OK why are you negative????
@TheDjcarter1966 He stated why he was negative, he just started. He’s most likely still catching up from all the purchases he made to move into mobile. Doesn’t mean he’s not making money. I’m dealing with the same thing right now. My mobile part of the business has a good profit ratio, just took a lot of money to get it set up.
There's gross profit and net profit. He's probably 50 and 15% gross but negative on net profit.
@HH-le1vi can you explain this because I don't understand how that adds up? Thank you 👌🏼
@@davidsprauer9443 gross profit is s before all expenses are accounted for. Net is after all expenses are accounted for.
@@HH-le1viI think you’re confusing profit with revenue
Unfortunately, in N.C. a food truck has to have a brick and mortar home base. Trucks pay restaurants rent to call that their home base.
Ugh. There is our "free country" in action.
Well, I guess we all know what Dave's having for lunch that day😂😂
That 21% rate at the hospital seems really high. Maybe that rent rate is a legacy from a previous smaller operation like a coffee shop or a bakery that had less revenue. I think it's where the conversation with the stewards of the hospital about getting a capped rent rate.
Great point, and you are probably right. They should at least try to negotiate the rent down to something reasonable. Should be able to find some comps and then make the case, and pull out if they don't fix it. Chances are good that the hospital staff want the restaurant.
I think you have to consider your not just renting the space your renting the captured market as well… staff and family or patients have to eat and he’s the only show in town…
@@robbyolesko9045the hospital is providing him a space to do business, and charging rent for that is justifiable, but why does the hospital also deserve rent on the captured market?
I worked in a hospital that had such good food that people came in just to eat there, so they had to charge two rates (no discounts for those who aren't patients, family or employees). Maybe this hospital feels like the bbq business is competing against them.
Rent not being a fixed cost is ridiculous
@@dwm1795 It was probably set up so that if someone put in a coffee shop with low overhead could stay open if they aren't making money, but when a profitable business comes in, it gets burned.
What is his overhead at each location
If you can’t find help, you are not paying enough. If you can’t afford to pay, you don’t have a viable business.
Raise prices
Y’all are forgetting one important point. Freestanding restaurants going to involve hundreds of thousands of dollars upfit probably. Don’t have that if you rent from the hospital.
Sounds miserable working a shop out of a hospital.
I shut down a 5% profit place. Already had a 50+% place going and said “F” the wishy washy customers at the new location. 15% is my minimums.
How very greedy.
@@stickyfox liability in my business is greater than most. Sorry but pushing papers I’d be fine 5-15%. Custom type work we do isn’t. That’s how I know you’re not in the type of business we’re in.
Transfer all liabilities to the shell company.
Add AI food processor.
Convince private equity that you are real.
Profit.
Dave gets alot of crap but he gives some really good advice here.
If you can’t find the staff you design it that way
15% of what?
I couldn’t work for a guy that says “gotcha” every other sentence.
Then I suggest that you don't quit your job as a Walmart Greeter.
@@Omar_Zazzle Your comment doesn’t surprise me coming from a guy named “Omar”.
@@Rebecca-ci3zc Omar gotcha there, Rebecca
@@Kaktus965 You think that’s a “gotcha” lol. Low standards.
@@Rebecca-ci3zc Well, my low standards would've weeded you out for extreme pettiness and low intellectual capacity. And you're still here arguing... because Omar gotcha
Close now.....
No. NC Barbeque is the best in the world.
I cotton picking despise “Mobile “. Food truck business. Walk up, see the menu prices. What the heck? Cost the same as a restaurant without the taxes and employment helping my community.
Yeah! He operates at a fifty percent margin because of the pricing. And still sets out a tip cup.