When it comes to opening a restaurant in Brooklyn, New York, there are a number of costs that aspiring restaurateurs must take into account. From seating and renovations to the cost of food and payroll increases, the expenses can add up quickly. In this article, we'll explore some of the initial costs that every New York restaurateur should factor into their business plan and budget. The rent is one of the most important costs to consider when opening a restaurant in New York.
According to The New York Times, “a healthy restaurant intends to spend about 10 percent of its sales revenue on rentals, utilities and other occupancy expenses.” It's possible that a large group or chain of restaurants could trade below 10 percent because their volume is so high, but a chef who opens a full-service restaurant can end up in trouble if profits fall below that threshold. The cost of food is more expensive in New York than in most other states, something that restaurateurs must consider when creating their budget. A restaurant can be profitable with a 40% cost of food, just as much as a restaurant with a cost of food of 20% can be losing money. Payroll increases are “a punch in the gut” for owners, according to Richard Coraine, an industry veteran with 35 years of experience and director of development for Danny Meyer's Union Square Hospitality Group.
New York State allows employers to pay a lower minimum wage to employees who receive tips, while California is one of seven states that have abandoned the so-called tipped minimum wage, so a New York restaurateur pays those staff members less than a California homeowner. Converting an empty space into a kitchen and restaurant will require significantly more investment than working with a space already designed for a restaurant. If your restaurant is located in a small town or suburban area, you can expect to fall at the lower end of the spectrum, between five and eight percent. Every restaurant is different, meaning your restaurant's starting costs won't be the same as those across the street. West Coast restaurateurs have their own complaints, such as limiting the number of licenses to sell alcoholic beverages, which can push up the price of buying one in a busy neighborhood, and the same shortage of skilled labor that New York faces. Traffic growth in all types of restaurants has stagnated at 1 percent since March, according to the NPD Group, which believes that the number of visits is a more reliable indicator of the health of the sector than sales figures.
The New York restaurateur's eternal lament that staying afloat is harder here than anywhere else in the country grows stronger every time another restaurant closes. New York restaurateurs lament other persistent frustrations, such as a complicated permitting process and a two-tier liquor licensing system that can take months to resolve. But is it true? Is New York less hospitable to independently owned restaurants than other big cities? It's hard to say definitively, but what we do know is that aspiring restaurateurs must be prepared for higher costs when opening up shop in Brooklyn or any other part of New York.
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