A CBI report released in August revealed that spending on services grew over the previous three months. A large proportion of this was attributed to restaurants and bars.
It is a commonly held belief that everyone has a great novel in them. In addition to this many of us now also aspire to start our own restaurant.
It is easy to see the appeal of running your own restaurant. The UK’s relationship with food has become more sophisticated over the last decade, and we are increasingly becoming a nation of foodies. Additionally, concept based restaurants have the appeal of being both creative and having the potential to scale and generate a significant financial return for their owners. A relatively recently acquisition was Byron Hamburgers, first incorporated in 2007. In 2013, the company had scaled to 34 sites and was sold for £100 million to Hutton Collin Partners.
However, despite positive stories in the media running a restaurant is one of the hardest business models to get right. During the financial year 2014/15 1,294 restaurants became insolvent in the UK.
Many of the most commonly cited reasons for failure are due to first-time restauranteurs miscalculating the costs associated with set up and ongoing overhead costs.
Therefore, it is not surprising that an increasing number of a new breed of successful concepts are started up by individuals who are from a finance or business background.
Mark Selby, co-founder of Wahaca, a Mexican street-food restaurant with over 20 restaurants, has a background in corporate finance. Prior to starting Wahaca he worked at Merrill Lynch and for the Capricorn Group developing restaurant models.
Selby attributes his experience working in finance as being pivotal to being able to set up and run a successful restaurant chain:
“[Working at Merrill Lynch] taught me everything about running a business from the finance side. Cash flow, balance sheets and P&Ls…I realised this was really important stuff to understand if you wanted to go into business.”
Jeffreys Henry, a London based accounting firm which specialises in restaurant and hospitality clients have noticed the changing profile of restaurant founders.
Bhimal Hira, a director at Jeffreys Henry, says: “More and more new restaurants are being opened by city professionals, [consisting of] investment bankers and accountants.”
Whilst Hira acknowledges that such individuals are likely to have a thorough understanding of how business works, he thinks that a number of new owners are initially motivated by kudos but underestimate how hard hospitality businesses are to run.
He says, “I think it is a lifestyle thing. They want the glory of owning a restaurant but some don’t understand the pressure and commitment required to make it work.”
Read the full article at https://www.aatcomment.org.uk/finance-experience-is-crucial-to-running-your-own-restaurant/