Restaurant Budget Allocation Formula How to Invest a 300,000-baht Budget for Good Sales

Restaurant and beverage businesses are businesses that experience growth every year. Their combined market value is approaching 400 billion baht. Such a business is the dream of many people. Especially when people are saying the economy is bad, you will still find that more and more people are still starting restaurant businesses, because this type of business is easy to start and offers a lot of investment options ranging from thousands, tens of thousands, hundreds of thousands to millions and beyond.

Although this type of business can experience growth with a bright future while being easy to start, and even though anyone can do it, managing a restaurant business toward success, profits, riches and branch expansions is a daunting challenge. Lots of businesses see their untimely demise soon after they start, due to financial mismanagement from the beginning, which prevents them from staying afloat.  The question for people looking to enter this business is “how can you manage the investment budget to successfully open a restaurant and keep it afloat long enough to survive the early stages?” We have some examples to show you.

The first important things to restaurant businesses that entrepreneurs have to figure out first are what to sell, who to sell to, and where they are. Oftentimes restaurants are started based on the following two ideas:

1. Someone has a good recipe. If anyone has this, that person has a certain level of advantage. But then the person has to keep searching to identify to which people the recipe is suitable as well as the selling price that the food can be made with. Then it’s necessary to look for a location or target group suitable for the recipe.

2. Someone has a good location. If you don’t have a good recipe, but you have a good location, analyze and determine whether or not the location is truly suitable for a restaurant business. If yes, what are the customer groups in the area? What are their consumer behaviors? What restaurants already exist in the neighborhood? You need to analyze the location and study the behaviors of people in the location. You need to learn about the needs of people in the location from the existing restaurants, and you need to find your business opportunities such as what you can sell there. In particular, if you can find something that customers want but which is still unavailable in the local area, your business opportunity will be better. If you want to know about how to choose a money-making location and how to attract just the right customers, you can complete an online course for free!

Investment Budget Allocation Formula for Opening a Restaurant

Now that you’ve decided what kind of restaurant you are going to open as well as your budget, the next important step is to appropriately allocate your investment budget so that it does not pile up on any work area. In order to ensure that your restaurant can operate successfully in the end, you need to have enough circulating capital to last until a specified time. One example we would like to raise is when you have 300,000 baht budget. How do you allocate this investment budget? Let’s take a look at some basic guidelines. The investment budget is divided into three main parts as follows:

Part 1 – 50-60% of the investment budget goes to decorations and system installation.

It’s for investment in the restaurant so that it can be opened, and it includes the following:

– Rent deposit

– Advanced rent payment

– Design expenses

– Construction/decoration expenses

– Kitchen equipment, utensils, and decorations

– POS, restaurant operating expenses, etc.

Part 2 – 20-30% reserved as circulating capital.

This is for use as circulating capital inside your restaurant for about 6 months. If you open your restaurant and you make a profit in your very first month, then that’s great. However, most restaurants don’t experience that. If you don’t reserve circulating capital, you will immediately run into a problem. A lot of restaurants have to close down due to this reason, even though those restaurants might need just a little bit of time just for customers to know them.

Part 3 – 10-20% of the investment money is the marketing budget.

In the modern age, if you want your restaurant to be known quickly, you need to have money for marketing, whether offline or online. A problem that many SME restaurants struggle with is that they don’t reserve a marketing budget. By the time comes, they actual dig into their own pockets or pull their business money to market their restaurant, which potentially creates impacts to their capital and may cause them to fail to engage in consistent marketing. Thus, it’s necessary to set a marketing budget and continuously plan the use of this budget in order to produce actual results. If you would like to learn about how to promote your restaurant online, you can take a free online course! 

Based on the example, the greatest portion of the investment budget is the first part. Now that you know that this part is investment for the construction of the restaurant and system planning, totaling at 150,000-180,000 baht, you can plan and manage the restaurant on its location, how to make negotiations, what kind of restaurant to construct, what sort of materials to use, and the different designs, concepts and decorations involved.  Basically, your plans will be much clearer. Additionally, you can learn more from an online course on how to easily manage profit and loss budgets (link to course) in order to gain a better picture of revenue and expense management in restaurants.