February 4, 2021

Why You Shouldn't Open a Restaurant Just Because You Love Food (And What to Do Instead)

Once you’ve honed your skills in a certain cuisine, every conversation starts to sound like this:

“Hey, when are you going to set up shop?”

“Have you ever thought about opening a brick and mortar?”

“You know... that bakery is looking for a new baker, and your cinnamon bread is the best…”

According to Michelin-starred chef Phillip Foss, “being an excellent cook is only about 15% of running a successful food business.”

If you’re prepared to focus heavily on the other 85%, go ahead, start a restaurant. But if you’re open to other entrepreneurial food ventures, you’ve got plenty of options.

Let’s start with the elephant in the room: the costs of opening a restaurant are incredible. Between physical space, equipment, labor, food costs, marketing, and every other expense that pops up, the restaurant business can be hard on your wallet. 

The average profit margin for a food and beverage business is 5.5%. Even for food businesses that aren’t restaurants — such as companies that focus exclusively on meals to go — spend, on average, 32% on ingredients and materials, 33% for the labor and 5% on overhead. That doesn’t leave much wiggle room. Running a food business can also require some inventory gymnastics — stretching in some places while shrinking in others to avoid spoilage and waste.

Why You Shouldn’t Open a Restaurant...

If you don’t open a restaurant, you can run your business on your time. You don’t have to flex to the standard operating hours of a restaurant. If you want to knock out your prep and cooking in the morning one day, but you’re feeling like burning the midnight oil another day, you can do that. You’re not bound to the typical 11 a.m. to 10 p.m. hours of a restaurant. 

If you don’t open a restaurant, you can tightly manage supply and demand. If you only have the time and capacity to bake 30 batches of cupcakes one week, you can set your inventory and when you’re sold out, you’re sold out. Without a physical restaurant, you’re not stuck paying to operate an empty dining room when things are slow. 

… And What You Should Do Instead

Another compelling reason not to start a restaurant, and instead build a different kind of food business? You can operate a legal, inspected kitchen from your home. Some goods can be produced and sold right from your home kitchen, but you’ll want to do due diligence regarding the regulations around the food product you’re producing. In the U.S., you must register your home-based business with your local or regional health department. Make sure you understand your local government’s rules and requirements around home-based kitchens. 

Many first-time food business owners start by selling low-cost products that don’t require a bunch of equipment in order to make: things like candy, canned foods, and certain baked goods. 

Maybe you think you need a restaurant kitchen in order to create and sell food on a larger scale. While using a restaurant kitchen has its perks, you can find commercial kitchens elsewhere, many of which offer memberships and more affordable access. Many facilities offer shared or co-op kitchen space that you can rent hourly or monthly, depending on your production needs.

Most importantly, you can cook what you enjoy cooking the most. If you operated a restaurant, you might need to cater to certain dietary restrictions, or ensure that you have a wide enough variety of food to please picky eaters. That’s not the case when it comes to your cottage food business. If you want to sell pizzas, you have the power to set a menu and see if customers purchase your products. If your specialty is vanilla bean cupcakes, you don’t need to worry about baking raspberry cupcakes for the fruit lovers. You can focus on what you’re an expert in. 

You're serious about your food business. We are too. Ditch the complex order tracking spreadsheets and late night texts from your customers. The Castiron platform is purpose-built to help culinary artisans build and grow their businesses online.
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