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Startup Restaurant Shopping List: Equipment

By David Liu

According to Ohio State University's Hospitality Management program, one in four restaurants close or change ownership within their first year of doing business. A study conducted by Cornell University and Michigan State University found that 27% of restaurant startups failed within the first year of operation, and after three years, 50% of those restaurants were no longer in business. An overwhelming majority- 70%- of restaurants fail within the first decade of operation.

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Now here's the good news: Successful restaurant stories are everywhere and it's easy to learn from their success. As it turns out, restaurants fail for the same reason other startups collapse- lack of planning, poor decision making and inconsistent management are usually to blame. One reason the restaurant industry has a reputation for risk is the high amount of capital required to get the venture off the ground: before you can serve a single meal, you need to purchase food preparation equipment, prepare your physical space, apply for permits and licenses, and acquire traditional business standbys like office phone systems and payroll processing software. Profitable restaurants grow because they are able to recoup these initial expenditures as business picks up.

Smart purchasing decisions in the planning stages of your restaurant startup can set you up for success as you open for operations. So what do you really need when opening a restaurant? Here's your shopping list:

Equipment and Supplies

Start with the basics first: if you're offering sit-down dining options, you'll need things like menus, silverware, napkins, etc. Planning the menu ahead of time can give you a good idea of the type of preparation equipment you might need- not every restaurant needs a pizza oven or a high-capacity electric mixer. Equipment and supplies can typically be divided into three categories:

  • Consumables: Consumables include supplies like napkins, cutlery, food ingredients, soap for the restroom….the list can go on and on, depending on what you serve and the type of facility you have planned. Casual dining restaurants have different needs than formal eateries or establishments that offer bar selections.

  • Food Prep Equipment: Mixers, pans, measuring tools, machinery- anything used to make or prepare food falls into this category. This is often a restaurant's largest capital outlay, and many items (commercial ovens, stoves, cooktop ranges, etc.) are tax deductible or depreciable over the life of the item. Ask your accountant for more details if you need to make large purchases in this category.

  • Business Operations Equipment: Business equipment is anything that is used to support the restaurant as a business- phones, an office computer, printer, and copier, and (most importantly) a POS system or payment processing system.

Planning Matters!

Owning and operating a restaurant can be incredibly rewarding. Though the risks might be higher than those associated with some other business ventures, smart entrepreneurs can set themselves up for success by making smart equipment purchases during the startup stage.

David Liu is a writer based in San Diego, California. He writes extensively for Resource Nation, an online resource that provides expert advice on purchasing decisions and a comparison service for restaurant pos systems, merchant services and payroll processing services.

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