Yes, you can get rich owning a restaurant… if certain conditions are met.
The restaurant business can eat you alive. For example, Ohio State University did a study many years ago that showed 59 percent of all restaurants fail in the first three years of business. The National Restaurant Association once reported that the average restaurant makes a nickel to 8 cents on every dollar. Put those together you might come to the conclusion that the answer is no, you cannot get rich owning a restaurant. But that short-sighted answer is wrong.
For the sake of this tip, I’m going to assume that getting rich refers to obtaining material wealth such as money and property. With this in mind, let’s start off with property.
Purchasing the land that houses your restaurant is one way to get rich. Using the money you earn from operating a restaurant to pay off those initial loans could easily be worth $1-$2 million or more. Now imagine if you had multiple locations that you owned, and you can see the potential. While getting rich may require you to operate your restaurants 10–20 years, the answer is a resounding yes, you can get rich in this business.
Next, let’s talk about a much faster timeline in getting rich. If you don’t want to wait 20 years, and you don’t subscribe to the NRA’s average profit, then you’re in the right place. I teach my members systems and how to put management in place to uphold the systems. My members have a life and achieve a profit goal of 15 to 20 percent.
That’s right, I have members who make 15 to 20 percent in this very difficult business. Think about it this way: for every $1 million a restaurant does in sales, that’s $200,000 a year. I have members of my group that have incredible sales. I have members with low sales and high sales, but those that do $4-$5 million, even up to $10 million annually in sales. These members could be earning $800,000 to $2 million a year in profit alone in each one of those locations.
As you can see, the critical detail here is they operate restaurants that do more than $2 million a year. If we stick with that $2 million number, that restaurant owner making $200,000 on every $1 million, in five years would make $2 million. Plus add the equity from paying down the loans each one of those years, you can quickly see that, yes, you can get rich in the restaurant business.
Do note that it requires that you have a plan in place. You can’t just go willy-nilly into the business. Your budget will dictate whether you can buy a location or what the sales are going to net you. You want to make sure that when you open your restaurant, or you operate your restaurant, you need to be thinking about $2 million or more a year in sales.
I get it, for some of you reading this, you are already in a location that’s only going to allow you to do $500,000, $750,000 to $1 million. Do know that that creates a challenge. You’re going to have to open multiple locations and because you have less in sales.