> I remember clearly the day when the accountant showed me that we could effectively double our monthly sales and still not have enough to meet our eventual payroll obligations and that's about when you just finally sink into it: You're done.
The article doesn't really go into this part, but it does mention an extensive business plan. Was it that the labor costs were not foreseen, or that the revenue was much lower than expected? To be off by half is significant. It would be interesting to hear with hindsight what could have been done differently to avoid this (even if the calculation came out to "don't open a restaurant").
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The article doesn't really go into this part, but it does mention an extensive business plan. Was it that the labor costs were not foreseen, or that the revenue was much lower than expected? To be off by half is significant. It would be interesting to hear with hindsight what could have been done differently to avoid this (even if the calculation came out to "don't open a restaurant").
If doubling your sales wouldn't make next month's payroll, my first guess without any additional info is that margins are too thin (or possibly negative). Unless no one is coming in, it's not really a revenue issue, it's a cost issue.
Whatever your business is, know your costs and the drivers of those costs. You have to know whether the prices you can charge will cover the costs and provide enough profit to keep going. It's not even specific to restaurants.
Indeed I'd argue that their margins were off by a lot. It's not uncommon for non-hospitality trained people to screw that up (and in their defence, it is a lot more complex than most people think).
The article doesn't really go into this part, but it does mention an extensive business plan. Was it that the labor costs were not foreseen, or that the revenue was much lower than expected? To be off by half is significant. It would be interesting to hear with hindsight what could have been done differently to avoid this (even if the calculation came out to "don't open a restaurant").