Is There a Restaurant in Your Future?

Are you considering operating a restaurant in conjunction with your B&B Inn? If you are operating an isolated inn, it may be necessary to feed your guests, in the country inn style, more than just breakfast. If you are in an urban setting, extra food service not only isn’t necessary, but may be a financial burden because you would be competing with established local restaurants.

I visit B&Bs everywhere I go, and from my observations (colored by my biases), running a B&B with a restaurant is running two full-time businesses (as if one job isn’t enough!). A B&B with restaurant needs two managers — one for each business. If your B&B is going to be the showplace for your cooking, then listen up.

A separate business plan for the restaurant portion of your business concept is mandatory. Go slow as you consider a full service restaurant. Examine personnel and food costs; combined they should not exceed 70 percent of your annual gross sales income. You’ll have personnel and food and beverage costs. Daily operating costs include insurance, rent, licensing, utilities, spoilage and breakage, repairs, employee benefits, and taxes. Restaurant installation can be very costly and involved.

Do you even know where to start in analyzing the reality of a restaurant for you? Will you run the restaurant or hire a professional? You need equipment and supplies. Recipes for building your menu and knowing your prep and cook times will be important, and that helps set your pricing. Consider the space for the kitchen, storage, and guests. And then there are the staff to consider.

The food service industry is complex. Food service is more than food, it is also your labor, supplies, overhead, taxes, licenses, advertising, and a fickle public. What image are you going to create? Once that is established, how are you going to keep it’s quality high and consistent? How will you get and keep the public coming to your dining room?

Successful restaurants average 4­-10 percent profit, with gourmet cooking being the most difficult in terms of profit. You can improve that percentage if you have a high ticket average and you serve liquor. Your costs for serving liquor are less than for serving food. Most liquor doesn’t spoil and takes minimal preparation to serve, while food does spoil and takes a lot of preparation. What is your restaurant concept?

How large an operation will your inn and your restaurant be? Will you do most of the cooking while your family and partners run the inn? How many employees do you need to hire to help with your businesses? The fewer employees you have (because family is working), the higher your profit margin will be.

The two profit centers for your restaurant are breakfast and liquor sales. You can make a lovely, light breakfast at little expense or you can make a grand breakfast at a higher expense and charge even more. Liquor adds a whole new dimension to your decisions, thoughts, and offerings.

Colorado, for example, has many types of liquor licenses including beer and wine, 3.2% beer only, full liquor, tavern, hotel and bar, and entertainment. Colorado also has a B&B Liquor Permit which allows innkeepers to give alcohol to their overnight guests during a specified four hours each day. What options does your location allow? Going to your state’s Bureau of Alcohol, Tobacco, and Firearms (ATF). I strongly urge you to evaluate alcohol and its ramifications before you make it part of your inn and restaurant.

What will a “bar” do to the atmosphere of your inn? What about drinking and driving? Check with your insurance agent to understand your liability and its costs. How will this impact guests who have drinking problems? Alcohol may be a profit center for you, it also may be a problem center for you.

Boris Bless, a former chef in Boulder, Colorado, summarized his thoughts on restaurants in B&Bs with this:

  • a restaurant within a B&B saves rental costs
  • taxes, licenses, and fees are a high overhead
  • start-up costs are high
  • capital investment is large, $28­55/square foot, depending on your decor (late ’80s figures)
  • operational room should be planned at 40 square feet/chair (±10 sf)
  • there is also space needed for dry good storage, office, kitchen, bathrooms, …
  • country inn restaurants and restaurants that operate by reservation only can save up to 3 percent on operating costs (labor and food) because they can better determine their load at any particular meal

Operation and management should be done by a professional restaurateur.
–Boris Bless

What are you restaurant plans now?