A lot of the true magic of a restaurant – from dish development to staff morale – happens behind the scenes, or rather, behind the swinging kitchen doors. In the same way, a lot of the business thinking and running costs of an establishment are not easily obvious. With the help of local restaurateurs, we count some of the ways a restaurant may cost you.  

1. Setting up
Starting up a business usually comes with some hidden costs, and this is especially true in the restaurant industry. There are legal costs associated with obtaining a liquor license, for example, and top-tier establishments require prime locations, with higher rental costs.

Extra time and effort may go into finding and buying ingredients and things that weren’t foreseen or aren’t easily available. This was a lesson for Graham Oldfield and his wife, Philippa, the owners of Bao Down in Cape Town. He says, “Things don’t always go how you envisioned it. The layout may change due to the structure of the building.” 

 

View this post on Instagram

 

A post shared by Bao Down (@baodownrestaurant)

2. Selling enough
Natasha Robson-Lovato is the owner of Sweet Tea and Chickadee, an American-style bakery and cafe in Johannesburg that recently closed its restaurant operations to focus on its farm and events. “When I first started, it was surprising how much you had to sell in order to actually turn a profit,” she says. “I had never been trained in the industry and I just thought it would be easy.” 

3. Seasonal shifts
Callan Austin is the co-founder and executive chef of Eat Out 3-star restaurant Dusk and its next-door cocktail bar Nocturne in Stellenbosch. He says the seasonal nature of the local dining industry needs to be anticipated, with high earnings during peak times balanced out by the off-season. “I’ve long advocated that South African diners need to recognise the true cost of running establishments like ours; ideally, we should be charging at least 40% more than we currently do.” 

4. Being an all-rounder
When the Oldfields opened their restaurant, they didn’t foresee the different aspects of the business. They worked on everything from administration and maintenance to marketing. “We never expected to have so many different roles,” Graham says. 

5. Knowing your costing structure
Costs are only unexpected if you haven’t tried to plan for them. Doing as much as possible to understand where you are spending and how this contributes to your offering’s value and profit goes a long way. “Know your worth and charge accordingly,’ Robson-Lovato says.  

6. Forecasting well
Beyond knowing what something costs at a particular point in time, forecasting for the future is a tricky and crucial skill for owners in a stressful environment. Austin says, “The unpredictable nature of the industry makes forecasting difficult, but over the two years since we opened, we’ve identified trends that help us plan for the future.” 

 

View this post on Instagram

 

A post shared by 𝑫𝒖𝒔𝒌 (@dusk_restaurant_)

7. Regular maintenance
From maintenance to replacing equipment, continually investing in the business should not be a surprise to an experienced restaurateur. Austin gives the example of replacing linens three times a year, which costs around R35 000 each time. There are also locally specific costs. Robson-Lovato says, “Here in South Africa, we do have the cost of generators and diesel fuel, but we can hardly call that unexpected after years of load shedding.” 

8. Staffing costs
Austin warns not to underestimate staffing costs, particularly at high-end establishments. “Our team includes highly trained and experienced individuals, who embody our brand, and their expertise comes at a cost,” he says. “Interestingly, restaurant staff salaries often match or exceed those of professionals with degrees working in large firms.” 

9. Rising costs
While knowing your costs is one thing, this might drastically fluctuate with time. “The challenging part of running a restaurant right now is not the unexpected costs, it is the rising costs,” Robson-Lovato says. When product, rent and utility prices increase, you cannot directly transfer the increase onto your customers, instead, you must strategically expect these possible changes. Beyond the larger costs, it’s easy to overlook how essentials, like cleaning costs or clingfilm, contribute to the overall bottom line.  

10. Unexpected growth
While success is usually expected, or at least hoped for, it may come faster than expected and carry some costs with it. Oldfield explains that they upgraded their restaurant space drastically during the COVID-19 pandemic, moving from a 30-seater to 85 seats. “We didn’t expect to grow so quickly, but the business wouldn’t have survived through the pandemic had we not moved.” 

As Austin says, “running a restaurant is a constant exercise in dealing with the unexpected.” In this dynamic, ever-changing environment, there are many unexpected challenges and costs, but the restaurants who roll with the punches and come out successful create memorable experiences for their customers.