Bootstrap Startup: Inside A $13K Restaurant Opening

Opening a restaurant is usually a spendy proposition. You can't open a Fatburger hamburger franchise for under $500,000 these days, and costs on a new fine-dining restaurant can easily top $1 million before a single customer sits down to eat.

The usual process for creating a "name" restaurant involves hiring a top-flight restaurant design company, buying all-new equipment, and completely gutting a large, pricey space.

Then there's the big money needed to hire a design firm for top-notch branding, menu design, and marketing campaigns.

But if you're clever, you can skip all that and test out your new restaurant idea without shelling out big money. That bootstrap approach is one favored by Birmingham, Ala.-based chef Chris Dupont. After cutting his teeth cooking at New Orleans restaurants, Dupont wanted to strike out on his own.

Cutting to the bone

He opened his first eatery for just $7,000 back in the early 1990s, after finding a neglected 7,000-square-foot space for just $350 a month in a Birmingham suburb. He converted part of the ample property into living space where he took up residence while the restaurant got going.

The French-influenced fine-dining restaurant he created, Cafe Dupont, thrived and moved to downtown Birmingham.

Recently, Dupont decided he wanted to create a more casual place to experiment with international flavors, and started looking to bootstrap another restaurant opening.

Would soaring real estate prices make it impossible to open a restaurant on a shoestring now? Dupont had confidence he could repeat his process for his new concept, Tau Poco, where diners can choose everything from Argentinian chimichurri sauce to couscous to kimchi to include in their dish's mash-up of flavors.

Secrets of a low-cost restaurant

He ended up spending a bit more, but not much. He says Tau Poco, which opened in October 2013, cost under $13,000 to open.

The key, Dupont says, is to think of the first restaurant in a new concept as a test case. Find a small, existing restaurant space, give it a cosmetic makeover, and get great food out there, so diners can start the buzz going.

"Ultimately, you'll be graded on the food," he says. "Diners do not come back because you put in a $600,000 kitchen -- they're coming to eat the food."

If diners are receptive, let revenue from the eatery fund a bigger restaurant down the road, instead of shooting for the big, showy version right away.

Here's what he spent the money on -- and how he kept costs down to the bare minimum:

• Tune out advice. Dupont recommends drawing up your own budget and rejecting conventional wisdom about what is a "must-have" in your eatery on opening day. "So many people are going to inundate you with ideas on what you have to have," he says. "If you listen to that, you'll end up spending five times what you need to."
• Think makeover. Dupont sleuthed out an 1,800-square foot former restaurant space in Birmingham's rebounding downtown which he says had seen several previous eateries fail. So rent was cheap -- just $1,000 a month -- and the layout was already set up for cooking. Outdated fixtures and furnishings were removed and replaced with low-cost alternatives that fit Tau Poco's theme and look.
• Buy raw materials. For new flooring, Dupont shopped Home Depot , selected dirt-cheap slate tiles, and then paid a contractor to install them. Total price: $2,000.
• Focus on essentials. One needed expenditure was upgrading plumbing in the space, some of which was flat-out broken. Fire-rated paneling for the kitchen, another critical item, was $1,500.
• Hire local for branding. Instead of finding a big-name design firm and spending five figures, Dupont hired a local artist and paid just $5,000 for all branding and marketing materials, from wall murals and menus inside the restaurant to the sign outside. Even better, $2,000 of that payment was made in restaurant scrip instead of cash, further lowering up-front costs.
• Reuse. For that sign, Dupont took down the shop's existing sign, turned it over, and had his branding artist paint the Tau Poco logo on the back. This saved both on materials and on red tape and permit costs -- reusing the sign meant Dupont could skip the city's signage review process.
• Lease. Dupont needed to get rid of a huge refrigerator case that took up too much space and replace it with smaller cases, which he leased to keep up-front costs down.
• Do without. Tau Poco has no soft-drink machine, cup dispenser, or ice machine, all of which Dupont saw as optional items that could be added later if needed.
• Buy wholesale. To get an upgraded oven, Dupont shopped restaurant supply stores, scoring an oven/stovetop combo for $2,000.

The low-cost launch doesn't seem to have hurt Tau Poco with diners -- in the first month, Dupont says the restaurant is seeing about 100 diners a day with an average $10 check. If the concept proves out, Dupont is hoping to repeat his low-cost startup process and open more Tau Pocos in other cities.

"You don't need $100,000 to open something you're passionate about," he says. "Anyone could open a restaurant with a credit card, and get their business going."