Small Business Finance Lessons From A New Restaurant Owner

Glen Wagstaff, an attorney based in Utah, opened an international consulting firm a couple of years ago. His first client was an ice cream company in Brazil. Wagstaff and his team helped them get FDA approval. “They were the first ice cream company in the history of Brazil to get approved by the FDA,” he explained. “They’re the first dairy company to be approved in the last five years, and they’re the first food company to be approved in the last 2 years.”

It led to recognition from the Brazilian government, and a host of announcements and stories followed. Then Wagstaff started getting a lot of interest.

One contact was from a Brazilian pizzeria owner in Utah. He wanted to sell the business or transition out and move to Florida. Wagstaff’s team presented a whole restaurant concept with franchising opportunities to the client, but it didn’t work out. So he and his business partner decided to try it themselves by starting a new restaurant based around the Rodizio style pizza restaurants common in Brazil.

Here’s what Wagstaff learned about the financial elements of running a business when he opened his restaurant.

A fast start may limit your funding options

Wagstaff and his partner have worked with lots of business owners, so they know that “finding startup capital is the hardest, even when you’re purchasing an existing business that’s doing well” like they were.

After investing their own money to open the restaurant, they got a surprise from the bank. “It’s funny because we opened our doors, and two days later the bank gave us a line of credit, and we didn’t even ask for it,” Wagstaff recalls. “They just gave it to us. So once you start, then the operating capital. That’s easier to find. But the startup capital is hard.”

They looked at traditional loans, startup capital loans, SBA loans, and even hard money loans, but they were trying to open fast — within three months — so those options would take too long. “We felt like we could get an SBA loan, but the timing would have just taken a very long time in comparison of what we what we wanted and what we needed.” Luckily, they were able to self-fund, but knew “if we needed more capital we would bring a capital partner.”

You probably need more money than you think

The restaurant opening was delayed, but it wasn’t because of finances. Instead, Wagstaff encountered multiple problems, including figuring out the details of the health inspection, delays in securing the right name and the time-consuming task of finding quality staff. “We knew more or less what it was going to cost, and then it cost three times more, and everything takes three times longer than you think,” he said.

If you’re looking to enter the restaurant business, especially sooner rather than later, ensure you have your financing in order and a plan for securing additional funding if issues arise. Consider multiple options, including fast business loans and investor financing, to raise the capital you need to open and keep your business going until you have enough customers to keep the doors open.

A business plan doesn’t always translate into real life

Wagstaff writes business plans for a living, and he had a detailed business plan in place, though he struggled with market research. “One of the things we always do when we do a business plan is is competition research.” Their concept — Brazilian-style “never-ending pizza” with rotating flavors — didn’t fit neatly into existing categories.

Should they research pizzerias? Brazilian restaurants? All-you-can-eat buffets? It took multiple meetings with potential investors asking questions they couldn’t answer before they figured it out.

“You have to know who you’re trying to be so that you can research your competition properly,” Wagstaff learned. If your concept is unique, you may need to look at several different types of businesses to get accurate financial projections.

He also underestimated how long it would take for the business to support itself. He thought it would take three months. Those same three months passed before they even held their grand opening.

He said while they hadn’t formally gone in and adjusted the written business plan yet, he’s had to adjust his original plans as things have gone on.

Don’t forget the small details when you’re focused on the big picture

Just a week and a half after opening, they were in for a surprise.

“We looked at the bank account and realized that there was no money,” he said. “We hadn’t linked our merchant processing account to our bank account yet, and so the money wasn’t flowing.”

It was a humbling reminder that even with all the planning, research and projections, real-life execution doesn’t always cooperate.

Be prepared for obstacles and for things to go wrong. Even the most thought-out business plan can’t account for issues like Wagstaff faced, but it can help you pivot and overcome them.

The smartest (and most expensive) decision they made

Neither he nor his partner had restaurant experience. They knew business, but restaurants were a different beast entirely, and they weren’t ready to run the pizzeria themselves.

So they decided to hire someone instead — a restaurant consultant who has helped launch over 100 restaurant locations. This consultant knew pricing and how to hire staff. He also helped provide confidence and peace of mind when things went sideways during the delayed opening process.

“The biggest thing that we did, and it was the biggest cost and the biggest reason why it costs us so much more but also the biggest security, in my opinion, is that we have on our team a restaurant consultant,” Wagstaff explained.

This taught Wagstaff a valuable lesson about hiring: sometimes paying more upfront can save you a fortune later. When they were deciding whether to hire a manager who cost more than they’d budgeted, Wagstaff realized that “having the right manager is gonna save us more money than saving a couple of dollars an hour on the wrong manager.”

Wagstaff’s biggest takeaway: vision trumps passion

You may be surprised to learn that Wagstaff wasn’t passionate about running a pizzeria. He likes pizza, but he wasn’t dreaming of slinging dough and managing kitchen staff.

What kept him going through the tough times was his bigger vision of building a scalable national brand and creating something unique in the market, especially as a minority-owned business.

You don’t need to love every aspect of the day-to-day work, but you need to believe in where you’re heading long-term. Otherwise, you’ll quit the first time things get hard, which is almost guaranteed in the restaurant industry.

Don’t wait to start until you have it all figured out

A few months into operations, Brazuca Pizza is just getting started, but Wagstaff remains optimistic. They’re building the foundation for something bigger, a scalable concept that could work in multiple locations.

His final piece of advice? “It’s more important to pull the trigger and get things going than to worry about getting everything right. You figure out the stuff along the way. It’s gonna work itself out, and you have to go in with the long term mentality.”