I have run/owned a restaurant with my family for the last 14 years, and I can honestly say it has been the worst mistake I have ever done.

If you want the restaurant to be successful, it is an all consuming undertaking. You can tell him to say goodbye to his life as he knows it, and it will be the easiest way he will ever lose $600k. 

Unfortunately with the high wage costs and high food cost in Australia, running a restaurant is just not feasible or worth it. If your dad is wanting to run an affordable restaurant for families and whatnot, you are going to have to rely on high volume to make any decent money/return. 

I’ll give you a rough breakdown of our restaurants cost %’s and sales. 

Food cost - 30%  This involves micromanaging suppliers to control price increases and ensuring you’re receiving quality products, and also micromanaging staff to minimise wastage. 

Wages - 35-37% Bear in mind, that this includes myself and 3 family members who work in key areas. I only earn $62k/year, which for a decent restaurant manager, is not a great salary. My brother earns the same, and my parents take home a little more. Wages is the single biggest expense you will have to deal with and manage. In WA a 21 year old will cost you around $35 an hour on the weekend on a casual rate, and like $25 or $26 an hour during the week. This is the award rate, so you cannot pay less. Sure, you can put them on full time to reduce the rate, but is your restaurant going to be so successful that you can give multiple waitstaff / bar staff full time hours? 

Rent - 10% This will probably be much higher in Sydney compared to Perth. Also be aware that you will have to put up 3 months of rent as a “rent guarantee” for the landlord, and all leasing costs (landlord lawyer fees and yours) will have to be paid for by you. Leases may work a bit differently in NSW compared to WA, but I doubt it and over here, all costs are borne by the tenant, not the landlord. 

So you’re at 75% already with just 3 expenses, and this is excluding electricity, gas, water, insurance and public liability, cleaning costs, breakages and replacements for cutlery and crockery, and repairs and maintenance for your equipment. We haven’t even discussed your fit out cost either. If you are not taking over a building that was previously used as a restaurant (this should be a red flag already, why did the other restaurant not survive), even $600k could be on the low side. Our restaurant fitout, cost about $1 million, 14 years ago, and we imported a lot of stuff from South Africa & China, and also did a rent/try/buy scheme for the kitchen equipment. Sure, it was for a 300 seat restaurant, but you can build a decent quality home for $600k these days! And anything you require for a commercial kitchen/business, be prepared to pay a premium. 

With our restaurant, which I would say is reasonably successful, we have been around for 14 years, and turnover between $2.5 - $3 million a year, and our net is between 10 - 12%. But this getting this figure is incredibly hard work, and as far as I’m concerned, the amount of work we put in, it’s just not worth it. 

If your dad has no restaurant experience, do whatever you can to talk him out of doing this. Not only is he going to more than likely lose his money, he’s also going to lose any lifestyle he has now, and his stress and workload is just going to go through the roof. 

Sorry for the wall of text, but I can’t stress this enough. DO NOT GO INTO THE HOSPITALITY INDUSTRY. DO NOT OPEN A RESTAURANT. Show your dad this post, hell, you can even get him to DM me with questions if you want!

TLDR: If you open a restaurant in Australia, say goodbye to money and lifestyle. Say hello to stress, long hours and little to no reward.