Can a Restaurant Owner Become a Millionaire?

The restaurant business is not for the faint hearted. You really have to love what you’re doing. The hours are long and the profit margins are low. But is it worth it? … Can a restaurant owner become a millionaire?

The short answer is yes. A restaurateur (or restauranteur?) can absolutely become a millionaire.  But it’s not easy. In fact, there is a joke that says the best way to make a million in the restaurant business is to start with 2 million. That being said, it is possible and we’ll show you how …

Here are some ways how to get rich in the restaurant business and maybe even become a restaurant owner millionaire!

Build a Large and Very Busy Restaurant  

Can a Restaurant Owner become a Millionaire with just one location?

The profit margin of a restaurant can vary from 0 – 15%. There are certain ways to maximize that margin.  One way is to serve more items with higher margins. Some examples of high margin items are pizza, breakfast foods, fountain sodas, pasta dishes and liquor. The other way to increase profitability is to decrease expenses. We will cover this in another article.

For arguments sake let’s say the profit margin of a restaurant is 10% of gross sales.  In order to make a million dollars in annual profit you would need to have $10 million in gross sales. Is that even possible? 

Restaurant Business Magazine puts out an annual list of the Top 100 grossing independent restaurants in the US.  Coming in at #100 on that list in 2020 was Virgil’s Real Barbecue in Las Vegas with gross sales of $11,391,678 and an average check of $27.

Topping that list was Carmine’s in Times Square with gross sales of $39,080,335 and an average check of $40. Is it easy to build a single location independent  restaurant that does $10 Million in gross sales? No.  Is it possible?  Absolutely! So yes, it is possible for a restaurant owner to become a millionaire with just one restaurant

Open Multiple Restaurant Locations 

While becoming a millionaire as a restaurant owner with just one restaurant can be accomplished,  it’s not easy. You will need to have a great location,  amazing food and a lot of luck. But there is another way. Opening additional locations. Most of the large iconic restaurant chains we love started out as one single location.

But before you even think about opening another location take care of your first location first. Make sure that you have a system of procedures and everything is running smoothly.  If your first restaurant isn’t profitable why would you want another? 

Opening a restaurant is very expensive and risky. Opening multiple restaurants is even worse. Make sure to have all your ducks in a row and know what you are doing. Make sure you have a system in place and great general managers in place. 

Make sure to get good legal counsel and talk to people who have already done what you are trying to do. Opening multiple restaurant locations can make you very rich. Just be careful and make sure it’s what you really want to do.  

Can a restaurant owner become a millionaire with multiple locations? Absolutely!

Build and Sell Restaurants 

Can a Restaurant Owner become a Millionaire by building and selling multiple Restaurants? 

My friend Rob has built and sold over 30 restaurants and become a multi millionaire in the process. His current restaurant has gross sales of about  $6 million a year.  He took over the location from a previous restaurant that had failed.

Rob was able to get it for a song because the landlord didn’t want to have an empty building. Most of the equipment he needed was already there and he was able to get it up and running in 30 days.

I didn’t ask Rob how much money it cost him for the restaurant but I imagine it couldn’t have been more than $250K. With the level of sales he is doing now, less than 6 month later he could sell it for $1.5 to $2 million. Rob has done this same process many times and become a millionaire many times over in the process.    

If you want to buy or sell a restaurant you can contact a Restaurant broker.       

Franchise Your Restaurant

Can a Restaurant Owner become a Millionaire by franchising their restaurant concept?  

Building one large and successful restaurant, expanding to multiple locations and / or building and selling off multiple restaurants can take a lot of money and a lot of time. But there is a faster and less capital intensive way.  

One of the best ways to become a millionaire in the restaurant business is to franchise your operation. This will allow you to expand to multiple locations without any additional cash outlay on your part.  Basically what you are doing is cloning your restaurant operation so that other people, known as franchisees,  can run a business just like yours. 

You give your franchisees the right to use your name, branding, and business model in exchange for an upfront franchise fee and ongoing royalties. Once you have a good number of franchises across the country you can afford to do national advertising to make your restaurant a household name nationwide. This process has made numerous restaurant owners into millionaires many times over. 

Some examples of franchises you may be familiar with include  such iconic brands as McDonald’s,  Taco Bell,  Dairy Queen, Dunkin Donuts and Subway.   They all started out with a single location and expanded by franchising.

Franchising is not a magic bullet that will ensure success. Before you decide to franchise your restaurant concept you will need to make sure it is successful. You will need to fine tune your business model and menu and have a standardized operating procedure (SOP) that will support multiple locations nationwide and even internationally if you want to take it that far.   

Focus on your first location and make your restaurant the best it can be. Get it profitable and running like a well oiled machine. Know your numbers and get your profit margins up as high as possible. Look around the market and see if your concept is unique and special enough to bring to the masses.Then talk to a franchise consultant or franchise attorney to get some advice on how to bring it to the next level. 

Buy Your Restaurant Real Estate

Can a Restaurant Owner become a Millionaire by buying the building that their restaurant is located in?  One of the largest expenses of any restaurant is the rent they pay to their landlord.  It is quite possible that the owner of the building is making more money than the owner of the restaurant. So how can you get rid of that expense?  Buy the building. 

Now you can make money as a restaurant owner  and additional money as the landlord. This will also protect you from future rent increases.  Now you don’t have to worry about spending years building up a successful restaurant only to have the rug pulled out from under you when your lease is up and the landlord raises the rent a ridiculous amount.   

If you are buying an existing  restaurant ask if the real estate is available as well. Often it will be for the right price. If you are looking for locations to start a restaurant from scratch try to get an option to buy the real estate as well. If you already have a restaurant, talk to the landlord to see if he or she will sell you the building. If they say no, keep asking occasionally and maybe they will eventually relent.          

Lease Out Your Restaurant  Business

Can a Restaurant Owner become a Millionaire by leasing out their restaurant business?

One of the biggest obstacles that prevents a restaurant owner from becoming a millionaire is the fact that owning a restaurant is very time and labor-intensive. Most restaurant owners spend more time working in their restaurant than working on their restaurant business.

Developing a system that allows you to have multiple locations without having to be there is one way around this. Franchising your business concept is another way around this. With franchising, you get third-party operators to operate multiple locations and you get a small percentage on whatever they do.

Another way is to lease your restaurant. Once you get your business running smoothly, know your numbers and have  a system in place you can find someone to run the restaurant. They pay you a certain amount every month and keep everything over that. Or maybe they pay you a certain minimum monthly and a small percentage of sales.  You still own the restaurant and can sell it at some point if you want to. 

If you structure it properly this can be a win-win arrangement for all parties involved. You will still get cash flow from the restaurant while stepping away from day to day operations. It’s a great way to create passive income from your business. Your operator will be able to take advantage of the good will and income you have  created without a huge investment. 

You can also do a lease-to-own arrangement where the lessee (person that is leasing) has the option to purchase the business at some point. Just make sure that your operator knows what they are doing so they don’t run your business into the ground and ruin all your hard work.  If you own the real estate, like suggested earlier  you can sell  the business and still collect rent. 

Win The Lottery  

If all else fails, you might as well try playing the lottery. People from all walks of lives have won and it might as well be you. Remember you have to be in it to win it!

Conclusion

Can a restaurant owner become a millionaire? Yes,  Will it be easy? No. But it can be done. You can either focus your efforts on a single restaurant or branch out and open multiple locations.  You can also look into franchising your concept. It’s never too late.  Harlan Sanders opened his first  Kentucky Fried Chicken (KFC) franchise in 1952 at the age of 62.  

Jack Bastide is a Restaurant consultant who specializes in helping restaurant owners make more money. Check out our Restaurant Resources.