Your mission should you choose to accept it: opening a restaurant

Tags: creation, hospitality industry

Is starting a restaurant in Luxembourg mission impossible? Here are 5 key questions to be able to say challenge accepted to your business project and turn it into a sustainable entrepreneurial adventure.

1. Am I qualified?

HORESCA (1) is the benchmark organization for restaurant businesses in Luxembourg. It offers a highly complete guide (2) with a new version published annually, where you can find all the information you need to get started.

The various activities in restaurant and catering services each have their own specificities. Here are the qualifications your will need to be an eligible candidate for running your own restaurant:

Either have completed training for access to trade professions with the House of Entrepreneurship or equivalent (EU) (3)
Or have a previously obtained business permit.

Do be aware that “catering” activities, classified as craft trades (4) and restaurants with a capacity of over 50 people, considered to be classified establishments (5), are subjected to different legislation. If this applies to you, no need to panic! You can find more information in the links at the end of this article.

2. Am I up to date for all the regulations?

A “Trade - Restaurant establishment” business permit is required (6). You can submit a request online via myguichet.lu or have the House of Entrepreneurship accompany you in the process. This permit will allow you to:

Sell prepared foods to eat-in. You can of course do delivery or take-out as well. However, to not be considered as a caterer, you must sell “eat-in” dishes as well.
Sell alcoholic and non-alcoholic beverages for on-site consumption or take-out, so long as you have the appropriate license (7)!

3. Which legal form?

A Sarl could be an appropriate choice as you will be needing high capital, employees and a lease… the notion of “limited responsibility” makes perfect sense given the situation.

For this step, you can seek advice from the House of Entrepreneurship (HOE). You can also check out our article about legal forms to brush up on the topic before contacting the HOE. It could save you some time.

4. Do I have the necessary financial resources?

Like for projects of all sorts, this part is extremely important and absolutely indispensable. You have to estimate the budget you need (at least €50,000 or more depending on your project, the location and type of venue) to start your restaurant.

Why? Firstly, because you need to plan for certain expenditures when starting your activity:

Your venue (often two or more rent payments up-front, and/or the purchase of business assets)
Renovating/tailoring your space
Buying stocks
Buying an alcohol license
All costs linked to your choice of legal form (notary, lawyer, certified accountant if required)

How to fund your project?

You can consider applying for a bank loan. Be aware that to do so, you will need a personal contribution of at least 25-30% of the total amount requested. You also have to present a business plan, as well as 3 and 5-year financial estimates. You can find helpful details and advice from a field expert in our article “How can you convince your bank to grant you a loan?”. You can also seek help from microcredit organizations such as Microlux.

How to calculate your turnover and monthly fees?

To estimate your turnover, there are various aspects to examine:

Your turnover will clearly depend on your seating and production capacities
Depending on your menu prices, determine a per-customer average to set your “average bill”
To set your prices, first take the cost of raw materials, then add a margin. You should compare your prices with the competition and nearby restaurants, etc. (this is very strongly recommended!)
Lastly, make sure you are covering your monthly fees at the very least, which include: your raw materials, rent, fees (water, electric), personal fees, insurance, accounting fees (about €2000/year), all applicable taxes, ancillary services such as software subscriptions, website hosting, costs relating to advertisement and communications, etc.

We recommend that you request quotes to have a better upstream visibility of your monthly fees. Don’t be shy to check out the prices at nearby businesses to get a realistic and achievable idea for your own business.

5. What location should I choose?

Luxembourg’s real estate market is obviously a challenge to take into consideration. There are few vacant spaces and rent is relatively high… That’s why you should plan ahead and be ready to sign a lease the very moment you find that perfect place.

Having a clear idea of your target clientele will help you choose a location. Ask yourself these questions:

Who will be interested in your menu?
What population type, what age group?
Where can you find those people?
How can you get through to them?
You also need to think about the budget you can reasonably put toward rent, which will impact the choice you make.
Look into the surrounding environment, traffic rates and types of businesses nearby.

One last tip:

Having an online booking system and home delivery can be a plus. There are several in Luxembourg.
Your restaurant’s image is important too, so do not neglect it! A restaurant’s reputation can make all the difference in the world!
Think of your customers first. Their experience should make them want to talk about the food, and much more! The atmosphere and the quality of the service are also of the utmost importance.
And lastly, remember to factor in about your own private life/professional life balance. Running a restaurant is a passionate experience, but it can be very intense!

For more information, we’ve selected these Meet an Entrepreneur videos for you, with restaurant owners sharing their passions and the challenges they face.

To take things further…

(1) HORESCA / (2) HORESCA Guide (page in French) / (3) Training for access to trade professions organized by the House of Training or equivalent (EU) (training in French) / (4) “Catering” activities / (5) Operating permit for classified establishments (commodo/incommodo) / (6) Operating permit for HoReCa establishments (hotels, restaurants, cafés) / (7) License for establishments selling alcoholic beverages