I Started a Restaurant Business With Ksh. 500,000 And Failed. Here’s Why

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Ksh. 500,000.

What would you do if you had such an amount of money?

Would you start a hardware business, a salon business, a bar business, or just another executive barbershop in your hood?

Two months ago, I was faced with such a hard decision.

I had Ksh. 500,000 in cash.

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Somehow, it kinda remained as my pocket change after deducting all my expenses for January and panning for February-March 2021.

In my mind, I was like, Kenn you should party this money out.

“You really worked hard in 2020 and it’s only fair that you throw some sherehe to remember the year.”

I guess that was the other side of my brain that only thinks about women, women, and more women. Hehe…

And if I had not felt the urge for a long call, that would have been it.

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I’d have drained every cent on women and booze (I don’t drink by the way).

Then long call happened and everything changed.

How, you ask?

Funnily, I’m that guy who only thinks investment while pooping.

Any other time I only think about how to spend money.

But, can you really blame me?

I’m from that tribe.

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The tribe that spends, spends, and spends.

The tribe that spends money even before it’s earned. Hehe…

And by the way, the part about thinking big while in the toilet is not a joke. It’s true: –

  1. I can draw a profitable financial roadmap when pooping.
  2. I can evaluate my comfort zone and decide on what risks to take.
  3. And most importantly, my mind just doesn’t get tired examining the return on investments while I’m pooping. Hehe…

And on this fateful day before deciding that the restaurant business was it, my pooping mind did something crazily out of this world.

It went ahead and even showed me some key financial metrics that I’d however not imagine watching Netflix.

  • Balance sheet
  • Income statement
  • And cash flow

for my soon-to-be profitable restaurant business.

In the end, I decided on a restaurant business flushing out everything else.

And it’s needless to say that by the time I was leaving my comfort zone (the bowl), I had everything well planned out.

I had settled for a business name, for a location, for a business plan branding among other important factors to consider while starting a business.

It wasn’t so long until I paid for a premise. That’s rent – Ksh. 34, 800 plus another Ksh. 30,000 deposit at K-City business park, Block K-822.

It would cost another Ksh. 100,000 to do the interiors and fit the premise with essential storage cabinets, ventilation chimneys, electricals among other stuff.

Weeks later, I printed branded T-shirts for kitchen staff, delivery guys, waiters, and a cashier.

Not to forget invoices and receipts. Total printing cost coming to around Ksh. 10,000.

Kitchen appliances.

Have I already mentioned how much I spent on kitchen appliances?

I spent Ksh. 51,700 on a 300ltrs chest freezer, Ksh. 8990 on a microwave, Ksh. 1,999 on a Chefline 36CM Two-Sided Double Grill Non-stick Pressure Pan, Ksh. 36,000 on a chip fryer and another 20,000 on sufurias, utensils among other essentials.

It was crazy.

Miscellaneous 

Not to mention that I also spent another Ksh. 135,000 to purchase two used motorbikes for deliveries.

I bought them from Watu credit.

To this end, you would think it was over and now my business was ready to fly.

No.

How do you start a restaurant business without food? Hehe…

I spent Ksh. 60,000 to stock food and soon after, it was on.

Together with my team, we crossed the green line. Joon Kitchen was now operational and delivering food in Kisumu and environs.

To trample our competition, we even made an app for the business. Joon Kitchen on Playstore.

Can you imagine us? We were badass.

Then after 12 weeks, we hit the dead end.

5 Reasons Why I Believe My Restaurant Business Failed in Just 3 Months.

  1. Bad Product-Market Fit.

While it is a no-brainer that people love food and if it is good they will buy it regardless of the cost, it is also true that Kenyans are impatient with hunger.

Using an app or web app to order food means you will wait a while before you receive your order, most of our clients didn’t have that patience.

They ordered once for the experience and moved on to the next closest shop. And only ordered again if they had no other choice but to wait.

  • To an extent, I would blame myself for being so much in love with my product (mobile app) and for trying to drive it so much even when the market needed real people, the real waiters on the ground.
  • Much as I consider my business a failure, and I take fault in not pushing it so hard, I also blame the kitchen staff for not driving enough traffic to prove the idea adequately.
  • It is also obvious that we miscalculated the share of the market we needed to make our restaurant business viable. We should have gone back to the drawing board.
  • We were ahead of the Kisumu restaurant market by a few years. Look at it from this, angle, no small restaurant or hotel uses mobile apps and web apps to take orders and deliver food but us.

2. Poor Business Model.

Unlike the normal restaurants that allocate sitting spaces for walk-ins, my business didn’t.

I structured it differently and put more emphasis on serving corporate clients. Almost entirely serving offices only.

Of course not putting into consideration the other set of clientele and not reasoning that there could only be so many office workers in Kisumu, Kenya.

In the end, it came down to short customer lifetime value and the high cost of acquisition of corporate clients.

Looking at it now, I could have done things differently, but how would I have known?

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Remember, even the best startups face these challenges. No matter how good they are, there is always enough room for strategic error.

3. I gave up too early.

Starting to write this part I remembered a poem I read in high school titled: –

The sinking of the titanic.

Specifically, the part where after the titanic breaks into two a character in this poem by the name Shine tells the captain,

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“if you swim me across the sea, I will give you all the gold I have.”

And because the captain knows that it would be a hustle swimming with this fat foolish man on his back while also carrying gold; he replies to Shine, “there is more gold on land than there is at sea.”

Even though I read this line like over 10 years ago, I still carry the message with me to date.

There is more gold on land than there is at sea.

Even though I did not run this business for so long, I could already feel like I was chasing the gold at sea with a fat foolish man on my back.

So, what did I do?

I dropped my fat man (the business) and the gold (the promise of future profitability) and decided to save my life, my assets, and my money for a brighter tomorrow.

Don’t get me wrong though.

Getting out too early may be a bad sign, especially if you just invested half a million in a business that barely sustains itself.

But would you rather go down the drain or save a little you’ve got left?

If I was in the same shoe again, I’d quit early.

The problem is if you quit too early then someone starts the same business and they become successful.

Won’t that hurt? But at this point, if you ask me, his success should be none of your business.

Unless of course, you have improved your product, cleaned your strategy and you want to try again.

4. Bad Pricing.

Now that I’m reflecting back on this business, I think I was running a charity. Not a business.

How the hell did my clever pooping mind convince me to do deliveries with the same price charged at walk-in restaurants.

As in, a delivery business with 0 delivery fees? How?

Worst of all, our menu reflected sumptuous meals for peanut prices.

If you wish to start a restaurant business and would not like to suffer the same fate I did, consider these costs before you set your prices.

joon menu

  • Factor in your Costs: Rent, packaging, marketing—include these costs in your estimates.
  • Revenue Target: How much money do you ultimately want to make with your restaurant business?
  • Your Customer: What is the market willing and able to pay for?
  • Your Competition: How much are competitors charging? Can you justify charging more?

While at it, remember these two key points: –

  1. Price too low and you’ll go out of business from bad margins.
  2. Price too high and you’ll go out of business because you don’t have enough customers.

We went out of business because we priced too low.

If we priced higher, we would have justified that extra cost on deliveries, and our business would have survived.

Remember, pricing should continually be reevaluated throughout the lifetime of a business. I just didn’t have the patience.

5. Poor Hiring Decision 

For a restaurant business to run effectively, more so if it makes deliveries, it needs a special kind of people working.

Poor hiring decisions can refer to failing to fill essential positions entirely or failing to hire the right people.

Undoubtedly, my business failed to attract individuals who are entrepreneurial at heart yet committed to growing the business they work for.

We needed people with: –

  • Previous food handling experience
  • Previous small business experience
  • Social media presence
  • Two years of experience
  • Founder aspirations

Yet the people we hired to work for us were the opposite.

In my defense, this business could not raise enough cash to pay professionals who check this list, let alone raise enough money to sustain itself.

6. Bonus Point 

I lost track of the main objective of starting this business which was, to drive sales.

If I was to do this thing again, what would I change?

  1. I’d definitely include a sitting area in my new business.
  2. I’d re-evaluate my pricing
  3. Hire right
  4. Drive sales
  5. Keep going
  6. And tone down my business to offer what the current market needs.

Conclusion 

Good luck starting your new restaurant business. I hope this helps.

Do you have a similar experience or even a worse experience with your business?

Let’s talk in the comment section below.

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