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How to Invest in Restaurant Business in Germany?

The moment you discover you can put aside more money than you need to spend is a pleasurable realization that quickly becomes a responsibility. Experts claim it’s not reasonable to put money aside if you can invest it. Moreover, if you decide to invest, what should you invest in?

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  • High-yield savings accounts,
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  • Cryptocurrency;

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But what if you want more fun and a lively adventure instead of counting numbers? What if you want to invest in the restaurant business instead of sitting in front of a computer screen? We’ve got a few hacks for you.

Is a restaurant a good investment?

Some questions need to be asked from the start or even before. The restaurant business is generally described as harsh to invest in successfully. There are two directions you can follow within this scope. First, you can buy a restaurant and do it all on your own, which means you have an entire risk of failure solely on your shoulders. On the other hand, owning all the business means you get all the profit in case of a favorable outcome.

Hence, you can choose another option: bring on restaurant investors and share the costs. It means you will have more money to work with, and (since people come with valuable skills) you will gain expertise that can increase the business’s longevity. Yet, not to underestimate that taking more people onboard means you lose control and profits, should there be any in the future.

According to experts, if you must invest in a restaurant, choose an established one, preferably a franchise, and study the financials before signing any papers. Keep in mind that new restaurants have a high failure rate within the first five years. On average, restaurants only begin to turn a profit within three to five years. So, they can be good investments but aren’t that easy to handle and, therefore, require a dedicated player able to endure this high-risk investment game.

Should you invest in a restaurant in Germany?

Assuming you figured it all out and decided to set up your restaurant in Germany with the investment objective — what should you know?

Germany’s foodservice industry is developed, making opening a restaurant an attractive business idea for entrepreneurs. Regarding German client dynamics, this central-European country features an increasing foreign population and a growing number of tourists coming all year round. It means that novelty in this area is desired, and available restaurants should specialize in various cuisines.

Consumers influence the German foodservice industry, and the most sought-after currently are:

  • regional produce;
  • retail catering;
  • Asian cuisine.

Also, bear in mind the leaders and indisputable winners in this market: full-service restaurants with international chains, serving mainly the fast-food sector.

How to open a restaurant in Germany?

It’s a no-brainer that before you first smell a duck roasting delightfully or spot a graciously decorated banana pudding coming out of the kitchen, you will have to complete loads of formalities, which will take time.

The first step is choosing a concept and working on the restaurant brand. Don’t lose this time on daydreaming — instead, do tons of thinking to determine the overall style you want to pursue. A few things to think about:

  • type of food served;
  • menu — in these initial stages, decide only on the basic categories of items that your restaurant will offer; don’t go into details; there will be time for it later;
  • the style and design of the restaurant.

Thanks to these decisions, your business will position itself on the market and engage in adequate marketing strategies.

It’s time to prepare the business plan. In the previous step, you and other investors have already decided on the restaurant’s profile. Now, go deeper and prepare a market analysis in the region for when you intend to open your business. For example, if you plan to open your spot in three years, focus on this period instead of drilling into the upcoming months. Also, make sure you tackle a financial projection and find time to reflect on marketing strategies.

Choose the right location — mind that liking a specific area has nothing to do with where you should locate your business. However, where your business is based will have a tremendous impact on its chance for success. Ensure the place you decide on makes your restaurant visible and accessible. Monitor the competition in the same area. Also, your targeted clients should match the demographics in the area where you prepare the grounds for your restaurant.

Now it’s time for a set of moves to push the investment from the planning phase to action. How do you yield substantial revenue if you only sit there making plans?

1. Incorporate — open a company in Germany; the most commonly used business form is GmbH (the private limited liability company), with the minimum share capital of 25,000 euros, which can also include in-kind contributions; within this business form, founders are only liable up to the extent of the capital invested.

2. Obtain the licenses — since the food sector in Germany is regulated, the business and the premises should comply with these ongoing regulations, among which permits for hygiene and public health issues, fire protection, etc.; there are no requirements for the qualifications of restaurant proprietaries.

To speed up the business registration procedure with the local authorities, consider employing a law firm in Germany.