Restaurant owners often forego taking a salary. Working hard for free is not a worthwhile way to spend your time, or money. There is too much legal and financial risk to not have any return on your investment.
During lean times, owners may delay taking a salary to keep the operating budget in the black. However, once the business begins to recover, the delayed salary should be taken.
If you do not draw a salary, you will not have a true picture of the profitability of your establishment. The salary you draw should be “market rate” for your geographic area, restaurant style and size. But paying salaries for all key employees, you can easily distinguish true profits.
Ideally, you should never put your family assets at risk simply to create a job for yourself. You need to create equity and profit to make the business a worthwhile investment. Restaurants and bars are high-risk businesses and are not generally a good investment in terms of regular growth and financial return. Owning a restaurant is generally a lifestyle and a labor of love. Money is not everything, but you can’t act irresponsibly with your family’s financial stability either.
Do you know your numbers?