People are aware that the restaurant industry is massive — to the tune of $372 billion a year — but, what they may not be aware of is that a quarter of these restaurants fail within the first year, and 60% fail by their third year. This rate of failure has driven some cutting edge chefs and restaurant financiers to seek out new investment opportunities. The pop-up restaurant trend was inspired by supper clubs, and first started in London in the mid-2000s as “happenings”. A cheaper investment upfront coupled with the opportunity for constant reinvention and chance-taking make pop-up restaurants ideal for restaurant financiers and chefs looking for a new investment.
Only available for a few nights, weeks, or months, these hot-spot eateries allow entrepreneurs to make a name for themselves alongside aspiring or professional chefs. The appeal of pop-up restaurants is the mystery and exclusivity: they can happen anywhere, and a patron must be in the know beforehand. Which is why the blogosphere and social media play a large role in getting the word out about these new eateries.
There are different reasons for why people want to start a pop-up restaurant. You may be a bright young chef with a stunning idea for a new restaurant, but lack the funds to invest in a proper establishment. Or, you could be a restaurant financier looking to expand a current restaurant and explore the idea of opening a new one. To save yourself the headache of opening a new venture and watching it sink like the Titanic, opening a temporary eatery may be the best and least risky option for conducting market research.
The costs of opening a pop-up restaurant are much cheaper than other alternatives. In 2011, the founders of the Wise Sons Jewish Deli in San Francisco, California, started a once-a-week pop-up restaurant. They reported their start-up cost was $2,000 to $2,500 per week of operation. For a pop-up restaurant doing three or four nights of NYC business, the cost can be anywhere between $30,000 and $50,000. This is still way cheaper than other options like starting a food truck ($50,000 to $200,000) or a 1,500 square-foot brick and mortar restaurant ($300,000-$500,000).
Click here or the graphic below for a full-sized view.