Before starting a hospitality business, ask yourself this (it isn’t how much money you have)
First chapter of our “From idea to business” guide, walking step by step from having an idea to opening the shutters.
By
Samuel Carrillo10 min read
60% of restaurants that open in Spain do not make it to one year, almost always because of decisions taken — or not taken — before the door opened. Before the premises, before the accountant and before the company, there is a question that decides the rest: do you have the means (money, craft, market and location) to start a hospitality business, and will starting it actually make you happy?
You’ve spent years in other people’s kitchens. One day you decide it’s your turn
You have the idea clear: the menu, the product, even the name on the front.
What you don’t have so clear is whether you can pay the rent in month three, whether your city already has six places like the one you want to open, or whether you can last six months losing money before it really takes off.
Nobody asks you those questions before you sign anything. We do, and this is the first step of the guide.
The four means you need before starting a hospitality business
Having means is not only having savings. There are four things, and each one fails on its own.
| Means | The question it answers |
|---|---|
| Money | Can you last several months without earning, on top of the initial investment? |
| Craft | Can you yourself deliver what you sell: cook, serve, look after guests? |
| Market | Do you know the real demand for that idea, not only whether you like it? |
| Location | Do you know that area: who lives there, who passes through, who already sells the same thing? |
You can be short of only one and the whole project suffers. Plenty of craft and no market: brilliant cooking for nobody. Plenty of money and no location: you build the perfect place where nobody will find you.
“Knowing the market” is not intuition: it is having counted how many similar venues there are within a ten-minute walk, what they charge and how many people walk in on a random Tuesday. “Knowing the location” is the same applied to the street: who lives around, who works there, and whether that mix can pay what you will charge.
Does it make sense for you to start it?
There is an even more uncomfortable question, and almost nobody asks it.
It is not the same to open a tapas bar in the neighbourhood you have always lived in as a Spaniard opening an omakase in Japan. The second is not madness — some people have done it well — but it requires more than enthusiasm: years of craft in Japanese cooking, contacts there, real knowledge of that market and that service culture.
If the only answer you have is “because I feel like it”, the project doesn’t have to be bad. It means you haven’t pressure-tested it yet, and pressure-testing it is exactly what this first step does.
How long will you be losing money before you make it?
Almost no hospitality business is profitable from month one. A normal start is several months in the red while you build a customer base and bed in the team.
That is not your failure. It is the normal curve of the business. The failure is not having planned for it in the till before you form a company.
The business plan and viability study come before the company, not after. They are not a formality for the bank: they are the only way to know, with your own numbers, whether your savings will stretch to the month when the business stands on its own. You cannot start the house from the roof.
Back-of-the-envelope maths: six in ten don’t last a year
In Spain more than 15,000 new hospitality businesses open every year. And according to consultancy Linkers’ figures reported by InfoHoreca, up to 60% do not survive their first year.
The reason is almost never the cooking or the location itself. It is a concept built around an idea someone liked, without first checking whether there was a real market for it at the price that needed to be charged.
That 60% is not bad luck. It is the consequence of skipping this first step, multiplied by thousands of openings every year.
A worked example: the same bar, two starting points
Two people want to open the same tapas bar on the same street.
The first has €15,000 saved, has worked eight years as a waiter and cook, and has lived in that neighbourhood their whole life. The second has the same €15,000, but has never worked in hospitality and wants to open in a city they don’t know, because they saw a cheap premises in an advert.
With the same investment, the first covers three of the four starting means: money, craft and location. They only still need to validate the market with data, not intuition. The second lacks craft and location, and the money they have does not make up for what they lack in the other two.
It is not that the second person’s project is forbidden. It is that before investing a euro, they have a homework list the first person has already skipped.
What I would do this week
- Write your four means on a sheet: money, craft, market, location. Score each from 1 to 5, honestly.
- If something scores 2 or less, decide whether you will fix it (training, a partner, a different area) before going further.
- Work out how many months of personal and business costs you can cover without enough sales. If you don’t reach six, don’t form a company yet.
- Talk to two or three businesses like yours, even if they aren’t direct competitors, and ask how long it took them to stop losing money.
- Count how many similar venues there are near where you want to open, and at what price they sell.
- Don’t reserve a premises or sign anything until that list is answered in writing.
A couple of things that still aren’t clear
The initial investment for a hospitality business varies hugely: we have seen market figures from €20,000 for a modest bar to more than €300,000 for a large restaurant in a prime area. There is no single number, and anyone who gives you one without knowing your concept and your city is making it up.
Nor is there a standard timeline for stopping losses: it depends on the concept, the rent and how long word of mouth takes. In the next chapters of this guide we will cover the business plan and viability study with templates and examples, including rent figures and break-even.
Until the next guide that might help the sector.
Sources
- InfoHoreca, "60% of restaurants close before a year: the hidden mistakes ruining Spanish hospitality", 22 May 2026, with data from consultancy Linkers.
- Tipi’s own work: the four-means framework and the worked example with figures.