Before starting a hospitality business, ask yourself this (it isn’t how much money you have)
By
Samuel Carrillo6 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 is less clear is whether you can pay rent in month three, whether your city already has six places like yours, or whether you can survive six months in the red before it takes off.
Nobody asks you those questions before you sign. 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?
A tapas bar in your neighbourhood is not the same as an omakase in Japan. The latter needs real craft there, contacts and market knowledge, not just enthusiasm.
If the only answer is "because I feel like it", you have not stress-tested it yet. That is exactly this first step.
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.
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 kitchen: it is a concept that never checked whether there was a market at the price you need to charge. That 60% is skipping this step, times thousands of openings.
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.
Six checks before you sign anything
- 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.
What you cannot pin to a single number
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. The next chapter covers the viability plan with numbers: concept, market, costs and break-even before you sign a lease.
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.