ABSTRACT
Advertising is usually quite expensive, but it is a necessary part of the success. Because of this, it is important to be very careful in the selection of an advertising agency. One way to estimate the dollar needs is to rely on the average cost of advertising expense for all restaurants. As mentioned, if people want to have a strong dollar return from the advertising outlay, they should first construct a budget. If the national average for food and beverage restaurants is percent, and they are planning to open such a restaurant, they will probably need at least twice that much, or around four percent or five percent of the first year's estimated net income for advertising and promotion. The business will provide some of that expense from income, but there will be a cash need of at least one-half of that amount to cover preopening expense and ongoing expense during those months when the business is new.
