Starting A Restaurant

[The Wrath]

Does anyone know anything about what it takes to get a restaurant started? A college friend and I are starting to vaguely flirt with the idea of opening a restaurant. It's going to be a themed restaurant, kind of like Dick's, except that it's a military theme. So the waiters will act like drill sergeants, instead of just being jerks.

If we actually move on this, it'll be a while, but we might start looking into possible locations pretty soon, as well as possible loans.

[Eternal]

I don't know much about the financial side of the restaurant business, but back in high-school I did work in one for a few years. I was involved in doing renovation at first, when the location was first rented, then waiting, and even some cooking at one point. The place did eventually get somewhere, but the amount of work and time that went into it, was disproportionate to returns.

It could be just my experience, but my advice to anyone who wants to get into that kind of business is three words: DON'T DO IT!!!

The main problem with food business is just that - food. If you can't sell it, you've got to dump it. Any other type of goods, you can pretty much store indeterminately, but with food - refrigeration will only get you so far, and it's better to lose some money throwing food in the garbage, than losing customers trying to serve something that's not fresh. Power outages are always fun too - especially if they last long. Not a problem you say - I'll get just enough food, so I don't have to throw anything out? Then you better hope you can estimate things well, because cutomers get pissed off even more when they can't get what they want.

And that's not even covering the whiny customers, because taste is a very subjective thing (unlike engineering, where I design according to the given specs).

Then, there's pest control - and you better make sure that your place is spotless, because a customer spotting one roach can ruin you (and I should mention you have little control over how well other businesses/appartments in your building take care of their bugs - and those things do have legs)

Finally - the operating hours - totally out of sync with normal businesses - and I hate nothing more than having to work on Sundays.

And all this is not even getting into Liquor Licences, FDA inspections, and staff issues.

To sum up - there are better/safer/easier ways to make money.

Edited April 17, 2006 by Eternal

[The Wrath]

I'm considering it only partially for the money. The other part is that I think our idea is really cool and I'd like to see it done.

If we ever move on this, I don't plan to be any more than the owner, raking in the profits. I would hire a qualified manager to do the rest.

[Dismuke]

Just a few things that you may or may not already know about but definitely do need to know about before opening a restaurant:

The vast majority of independently owned restaurants go out of business within a rather short period of time. There are two primary reasons for this. The first one is that many first time business owners spend a lot of time and money coming up with what they think is a great and irresistible idea and think that all they have to do is put a sign outside and people will magically come inside and buy stuff. Unfortunately, it rarely works that way. You have to do something that will cause sufficient numbers of customers to walk through the door and that means you have to promote and advertise. Sadly, advertising is very expensive. If you live in a big city and only have a single location, to advertise in the local newspaper or on the local radio or television stations means you have to pay to have your advertisement seen by a great many people in parts of town that are likely to be outside your restaurant's market area. If you seek out advertising venues that are more local to your specific part of town, you will often find that they are free throw away publications or junk circulars that many people use to line their bird cages with instead of actually reading. Before you even start, make sure you have a very solid plan in place to promote the restaurant and the capital necessary to do so.

The second reason that many first time businesses go under is they are too under capitalized to survive the period of time that is necessary for them to catch on and become profitable. Very often, just as the business itself is beginning to become marginally profitable and look like it might make it, the owner's personal finances begin to buckle taking the business down with them. Before you go into business, make sure you either have the personal capital to pay for your housing, transportation, insurance and other necessities or have some other source of income to take care of those needs.

If we ever move on this, I don't plan to be any more than the owner, raking in the profits. I would hire a qualified manager to do the rest.

And exactly where are you going to find this allegedly qualified manager? By running a classified ad in the local paper or on the Internet? And on what basis will you know he is qualified to basically be the CEO of your investment? By reading his resume and taking seriously the stuff he feeds you in a job interview? And if he is so qualified, why on earth would he be willing to work for some unknown start up instead of opening a restaurant himself or going to work for one that is already very successful and stable?

My strongest bit of advice to you is this: if you do not plan to run the business yourself, DO NOT go through with anything until you have already identified the specific person who WILL run it for you. This needs to be a person whose competence, judgment, loyalty and honesty you have 100% confidence in. This needs to be a person who you would without any hesitation hand over all your money to - because if he is going to run the business for you, that is exactly what you will be doing. Your odds of finding this type of person through a classified in the newspaper or through Craigslist are very remote - and all it takes is one erroneous hiring decision to completely destroy your business during is most precarious stage of existence. This person needs to have all of the experience and industry knowledge that you lack - and you need to have enough confidence in this person to give him the latitude to make whatever day-to-day business decisions he feels are necessary (keeping you in the loop, of course). My suggestion is to either find someone who is willing to put some of his own capital into the endeavor or, if he lacks his own capital, work out some sort of arrangement where he will, based on performance, become a partner in the company.

I have never worked in a restaurant before - but I can easily imagine that they must be very difficult to manage. First, one has the need to deal with a workforce that is not exactly well paid. Unfortunately, finding employees who are capable of merely showing up to work every day and on time every day is very difficult in today's world and the lower the pay scale, the more difficult it is to find such people. Restaurant jobs are not especially difficult to find for someone who has prior experience - so if you do something that ticks one of your employees off of if a competitor offers him 50 cents an hour more, he is liable to quite on you and go elsewhere with almost no notice leaving you to desperately scramble to fill his spot. Even your good people are likely to move on after a while. Turnover will be a constant problem - do you or does the manager you will hire know how to deal with such turnover and what steps can be taken to reduce it?

None of this, by the way, is meant to discourage you from opening your own restaurant. If that is your dream, the by all means go for it. But you have to be a very hard core realist about these things and know exactly what you are getting into and why others who were just as ambitious, hard working, intelligent and capitalized as you are ended up falling flat on their faces. . Remember that really horrible and mystical movie from some years ago called Field Of Dreams? Remember that horrible catch phrase from the movie "Build it and they will come?" Well, that isn't they way the business world works. If it was that easy, everybody would do it and be rich.

Anyhow, that's just my two cents worth.

[fatdogs12]

Does anyone know anything about what it takes to get a restaurant started? A college friend and I are starting to vaguely flirt with the idea of opening a restaurant. It's going to be a themed restaurant, kind of like Dick's, except that it's a military theme. So the waiters will act like drill sergeants, instead of just being jerks.

Wow a military theme, never thought of that in a restaurant. I don't know but I would probably stake a lot of money that that idea will not be popular. Not to be discouraging because I could be wrong but I am willing to eat almost anywhere but that just seems really tacky.

Considering also how unpopular the war on Iraq is and how in general it is a negative thing in the minds of the people I would think that it's something people would just rather not think about.

A great book about business (IMO) is "No Cash, No Fear" which is a very misleading title because it really has nothing to do with the book, but this book shows tons and tons of concrete and real examples of starting different businesses and the typical problems that are faced.

So far I have started 3 businesses (2 successful and one not very) but I have found that this book really shows what owning your own business is like on a day to day basis and how important low overhead is.

Best of luck

[scottkursk]

Lots of good advice here. Dismuke is right in that the #1 problem of any restaurant, any business for that matter, is undercapitalisation. It really does take a year + to get most retail business up and running to the point of being self supporting. Of the stores I've opened they usually have taken about 2 years to be fully supporting.

There are so many little things that can get you screwed up when opening a business that you'd never think of. One place that a lot of small businesses get caught is when they sign a lease. I've signed close to 10 retail leases and every time I learn something new. Finally, my company hired a full blown realtor and legal guy that really rides tac over the contracts. There are tons of subtleties that are hard to catch. With a restaurant, the little things are exponentially more complex.

Then there is the complexity of doing everything about the buildout and fittings. The hardest part of any retail or restaurant business, the more complex the interactions with the customers the more important it is, is human resources. The hardest part is hiring. Hire 1 bad person and they can quite easily put you out of business and into bankruptcy. So you have to be dead spot on when it comes to hiring. Plus the hr issues like workmen's comp, etc are a bear.

The best thing when it comes to any business is having someone that knows the business. Generally, one of the partners with an equity stake is ideal since they have a real stake in the places success. Like when it comes to the food, the more you do inhouse (from baking the bread to plating the enchiladas) the more profitable it can be. However, you also risk a WHOLE lot more from spoilage. So, there are some pretty decent places that job out their food to Sysco and literally just stick the food out of the wrappers onto the plates while just sprinkling onions (from the pre diced Sysco onion container) on top to make it seem fresh.

If you go the exact opposite tack and do something like a Subway franchise, you do jack other than just be there and unload the boxes from the main office. They do the buildout, give hr adivce, training, etc. You just have to pony up 200k+ for the right to sell their goods. Now the real downside is you give up some of the chance for some real success. But, you gain in having someone with experience giving you guidance and support. The thing you give up most is creativity. Chains are meant to be cookie cutters of each other (for the most part), but then that is what a franchisee is looking for.

The number 1 problem of any business, company, religion, etc is getting customers. Having a better mousetrap doesn't count for alot if you can't let people know it's better. People pay alot of money to get people to figure out how to get cusotmers. It's 1/2 art and 1/2 science. I've still not got it quite down yet.

So, I'm not trying to talk you out of doing it. Doing something you really love and believe in can be rewarding both for the psyche and the pocketbook. Just go into it with your eyes wide open and keep asking questions and constantly check your premises.

I must say that that if you are looking at opening a military themed restaurant, it might make a compelling idea if executed right. Dick's is an idea that most people would scoff at but it works. Given your neck of the woods, there also may be another reason why it would work where it woudln't work in say Berkely, CA.

[Groovenstein]

This may seem like a tiny thing, but it's not, at least not around my area. Know the smoking laws. If smoking has been banned already, at least you can get a better idea of what you're facing for potential revenue. If it hasn't been banned yet, you're facing some potentially devastating uncertainty. Lincoln got smacked with a total indoor smoking ban and many places not in the downtown area (by the college) took a massive hit.

[The Wrath]

Wow a military theme, never thought of that in a restaurant. I don't know but I would probably stake a lot of money that that idea will not be popular.

Have you ever been to Dick's? If you're not familiar with it, it's a restaurant where the waiters are supposed to be...well, dicks. They just act like assholes towards the customers. There are a number of them in various places of Texas, but I think it's just a regional thing. It does quite well.

On a separate note, all advice given so far is appreciated and I definitely have some thinking to do. Like I said, this is just kind of a vague idea right now, but we might start looking into it pretty soon.

[scottkursk]

Oh, another thing you can do for fun is to google "restaurant supply" and get some catalogs. It'll curl your teeth. I get most of my cookware from them since the construction is more rugged since they assume you'll abuse it in new and imaginative ways in a professional kitchen. Still, it will give you a good idea of what it costs to open one.

[DavidV]

In high school, I worked for a former CEO of Taco Cabana who quit to start his own pizza chain. Man did he work hard. Seven days a week open to close, and the only days off he took were for business. He was a real “slave driver”, very abusive to everyone there, including his feeble old mother, who did the accounting. He’d yell and curse at you for the slightest mistake, and I think he actually enjoyed making the girls cry.

He did a number of the things suggested above, like keeping minimum stock and sending me to buy produce from the neighboring grocery store when we ran low, and mixing everything from scratch. Every week we’d drive around the local hotels and leave coupons with them. All the employees there were losers, and turnover there was extremely high, but he did keep a few people around for the important stuff – namely managing the ovens. I probably should have paid more attention to the way he ran the place, but I only worked there because my girlfriend did. I did have one legacy on the place – I perfected the veggie stromboli sub and he added it to the menu. It’s still my favorite “sandwich.”

[JMeganSnow]

Have you ever been to Dick's? If you're not familiar with it, it's a restaurant where the waiters are supposed to be...well, dicks. They just act like assholes towards the customers. There are a number of them in various places of Texas, but I think it's just a regional thing. It does quite well.

Like, what do they do? Do they sit at your table when they're taking your order? Do they call you names and throw food on you if you have a problem? Are they like the Soup Nazi from Seinfeld? Or do they just make you wait forty-five minutes for drinks?

I could sort of understand if they're good-natured about it, i.e. they don't do anything really, truly, rude, they just tease you by acting up a bit and making you argue with them: "you don't want ketchup" "yes I do" "you want mustard" "No I don't" . . . then they bring you ketchup and insist that it's really mustard or some such thing.

When I heard "military themed" I was figuring more that you'd have attractive, young, clean-cut men serving the tables and calling you "ma'am" and there'd be all sorts of military paraphenalia all over the place and all the dishes would be weird foreign stuff. It'd be like Hooters for women. Or you could go mess-hall style and have a different menu every day and everyone eats the same thing, so you just sit down and someone gives you your food. I'd eat there, but I like to try new things.

[Thoyd Loki]

I've been in the industry for 21 years now. If you do not love it, don't do it. If you are not thinking of food 24 hours a day, don't do it. If you don't enjoy waiting on people, washing dishes, cooking food, cleaning restrooms (you'll be amazed how many people can't get a poo-poo or pee-pee in the can), being a cashier (think your employees are coming to work everyday? not in this business, buddy), don't do it. Don't want something that will consume every waking moment of your life 7 days a week without end, and maybe you'll break even for the first few years, but the odds are much better for bankruptcy? Don't do it. Better learn Spanish if you are in a big city. Better learn it anyway.

Want to do all this with your odds of success being equal to being a Hollywood megastar (failure rate for new restaurants in the first three years are abysmal)?

If this isn't a truly burning passion, it'll rip you a new one, mark my word, I've seen it again and again.

If it is, best of luck to you, you'll need it.

[Thoyd Loki]

Want to do all this with your odds of success being equal to being a Hollywood megastar (failure rate for new restaurants in the first three years are abysmal)?

Being equal to being a Hollywood megastar?! Wow, what an exaggeration! But, the failure rate is abysmal, nonetheless.

[The Wrath]

Like, what do they do? Do they sit at your table when they're taking your order? Do they call you names and throw food on you if you have a problem? Are they like the Soup Nazi from Seinfeld? Or do they just make you wait forty-five minutes for drinks?

I could sort of understand if they're good-natured about it, i.e. they don't do anything really, truly, rude, they just tease you by acting up a bit and making you argue with them: "you don't want ketchup" "yes I do" "you want mustard" "No I don't" . . . then they bring you ketchup and insist that it's really mustard or some such thing.

When I heard "military themed" I was figuring more that you'd have attractive, young, clean-cut men serving the tables and calling you "ma'am" and there'd be all sorts of military paraphenalia all over the place and all the dishes would be weird foreign stuff. It'd be like Hooters for women. Or you could go mess-hall style and have a different menu every day and everyone eats the same thing, so you just sit down and someone gives you your food. I'd eat there, but I like to try new things.

No, they're not good-natured about it. They're very good actors, and don't even have the appearance of joking. Of course, they won't do anything physically to you and they won't mess up your food, but it's the way they talk to you. It may sound unattractive, but that's the whole reason people eat there.

[LaszloWalrus]

Sorry to re-open an old thread, but can you give an example of something that happens at Dick's? It sounds interesting.