I can personally relate to their struggles to get a business going, retain staff, and to be one step ahead of everything when you're just trying to survive.
And I lived right next door to Renard.
It's hard to imagine that during the planning, budgeting, and all the upfront work that someone didn't caution him against the unscrupulous landlord. The landlord was a guy that wrapped a chain around our neighboring building to pull his building back onto its foundation. This is a guy that had public, outstanding violations and complaints on his building and unpermitted work.
And they moved in to a microscopic kitchen to do white-tablecloth dining in a local neighborhood. Yes, they moved in right after a hot restaurant, St Jack, moved out, but St Jack had a marketing/advertising/buzz machine behind it. They systematically created success, not the other-way around.
I guess the moral of the story is take this to heart:
>I told myself what I'm sure every single novice restauranteur tells themselves: I'll be in the 1 percent that make it, by sheer will.
Take the leap, but you've got to do your diligence. Listen to the feedback and concerns people voice about your endeavor.
> Take the leap, but you've got to do your diligence. Listen to the feedback and concerns people voice about your endeavor.
Absolutely, but there's never a situation of any kind without drawbacks.
A quote from David Chang of Momofuku, etc:
> I think almost everything we've done has been a failure from the get go. That's just the truth, and I don't think people see that. We have fucked up just about every opening in every restaurant we've ever done. We grind it out and figure out how to make it work as we go. That's what makes it a very organic experience and sometimes maddening. But I can't see any other way to do it than to engage with the world, make the mistakes, and pick up the pieces from there.
The landlord may or may not be a dick. I'd like to see some more on that chain story (because I'm really curious about the specifics physically) and the general statement about unpermitted work.
The hype machine thing you mentioned might be the real deal. As far as I can tell chef's food wasn't remarkable for Portland. His highlight pic was a french onion soup and a steak tartar, not even plated well. The rest of the atmos looked like snippets from "How to be Portland" magazine. They said "Keep Portland Weird" but that brand has been bought and sold and done with since Death Cab for Cutie had that song about answering machines.
It might be good food, it might be expensive, but man... Portland basically invented what we think of as the modern 'foodie' dickweed.
I'm not sure that any place that doesn't have extremely deep pockets isn't dealing with a landlord that wouldn't try some chain foundation voodoo, or even like real deal fraud, and chef still gotta survive plus overdeliver world class dining experience if he wants to be heard.
I have to agree, that was a very pedestrian food shot. There's nothing wrong with straight bistro fare but not at premium prices. I think the problem here was they went premium with the location and environment and preparations, but it didn't translate into an exciting experience.
Also the author sounds quick to blame external forces and the general malaise of the industry, which perhaps can cloud one's focus on identifying and fixing your own weaknesses.
The other moral of the story would don't assume that enthusiasm equals friendship. This poor fellow's erstwhile landlord fleeced him and I'm astonished that his investing partner didn't warn him away in favor of some less glamorous but more economically sustainable location.
Also, commercial landlords are not nice people. I see and hear a lot of similar stories here in the Bay Area, where it's now routine for landlords to jack up the rent by 100% at the end of a lease period. In cases like this landlords often plead that they have no other choice than to charge the market rate, and this is partly true - but they omit to mention that they are often leveraged to the hilt and are using their existing holdings as collateral to buy more property.
Even when property is sitting empty, it may still be 'working' for the landlord - commercial property can be depreciated for federal tax purposes over a 39 year period, so a building in a downtown area can sit empty but serve as a tax umbrella for profitable rentals elsewhere, as long as the costs of maintenance/blight mitigation stays low. I'm no accountant but as far as I can tell the tax code disproportionately favors property owners.
Novice restauranteur. . .. is just another word for failure.
You cannot purchase a restaurant without knowing the industry (eg by working in it), and expect things to just flow.
Don't take the leap, actually learn what the hell you're getting into.
As for the landlord, bloody hell. Needing to spend 20k on plumbing and they didn't think that was a bad place to rent ? There is no excuse for that, even if there was more than 20k of equipment on premises, they should have seen the warning signs.
Tldr: foolish investor thinks buying a restaurant is easy money, learns the hard way that it isn't.
From what I have read, margins are so thin in the restaurant business that doing an energy audit and tightening up costs that way can be the difference between running in the red and profitability. That doesn't leave a lot of wiggle room for a greenhorn to learn the ropes, to figure out this isn't working and pivot, etc. I imagine that's part of why franchises are so popular in this space.
I often wonder how these things are calculated. I just don’t know that there is enough time in a year and enough buildings in a city for there to be 100 times as many attempts as there are successes, unless you include everyone who has ever thought, “I’ll open a restaurant!” And goes back to watching TV. Put another way, if 10 restaurants were successfully launched in a year, that implies 990 failures.
There are a number of sources of statistics, and while they vary a bit, they all show that the popular story of a ludcirously high failure rate for new restaurants is not true.
That said, the majority do either fail or get sold within three years, which (given that owners generally aren't building them for an exit) suggest a high combined rate of failure or burnout. But nothing like the 90, 95, or 99% short-run failure rates often tossed around.
Okay it's time for me to chip in properly, forgive any typos I'm on a phone.
Preamble: I'm rated as an executive chef(my last 3 positions before leaving the industry), and I had worked for over 17 years in hospitality (from apprentice chef, to manager and executive chef - I also spent 4 years traveling to different restaurants to try and save them from foreclosure).
"That chicken is a confit (with duck fat, aka $$), then served with a stock/stew that takes days (of labor dollars) to prepare, plus cost of employees to serve"
I sympathised with the author until this point. No it doesn't take days in the way the author points it out, it takes minutes with a time to follow. (Eg you don't have to actually do anything after you prepare and set it). That's akin to saying a good jam or beer takes months - yes in pure time, but it doesn't take staff time(and $$ as the author said).
As for the hours? The author is correct, hospitality is a slug fest, there is no doubt about that.
What I take from this article? An unexperienced person tried to build a new business in an industry that didn't have the experience in.
Would you try to start a software business, a cloud storage or a trucking business without experience? No it would be foolhardy, and that's the biggest problem with hospitality.
Frankly if you're not a chef - dont purchase a restaurant. Anyone can cook one decent meal, now try doing 100 a day while managing costs and staffing. (That's just the basics, there are hundreds of things you need to do just to begin).
At the end of the day, I sympathise with the author, I have seen (and tried to help), a lot of people in that situation, but you cannot just jump into hospitality with money and assume that it will work.
That chicken is a confit (with duck fat, aka $$), then served with a stock/stew that takes days (of labor dollars) to prepare, plus cost of employees to serve, stuff to serve it on and rent to pay, not to mention the utilities (the water bills on that cursed grease trap were the opposite of "the gift that keeps on giving"). That damned chicken should be $40! But people won't pay $40 for chicken, so it's $29.
This seems to suggest that the author (who I sympathize with very much) doesn't have much understanding of cost accounting, and therefore pricing, which is near the top of mistakes inexperienced business owners make. The cost of the chicken is variable. The costs of rent, labor, and utilities are fixed on a per plate basis.
I'm friends with the owner of a very large and very successful restaurant and he once told me that he basically makes no profit on food and that the food is just a way to get people in to sell alcohol which is where the majority of his profit is made. It's also true that some foods are necessarily more profitable than others. People won't pay your costs for the chicken confit and you lose a few bucks on every one that goes out? Fine, add a few dollars to your pasta dish that costs far less to make and if you sell the same number you're even. Or, if the chicken isn't profitable and you aren't selling many of them, just accept that people don't want it and take it off the menu.
...he basically makes no profit on food and that the food is just a way to get people in to sell alcohol which is where the majority of his profit is made...
Swap "alcohol" for "soft drinks" and you're pretty much describing the entire fast-food industry.
You have to be a very clever restaurateur to get away with $29+ entrees. This is not something you just plunge into on a whim.
They should just have made darned turkey sandwiches or something. Charge 25 cents less than similar ones in a two mile radius. If everyone is asking $7, make yours $6.75.
Have an espresso machine and great coffee.
Don't hire any outsiders until business outpaces your sandwich-fu.
Encourage take-out and phone-in orders (or online). Take-out people don't take up seats and you don't have to do dishes after them or clean the table.
Without having any experience in the area or knowing owners, this has been my exact assumption.
In a restaurant me and my girlfriend frequent, the main dishes are actually VERY affordable -- I'd even say cheap -- for what they offer. And many people flock to the restaurant in lunch breaks, but they are very careful to only order a beer plus a main dish.
Why? Because that restaurant's every single drink -- alcoholic or not -- is grossly overpriced. Desserts cost an arm and a leg. Salads are mostly okay but they most likely sell them for 3x the price of the ingredients as well.
The way I see modern restaurants is exactly like you said: food is just a bait so you can get in and buy the things that go with it, and they are the real profit makers.
I am perfectly okay with it. It was just an interesting revelation and I decided to chime in and thank you for confirming my observations.
It's a strange concept to have loss-leaders in a restaurant. If I were starting a restaurant, I would probably just want to sell everything at a profit. I don't have a burning desire to pay people to eat my food.
So is a random business guy hiring a chef to run his restaurant kinda the startup equivalent of a business guy hiring a dev to build his startup?
Both seem in a similar boat. A restaurant is nothing without a good chef. A programming startup is nothing without a good developer. Both have cases where the chef/developer starts their own companies.. and many more cases where an outside guy with some money comes in and tries to make it happen.
You can succeed in both paths, but it sure as heck seems a lot harder! I cannot image funding a software startup if each MVP I wanted took say 30k to make (instead of a few hours of time). It seems reasonable that cooking is similar..
One difference is that you can be a decent food critic without being a chef. So I think it's theoretically more feasible to start a restaurant as Joe-rando business guy.
That said, I think in both cases the business guy needs to bring domain knowledge (or an insane amount of hustle) to the table. Figuring out the type, location, and marketing of a restaurant is just as much of a make-or-break proposition as having the right chef. Similarly, on the software side you need either pitching/fundraising or some kind of go-to-market skills, whether it be enterprise sales or consumer marketing. Entrepreneurial chefs and developers at the top of their game enough to offer something compelling may be able to do this themselves, but in most cases a partnership with the right business person will have a multiplicative effect on the results.
You can be a great cook but a terrible chef. A chef is an experienced cook who can also manage a kitchen. Management ability without cooking skill is what you get at fast food franchises and meal manufacturers like Sysco. Being a foodie is a negative hiring signal in those contexts.
I would say yes. It's akin to running a successful port or delivery system, you can't just buy one and hope for the best, you need to actually either a) have experience and know what your doing or b) hire someone with that knowledge.
Hospitality is a little more difficult as the margins are so tight though, hence the most successful are owner/operators.
What I take from this article? An unexperienced person tried to build a new business in an industry that didn't have the experience in.
Few things wind me up more than people who've never worked in a kitchen/restaurant deciding to open one because it's their dream. They think they can do it better, or just that it will be fun and rewarding.
Over here it tends to be people buying a pub, because they like the idea of hanging out behind the bar serving the odd drink whilst the money rolls in. How hard can it be?
Being experienced is no guarantee either. I had a neighbor who was operating multiple successful restaurants at the Mall of America when he decided to quit and open his own place closer to home. He poured his heart and soul into that project, completely remodeling the space into something 100% better than what had been there before. I think it was the debt that did him in - the restaurant closed in 9 months, and he lost his house too.
Running a successful restaurant is -hard-. There are so many things going in, such a complex system with variables that change - sometimes within days - that sometimes I'm unsure how anyone actually runs a successful restaurant.
Otherdays, when I go visit a few friends places and see how things are organised, it's amazing how smoothly things operate.
But those same people, I know from being there with them, are constantly under stress, and have broken down to me after a few drinks after hours.
Is that supposed to be "trucking business" or is there some other business like souping up automobiles, referred to in a regional dialect I'm unfamiliar with?
EDIT: ...probably one of the anticipated phone typos, fat fingering 'i' instead of the 'u' key.
> That chicken is a confit [...] plus cost of employees to serve
Is that really a thing in the US? Honest question, I'm confused. The justification for requiring 20% tips (and considering you "nasty" if you leave any less) is that the waiters in the US are not even paid minimum wage, they rely on the customer tips to make a living. So, which one is it? If they rely on the tips, surely they don't cost the restaurant owners any significant amount of $$, do they?
Domain expertise (cooking, coding, whatever) - slow for one client
Logistic expertise - fast for large numbers of customers, not clients
Business expertise - becoming a legal and financial client
Financial expertise - pure cashflow and accounting with little regard for the specific business model
The skills applied in labor-intensive work are not automatically transferable to capital-intensive work as you move down the list. That's why the CEO of McDonalds trained as an accountant, and has probably never worked a grill in his life; for the job he does managing a global corporation, learning to cook would have been a waste of his time.
ISTM that a key difference in left/right political philosophy is that the left thinks its more ethical to start at the bottom and work up, whereas the right feels it's OK to leapfrog as far ahead as you're able. A libertarian economist would argue that this maximizes both individual freedom and value across the economy as a whole, whereas a Marxian economist would argue that such maximization strategies exacerbate boom and bust cycles, like a car with an accelerator but no brakes.
As someone in the food industry, I can appreciate the hardships and frustrations shared by the author. I've worked for others in restaurants and other consumer-facing food businesses, and now my company is a wholesaler. Some of why my company is like that comes from what I learned in prior industry experiences, but much of it is merely a reflection of my preferences and strengths, both of which compel me toward direct relationships with customers (wholesaling) rather than the fleeting, complicated interactions that come in restaurants, bakeries, etc.
So I can appreciate the frustrations the author shared. Many of them remain a part of my life—the crazy hours, bureaucracy, expenses, etc. Many of them are the nature of the industry. It is, after all, a service industry, and that means service to others. That’s typically a trying environment in the US, with its individual-focused culture. So I’m sympathetic to much of what the author described.
But it certainly reads like someone who didn’t know what he was getting himself involved with doing. Sadly—not critically—I’d even say it sounds like he (at the time of writing) only understands the symptoms of how things happened, not the actual causes. Just one example: He mentions lease negotiations covering four months but then describes the place as being in shambles. That indicates thorough inspections weren’t performed. Many of the self-described problems in the piece follow this pattern, him seeing what went wrong instead of describing what should have been done differently.
Maybe in the intervening time since publication he (and his partners) have learned from this. Obviously, what they went through came with high costs, emotionally, physically, and economically. I can only hope they’ve ultimately benefited from going through this and it improves their chances of success in whatever else they do. It’s never pleasant to read about someone failing, but it’s always great to hear when people turn disappointment into a stepping stone to success.
The story of the $29 chicken dish that should actually be $40 because of its preparation cost...why pour your own money down the drain? There has to be a market fit, and this is deliberately ignoring that. He writes that he didn't want anything but to stay open, break even, etc. This indicates a major blind spot to even attempting to implement that approach. Sounds rather like someone who loved the idea of being a "startup" restauranteur without really having any vision for what he actually wanted to do.
> That chicken is a confit (with duck fat, aka $$), then served with a stock/stew that takes days (of labor dollars) to prepare, plus cost of employees to serve, stuff to serve it on and rent to pay, not to mention the utilities (the water bills on that cursed grease trap were the opposite of "the gift that keeps on giving"). That damned chicken should be $40!
Maybe $60 even. But the restaurant has to look and feel like the restaurant which serves $60 chicken. Maybe there is a marketing problem there, people thought it was just plain chicken. Then yes, $29 is too expensive. If they were eating chicken confit, with carefully crafted stock which took days and a team of 3 chefs to make, and it came from some Sunny Mountain organic free-range farm in the next county then $29 sounds like bargain.
But as they say, everyone in Portland wants to open a restaurant. Probably anyone who could and wanted, already did. So there are plenty of options. At least I remember lots of options to choose from.
There is another element I noticed. If there are just a few good restaurants, and a plethora of other ones, people will just go to the ones they know. Not just because it is easy and a default choice. But also because they learned that trying new ones did not turn out as well, so they stop trying.
> bringing the plumbing up to code. $20,000 later we had a huge pit, filled with the gigantic, state-of-the-art grease trap the city now requires—all of which now benefit not us, but the landlord and his next tenant.
That sounds like they got swindled. They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.
That sounds like they got swindled. They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.
Eh, as a landlord myself, unless we agreed upfront to cover that improvement (usually by discounting on the rent), you're on your own. Renting to restaurants seems like a pain in the first place; considering their low expected lifetime, the property will have to be on the market again soon enough, losing money during the transition. Plus who knows if they won't go bankrupt with unpaid rent.
If this was prime location for restaurants, the grease trap would already be there. As it isn't, chances are the next tenant won't even be a restaurant.
I very much feel for this guys plight and what he's going through. He says the whole story right at the top. The venue is what screwed him. He didn't know all the things he learned about the food after he opened the place, but what he REALLY didn't know was about the operations of a building and the cost of the corner he wanted to end up on. That fucked him from the jump.
I know he's frustrated, as anyone would be, but the deck was stacked from the get go and it's no one's fault but his. Not the landlord or the grease trap. That was writing on the wall about unknown unknowns.
He starts by saying how "hot" the market is, like that's a good thing for his persuit. He starts with talk of it being saturated. The landlord doesn't need to take any risks on that hot corner for your grease trap or electrical.
I've taken a bath on a few things where I over invested in fixed costs. I've had to take a couple years off after a six year startup struggle because of burnout. I will say that when I've come back around, after really fucking kicking myself and licking all wounds, it was a VERY expensive lesson. Emotionally, fiscally, and socially. Usually cheaper than a masters degree though and infinitely more applicable to future runs at the real goal.
You want to get free and run a creative operation? Great. The world does not give a shit. Worse than that, it hates you and wants you to fail. The path to real freedom is paved with bloody miserable failure. Bad leases will eat you, which is not the landlords fault. If you want to make money, buy a Chick-fil-a franchise. They have a great track record and financing. If you wanna make art, be prepared to suffer for it and have no one give a flying fuck about how much it hurt to try.
The desire to blend art and commerce is something that very few people succeed at. Just because you have worked in a kitchen and scored a half million in inheritance doesn't mean anyone needs to care. No matter how much you spent. You could have put the cash in an account and get so good at cooking that someone else will take the ops risk to open your counter or take the risk yourself and learn hard what you don't know. The world sheds no tears either way.
Bunk Sandwiches in Portland didn't start with a $40 chicken. They started with a hole in the wall and a Cuban Sandwich that would make you slap your grandma. Also they could make them fast for $12 and had a line out the door. Eight years later they have several locations and a concert venue. The sandwich isn't as good anymore, but they made a legacy out of thing that could support itself and can continue to grow. I don't know anything about their owners, but I bet they can tell you some shit about surviving upside down leases and kitchen costs.
I seriously wish this guy the best. I'm sure some days that chicken was one of the best things anyone has ever tasted.
Oh I love it when a landlord and a restaurant owner, each facing competition or "his own set of problems" just figure out that it's better to kill each other rather than trying a little cooperation...
Either this guy didn't get his contractor on site before signing a lease, or the contractor is at fault for not mentioning this $20k problem. This is what happens when you skip your due diligence, because any contractor who should be building out restaurants would have known about the grease trap regulations off the top of his or her head.
For anyone else thinking of renovations, it's really worth it to get a contractor onsite before you commit. Any competent one will be able to tell you things like hey, widening those door frames 2 inches to bring you up to code is going to be far more expensive than you think it ought to be. etc etc etc. And just wait until you see how much a bit of asbestos on your ceiling is gonna cost you to remediate...
The mistake you are making there is assuming that those improvements add any value to the landlord or property. They don't. That $20,000 grease trap is an anchor that the next tenant has to have pulled out at great expense. They probably want different lighting so the electrical will have to be redone as well.
In any commercial property I have ever dealt with the tenant is responsible for any renovations because every tenant is looking to outfit the space differently. If the market is heavily in the favor of the renters at the time, I have seen landlords offer discounts on the rent to help cover certain renovations, typically expanded electrical service and the like, but even that has it's limits as landlords typically have costs associated with ownership they need to cover out of the rent.
Malls and (high cash flow) retail spaces will often provide tenants with money for renovations upon lease signing. For a 10 year lease on a proven business, it's not uncommon to have $20,000 - $100,000 build out on the space. This is, of course, priced into the lease.
Yeah, I don't know if the photos were stock or pictures of the real premises. But I wouldn't be very keen on 40-50$ entrees in a restaurant serving things in styrofoam cups.
> They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.
In business, the landlord is renting a space, and the company renting fits it out. You could spend more than several years' rent on a fit-out, why should the landlord goes halvsies in that case?
That sounds like they got swindled. They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.
Landlord splitting a cost with the renter? I about spit my coffee out.
While that’s true with residential housing (where the landlord pays all of the bill) it is not at all like that in commercial real estate.
I’ve worked at a number of startups where we needed an improvement. Electrical, computer wiring, knocking down a wall between two adjoining units that are now one. Not once has the landlord even offered to pay for any of it.
They can do this as they hold all the cards. Employers or shopkeepers need a physical space. There’s a limited amount of it in a desirable area. Ergo they can get away with it.
This isn’t true in residential as there is always more inventory coming online. Plus people will decide to move farther away. You can’t easily do that with a business.
What this does mean is that when opening a restaurant look for a place that previously had a restaurant in it and use their improvements. You’ll probably get a deal from the previous failed one to buy the movable equipment.
Maybe $60 even. But the restaurant has to look and feel like the restaurant which serves $60 chicken.
However margins on high end fine dining are reportedly even worse than most of the sector. If they're selling you $40 chicken it's probably still at a loss, counting on you making it up on wine and pastries.
Leasehold improvements aren't always split; it's better to negotiate those during the lease discussion. In our restaurant, we got ZIP back from the landlord for leasehold improvements.
I see a lot of comments concentrating on "maybe they didn't have a good plan/experience/whatever". But having some experience close to non-fastfood restaurant staff (in the UK though), I can only confirm a lot from the article. That business is more messy and the environment can be more toxic than anything I've seen in the IT.
The margins are way too small and staff is underpaid and overworked. Think paid for 7.5h, but working whole week of split shifts (morning, long lunch break, evening till closing) at close to minimum pay. Stockholm syndrome and "that's what working means" thinking is rampant. Abusive staff, back/front restaurant conflicts, etc. are standard. Rockstar developers are nothing compared to chef who makes the service staff cry and can leave with their kitchen staff to anther place when they want.
The lower management comes from people who survived enough of this to advance - they already know this is how it works, so not much gets changed.
Just recalling this makes me really angry. If you get a good service - appreciate it.
Hospitality as a whole preys on, young people needing money and older people, needing status.
(While I say our/we, I have left the industry after 17 years).
We hire the cheapest students to scrub dishes and carry food, for the lowest possible we can. If they argue, then we replace them with the ever available student market.
We will hire the lowest bidding chef's , from any region, as long as they can cook the dishes, and if they argue or want a raise, we will replace them with the ever available students/new visa holders.
I was lucky, I met people and got out of the direct cooking business. Despitr getting out of the business, I had my first stomach ulcers at 24, a friend of mine had a heart attack at 25, and too many friends to note have been driven to drug use.
I'm resisting the urge to be bitter here btw :-p
Oh for the record, I worked (at a high rank), for some of the top restaurants in Australia. Also it's not just aus, I see the same thing in Japan.
Abuse in hospitality, not sure I can actually say anything about this except : yes, constant.
I have seen it from the female chef's, walking behind people with a wooden spoon and trying to jam it in their arse, to kitchen hands having hot pans thrown at them for being too slow. It's not a one off, and it's not infrequent.
I just hope a few of you guys think about this, next time you order a meal.
>>We hire the cheapest students to scrub dishes and carry food, for the lowest possible we can. If they argue, then we replace them with the ever available student market.
When I visited US I once has a small chat with a Indian student studying in the US. From what I heard an entire range of restaurants and grocery stores in the US run on super cheap slave wage labor, who work without complain. There is no scope to complain actually because there is always the next batch of those ever available student labor that could replace you.
Id like to think if I met anyone that bitter in real life, that I would commit to their on their grave.
Yeah waiting on tables is hard work, often with very little positive feedback or money but shit, they make it sound like slugging through he damn fields of Normandy on dday.
No I'm sorry, but just fucking no.
It's a shit paying job, you get abused, it's looked down upon - which I think is a crime, it's a difficult job! - but it's not that bad as the author makes out.
Philly is similar to Portland in that there's a huge restaurant scene here. Yeah, there's a lot of failure, but some people seem to "make it" not just once but multiple times as chef-owners who operate 2 or more restaurants. Yes, if you look at overall failure rate for new restaurants it is very high and it is sad to see first time owners fail, but there are some who enjoy serial success (who also fail sometimes, but can afford it).
The ones which I know personally who are successful all had LONG histories of working under-the-wing of a master, literally starting as a line cook and progressing to sous-chef. Along the way they get savvy to the business, make an enormous set of connections and learn their market intimately. When they break out, they start very small and later take calculated risks to expand as they're able to survive failures.
Other ways people have found success is by starting as food trucks or as catering services or as suppliers (eg bakery, patisserie) to restaurants.
I'm not in the restaurant business, so take what I say with a grain of salt (heh), but from the people I know in that business there's a wide variance in the actual business knowledge they possess.
You need enough capital to actually open the doors - that means not leasing the space with knob and tube wiring, residential drainage and a leaky roof. If that's all that's out there, you could simply not open yet and keep looking. In the OP, it sounded like that money was burning a hole in the owner's pocket and he had to open now. Patience.
Then once the doors are open, you need detailed, ongoing knowledge of your costs. There is no $29 chicken if it costs out to $31. If no one is going to pay $35 so that you can make a profit, it doesn't go on the menu. But you don't, as the author put it, sell $40 in cost for $29 simply because no one would pay $40. Then you get into ordering and spoilage, where even me as a total outsider, could tell you there's often money rotting in the walk-in. Point is, you must know your real operating costs before you ever even stand a chance.
Then you have to go out there and not suck. For a chef opening a restaurant, this is probably the part they're focused on. Problem is, you could be sunk before you even get to this stage. The guys that are successful and worked under successful people for a long time probably learned quite a bit about running the business, and is why they have better odds.
tl;dr - Under-capitalization is a leading cause of failure for many businesses. You can't make up your operating losses in volume. Don't open any business if you aren't prepared to live and breathe the minutiae of your costs.
I was in the restaurant business for a long time. You are definitely on the money.
So many businesses I went to, were not able to understand the basics.
Hospitality, while it can be profitable, is a game of small numbers.
The smallest overlooked number can be your downfall.
The margins are slight, but with the right team they can pay out well.
What I mean is: take for example a simple bistro style meal of beef steak, vegetables and salad.
Let's use for example the following costings:
Beef: $3.00
Salad: $0.50
Vegetables: $0.40
So that gives you a base plate cost of $3.90, the standard practice is (at the lowest level) $15.60. (this - on a well run bistro will just cover your bills including staffing costs).
What a lot of first time restaurant owners don't realise is the side costs. I'm not talking staffing, rent or anything like that(which is a whole nother issue to keep an eye on), I'm talking the incendentals - broken objects, garnish, facility repairs and upkeep. These are just a few of the things that I have seen (many times) not accounted for.
Add on top of that a few weeks of unexpected less covers (clients basically), and you have a recipe for disaster.
While hospitality seems like an easy business to purchase (I have rescued/helped sell a lot of business whose owners thought it was), it is actually a massive investment in micromanagement.
If you don't micromanage, it will fail. If you overdo it (re pushing staff too much) you will lose your best staff, and fail.
As you stated, if you arnt willing to live and breathe your restaurant, don't do it.
Which is why I left the industry, why would I lose out on my time with my family, just to make less money than I could doing anything else?
My father-in-law has been a restaurant owner for his whole career. He has told me that it's quite common to have dished on the menu that are simply a loss (he is in a very price-sensitive market). They're countered by other dishes that have substantial profitability. In short, I agree with most of what you wrote, but each dish doesn't have to have the same profit margin on its own.
Well, there are good reason for selling stuff under-cost if the loss can be more than made-up for in other charges. Doing this is as old as retail itself-- a "sale" in the retail world. In the restaurant business under-cost prices for a particular item can get more people in the door who then buy drinks, appetizers and other menu items while enjoying the great deal of a $20 chicken. That's easier said than done, of course.
> I remember clearly the day when the accountant showed me that we could effectively double our monthly sales and still not have enough to meet our eventual payroll obligations and that's about when you just finally sink into it: You're done.
The article doesn't really go into this part, but it does mention an extensive business plan. Was it that the labor costs were not foreseen, or that the revenue was much lower than expected? To be off by half is significant. It would be interesting to hear with hindsight what could have been done differently to avoid this (even if the calculation came out to "don't open a restaurant").
>
The article doesn't really go into this part, but it does mention an extensive business plan. Was it that the labor costs were not foreseen, or that the revenue was much lower than expected? To be off by half is significant. It would be interesting to hear with hindsight what could have been done differently to avoid this (even if the calculation came out to "don't open a restaurant").
If doubling your sales wouldn't make next month's payroll, my first guess without any additional info is that margins are too thin (or possibly negative). Unless no one is coming in, it's not really a revenue issue, it's a cost issue.
Whatever your business is, know your costs and the drivers of those costs. You have to know whether the prices you can charge will cover the costs and provide enough profit to keep going. It's not even specific to restaurants.
Indeed I'd argue that their margins were off by a lot. It's not uncommon for non-hospitality trained people to screw that up (and in their defence, it is a lot more complex than most people think).
I sympathize with his difficulties, and don't want to shit on the guy. Trying to read between the lines, I sense that one of his core problems was weak negotiation skills, or the ability to have tough conversations. He negotiated a lousy lease. He hired a chef who wouldn't do the necessary work. Fundamentals that poison the whole downstream.
Like other commenters, also wondering how his elaborate business plans (made w/ experienced restaurateur's input) could be so wildly inaccurate.
Maybe another lesson is, don't rush to the "hot spot." Maybe find a market that has no good scene instead. Be an early gentrifier. By the time newspapers are writing about "hot spots" "hot jobs" etc, it's almost always the high-water mark.
Multiple times I've spotted tops of commodity bubbles by noticing when news articles talk about the absurd wages being paid the labor force. Miners and crane-operators being paid $250k/year during the initial Western Australia mining boom. Low-level labor in North Dakota being paid crazily during the initial part of the Shale Boom, etc. The news coverage is always breathless and euphoric. Wonder if we could build some sentiment analysis that can detect these sorts of articles in a generalized way?
Another way I've heard it described, "whatever industry the current class of graduating MBA is racing to join--avoid it."
> Like other commenters, also wondering how his elaborate business plans (made w/ experienced restaurateur's input) could be so wildly inaccurate.
I think the author commented on this pretty clearly in the article when they described themselves as someone with "...more money than sense". I've had many friends who are pretty insistent they have what it takes to make a successful run with a restaurant business with some gimmick on the side to bring in audiences, and every time I hear their pitch I can't help but be let down by the lackidasical pitch. I think in general people just don't really understand what it takes to get a restaurant just to "stable", neverminding profitable.
I'm often reminded of the difference between producing something and production something at a production scale; my partner is a chemist, and she tells me how their applicants don't always understand why a 1% impurity in a product matters immensely when you're producing 1 metric tons of the stuff. It's the same with a restaurant, I imagine, and trying to produce the same quality dish rapidly and consistently without much waste or flubbing the process, and being able to also rapidly adjust the volume you produce on a day to day basis with no strong indicator as to which way the demand is going to swing.
But none of that really registers when you read advertisement pieces from cities about booming restaurant scenes and how largely demand can be overstated when a city just wants some fresh air in their night life, and it's really appealing to people to imagine themselves as successful restauranteurs when inundated with such material.
A lot of is is that restaurants are largely built by wealthy people for their own social niche. They aren't designed to be profitable businesses, but more as a social device for their owners.
If you're wealthy in New York City, you will eventually be asked to fund a restaurant.
On the subject of wealthy people having restaurants for "social reasons," this article is an interesting read: "The Thrill of Losing Money by Investing in a Manhattan Restaurant":
Wonder if we could build some sentiment analysis that can detect these sorts of articles in a generalized way?
What would you do with the data?
The canonical example I always turn to is a friend of mine who realized one day that he was being paid $25/hour to sweep the floors in a factory (union job) and there was no way that was sustainable over the long term.
He started going to college at night and graduated and got a good job just before they shut the entire plant down!
Readit News
And I lived right next door to Renard.
It's hard to imagine that during the planning, budgeting, and all the upfront work that someone didn't caution him against the unscrupulous landlord. The landlord was a guy that wrapped a chain around our neighboring building to pull his building back onto its foundation. This is a guy that had public, outstanding violations and complaints on his building and unpermitted work.
And they moved in to a microscopic kitchen to do white-tablecloth dining in a local neighborhood. Yes, they moved in right after a hot restaurant, St Jack, moved out, but St Jack had a marketing/advertising/buzz machine behind it. They systematically created success, not the other-way around.
I guess the moral of the story is take this to heart:
>I told myself what I'm sure every single novice restauranteur tells themselves: I'll be in the 1 percent that make it, by sheer will.
Take the leap, but you've got to do your diligence. Listen to the feedback and concerns people voice about your endeavor.
Absolutely, but there's never a situation of any kind without drawbacks.
A quote from David Chang of Momofuku, etc:
> I think almost everything we've done has been a failure from the get go. That's just the truth, and I don't think people see that. We have fucked up just about every opening in every restaurant we've ever done. We grind it out and figure out how to make it work as we go. That's what makes it a very organic experience and sometimes maddening. But I can't see any other way to do it than to engage with the world, make the mistakes, and pick up the pieces from there.
The hype machine thing you mentioned might be the real deal. As far as I can tell chef's food wasn't remarkable for Portland. His highlight pic was a french onion soup and a steak tartar, not even plated well. The rest of the atmos looked like snippets from "How to be Portland" magazine. They said "Keep Portland Weird" but that brand has been bought and sold and done with since Death Cab for Cutie had that song about answering machines.
It might be good food, it might be expensive, but man... Portland basically invented what we think of as the modern 'foodie' dickweed.
I'm not sure that any place that doesn't have extremely deep pockets isn't dealing with a landlord that wouldn't try some chain foundation voodoo, or even like real deal fraud, and chef still gotta survive plus overdeliver world class dining experience if he wants to be heard.
Also the author sounds quick to blame external forces and the general malaise of the industry, which perhaps can cloud one's focus on identifying and fixing your own weaknesses.
Also, commercial landlords are not nice people. I see and hear a lot of similar stories here in the Bay Area, where it's now routine for landlords to jack up the rent by 100% at the end of a lease period. In cases like this landlords often plead that they have no other choice than to charge the market rate, and this is partly true - but they omit to mention that they are often leveraged to the hilt and are using their existing holdings as collateral to buy more property.
Even when property is sitting empty, it may still be 'working' for the landlord - commercial property can be depreciated for federal tax purposes over a 39 year period, so a building in a downtown area can sit empty but serve as a tax umbrella for profitable rentals elsewhere, as long as the costs of maintenance/blight mitigation stays low. I'm no accountant but as far as I can tell the tax code disproportionately favors property owners.
You cannot purchase a restaurant without knowing the industry (eg by working in it), and expect things to just flow.
Don't take the leap, actually learn what the hell you're getting into.
As for the landlord, bloody hell. Needing to spend 20k on plumbing and they didn't think that was a bad place to rent ? There is no excuse for that, even if there was more than 20k of equipment on premises, they should have seen the warning signs.
Tldr: foolish investor thinks buying a restaurant is easy money, learns the hard way that it isn't.
I would be surprised if every single novice restauranteur tells themselves that before starting a venue.
Most of them are probably tell themselves something like "If I build it, they will come".
Still, 1% seems to me very low, we are not talking about startups, are there actual statistics on it ?
That said, the majority do either fail or get sold within three years, which (given that owners generally aren't building them for an exit) suggest a high combined rate of failure or burnout. But nothing like the 90, 95, or 99% short-run failure rates often tossed around.
Preamble: I'm rated as an executive chef(my last 3 positions before leaving the industry), and I had worked for over 17 years in hospitality (from apprentice chef, to manager and executive chef - I also spent 4 years traveling to different restaurants to try and save them from foreclosure).
"That chicken is a confit (with duck fat, aka $$), then served with a stock/stew that takes days (of labor dollars) to prepare, plus cost of employees to serve"
I sympathised with the author until this point. No it doesn't take days in the way the author points it out, it takes minutes with a time to follow. (Eg you don't have to actually do anything after you prepare and set it). That's akin to saying a good jam or beer takes months - yes in pure time, but it doesn't take staff time(and $$ as the author said).
As for the hours? The author is correct, hospitality is a slug fest, there is no doubt about that.
What I take from this article? An unexperienced person tried to build a new business in an industry that didn't have the experience in.
Would you try to start a software business, a cloud storage or a trucking business without experience? No it would be foolhardy, and that's the biggest problem with hospitality.
Frankly if you're not a chef - dont purchase a restaurant. Anyone can cook one decent meal, now try doing 100 a day while managing costs and staffing. (That's just the basics, there are hundreds of things you need to do just to begin).
At the end of the day, I sympathise with the author, I have seen (and tried to help), a lot of people in that situation, but you cannot just jump into hospitality with money and assume that it will work.
Edit: typos ( thanks qwerty_asdf :-p )
That chicken is a confit (with duck fat, aka $$), then served with a stock/stew that takes days (of labor dollars) to prepare, plus cost of employees to serve, stuff to serve it on and rent to pay, not to mention the utilities (the water bills on that cursed grease trap were the opposite of "the gift that keeps on giving"). That damned chicken should be $40! But people won't pay $40 for chicken, so it's $29.
This seems to suggest that the author (who I sympathize with very much) doesn't have much understanding of cost accounting, and therefore pricing, which is near the top of mistakes inexperienced business owners make. The cost of the chicken is variable. The costs of rent, labor, and utilities are fixed on a per plate basis.
I'm friends with the owner of a very large and very successful restaurant and he once told me that he basically makes no profit on food and that the food is just a way to get people in to sell alcohol which is where the majority of his profit is made. It's also true that some foods are necessarily more profitable than others. People won't pay your costs for the chicken confit and you lose a few bucks on every one that goes out? Fine, add a few dollars to your pasta dish that costs far less to make and if you sell the same number you're even. Or, if the chicken isn't profitable and you aren't selling many of them, just accept that people don't want it and take it off the menu.
Swap "alcohol" for "soft drinks" and you're pretty much describing the entire fast-food industry.
They should just have made darned turkey sandwiches or something. Charge 25 cents less than similar ones in a two mile radius. If everyone is asking $7, make yours $6.75.
Have an espresso machine and great coffee.
Don't hire any outsiders until business outpaces your sandwich-fu.
Encourage take-out and phone-in orders (or online). Take-out people don't take up seats and you don't have to do dishes after them or clean the table.
In a restaurant me and my girlfriend frequent, the main dishes are actually VERY affordable -- I'd even say cheap -- for what they offer. And many people flock to the restaurant in lunch breaks, but they are very careful to only order a beer plus a main dish.
Why? Because that restaurant's every single drink -- alcoholic or not -- is grossly overpriced. Desserts cost an arm and a leg. Salads are mostly okay but they most likely sell them for 3x the price of the ingredients as well.
The way I see modern restaurants is exactly like you said: food is just a bait so you can get in and buy the things that go with it, and they are the real profit makers.
I am perfectly okay with it. It was just an interesting revelation and I decided to chime in and thank you for confirming my observations.
Both seem in a similar boat. A restaurant is nothing without a good chef. A programming startup is nothing without a good developer. Both have cases where the chef/developer starts their own companies.. and many more cases where an outside guy with some money comes in and tries to make it happen.
You can succeed in both paths, but it sure as heck seems a lot harder! I cannot image funding a software startup if each MVP I wanted took say 30k to make (instead of a few hours of time). It seems reasonable that cooking is similar..
That said, I think in both cases the business guy needs to bring domain knowledge (or an insane amount of hustle) to the table. Figuring out the type, location, and marketing of a restaurant is just as much of a make-or-break proposition as having the right chef. Similarly, on the software side you need either pitching/fundraising or some kind of go-to-market skills, whether it be enterprise sales or consumer marketing. Entrepreneurial chefs and developers at the top of their game enough to offer something compelling may be able to do this themselves, but in most cases a partnership with the right business person will have a multiplicative effect on the results.
Hospitality is a little more difficult as the margins are so tight though, hence the most successful are owner/operators.
Few things wind me up more than people who've never worked in a kitchen/restaurant deciding to open one because it's their dream. They think they can do it better, or just that it will be fun and rewarding.
Over here it tends to be people buying a pub, because they like the idea of hanging out behind the bar serving the odd drink whilst the money rolls in. How hard can it be?
It's infuriating and I have zero sympathy
Otherdays, when I go visit a few friends places and see how things are organised, it's amazing how smoothly things operate.
But those same people, I know from being there with them, are constantly under stress, and have broken down to me after a few drinks after hours.
EDIT: ...probably one of the anticipated phone typos, fat fingering 'i' instead of the 'u' key.
Is that really a thing in the US? Honest question, I'm confused. The justification for requiring 20% tips (and considering you "nasty" if you leave any less) is that the waiters in the US are not even paid minimum wage, they rely on the customer tips to make a living. So, which one is it? If they rely on the tips, surely they don't cost the restaurant owners any significant amount of $$, do they?
ISTM that a key difference in left/right political philosophy is that the left thinks its more ethical to start at the bottom and work up, whereas the right feels it's OK to leapfrog as far ahead as you're able. A libertarian economist would argue that this maximizes both individual freedom and value across the economy as a whole, whereas a Marxian economist would argue that such maximization strategies exacerbate boom and bust cycles, like a car with an accelerator but no brakes.
So I can appreciate the frustrations the author shared. Many of them remain a part of my life—the crazy hours, bureaucracy, expenses, etc. Many of them are the nature of the industry. It is, after all, a service industry, and that means service to others. That’s typically a trying environment in the US, with its individual-focused culture. So I’m sympathetic to much of what the author described.
But it certainly reads like someone who didn’t know what he was getting himself involved with doing. Sadly—not critically—I’d even say it sounds like he (at the time of writing) only understands the symptoms of how things happened, not the actual causes. Just one example: He mentions lease negotiations covering four months but then describes the place as being in shambles. That indicates thorough inspections weren’t performed. Many of the self-described problems in the piece follow this pattern, him seeing what went wrong instead of describing what should have been done differently.
Maybe in the intervening time since publication he (and his partners) have learned from this. Obviously, what they went through came with high costs, emotionally, physically, and economically. I can only hope they’ve ultimately benefited from going through this and it improves their chances of success in whatever else they do. It’s never pleasant to read about someone failing, but it’s always great to hear when people turn disappointment into a stepping stone to success.
Maybe $60 even. But the restaurant has to look and feel like the restaurant which serves $60 chicken. Maybe there is a marketing problem there, people thought it was just plain chicken. Then yes, $29 is too expensive. If they were eating chicken confit, with carefully crafted stock which took days and a team of 3 chefs to make, and it came from some Sunny Mountain organic free-range farm in the next county then $29 sounds like bargain.
But as they say, everyone in Portland wants to open a restaurant. Probably anyone who could and wanted, already did. So there are plenty of options. At least I remember lots of options to choose from.
There is another element I noticed. If there are just a few good restaurants, and a plethora of other ones, people will just go to the ones they know. Not just because it is easy and a default choice. But also because they learned that trying new ones did not turn out as well, so they stop trying.
> bringing the plumbing up to code. $20,000 later we had a huge pit, filled with the gigantic, state-of-the-art grease trap the city now requires—all of which now benefit not us, but the landlord and his next tenant.
That sounds like they got swindled. They paid for an improvement to the rental property, how come the landlord didn't split that with them. It just seems unfair.
Eh, as a landlord myself, unless we agreed upfront to cover that improvement (usually by discounting on the rent), you're on your own. Renting to restaurants seems like a pain in the first place; considering their low expected lifetime, the property will have to be on the market again soon enough, losing money during the transition. Plus who knows if they won't go bankrupt with unpaid rent.
If this was prime location for restaurants, the grease trap would already be there. As it isn't, chances are the next tenant won't even be a restaurant.
I wouldn't contribute either, frankly.
I know he's frustrated, as anyone would be, but the deck was stacked from the get go and it's no one's fault but his. Not the landlord or the grease trap. That was writing on the wall about unknown unknowns.
He starts by saying how "hot" the market is, like that's a good thing for his persuit. He starts with talk of it being saturated. The landlord doesn't need to take any risks on that hot corner for your grease trap or electrical.
I've taken a bath on a few things where I over invested in fixed costs. I've had to take a couple years off after a six year startup struggle because of burnout. I will say that when I've come back around, after really fucking kicking myself and licking all wounds, it was a VERY expensive lesson. Emotionally, fiscally, and socially. Usually cheaper than a masters degree though and infinitely more applicable to future runs at the real goal.
You want to get free and run a creative operation? Great. The world does not give a shit. Worse than that, it hates you and wants you to fail. The path to real freedom is paved with bloody miserable failure. Bad leases will eat you, which is not the landlords fault. If you want to make money, buy a Chick-fil-a franchise. They have a great track record and financing. If you wanna make art, be prepared to suffer for it and have no one give a flying fuck about how much it hurt to try.
The desire to blend art and commerce is something that very few people succeed at. Just because you have worked in a kitchen and scored a half million in inheritance doesn't mean anyone needs to care. No matter how much you spent. You could have put the cash in an account and get so good at cooking that someone else will take the ops risk to open your counter or take the risk yourself and learn hard what you don't know. The world sheds no tears either way.
Bunk Sandwiches in Portland didn't start with a $40 chicken. They started with a hole in the wall and a Cuban Sandwich that would make you slap your grandma. Also they could make them fast for $12 and had a line out the door. Eight years later they have several locations and a concert venue. The sandwich isn't as good anymore, but they made a legacy out of thing that could support itself and can continue to grow. I don't know anything about their owners, but I bet they can tell you some shit about surviving upside down leases and kitchen costs.
I seriously wish this guy the best. I'm sure some days that chicken was one of the best things anyone has ever tasted.
For anyone else thinking of renovations, it's really worth it to get a contractor onsite before you commit. Any competent one will be able to tell you things like hey, widening those door frames 2 inches to bring you up to code is going to be far more expensive than you think it ought to be. etc etc etc. And just wait until you see how much a bit of asbestos on your ceiling is gonna cost you to remediate...
Dead Comment
In any commercial property I have ever dealt with the tenant is responsible for any renovations because every tenant is looking to outfit the space differently. If the market is heavily in the favor of the renters at the time, I have seen landlords offer discounts on the rent to help cover certain renovations, typically expanded electrical service and the like, but even that has it's limits as landlords typically have costs associated with ownership they need to cover out of the rent.
In business, the landlord is renting a space, and the company renting fits it out. You could spend more than several years' rent on a fit-out, why should the landlord goes halvsies in that case?
Landlord: I don't care if you do it or not.
While that’s true with residential housing (where the landlord pays all of the bill) it is not at all like that in commercial real estate.
I’ve worked at a number of startups where we needed an improvement. Electrical, computer wiring, knocking down a wall between two adjoining units that are now one. Not once has the landlord even offered to pay for any of it.
They can do this as they hold all the cards. Employers or shopkeepers need a physical space. There’s a limited amount of it in a desirable area. Ergo they can get away with it.
This isn’t true in residential as there is always more inventory coming online. Plus people will decide to move farther away. You can’t easily do that with a business.
What this does mean is that when opening a restaurant look for a place that previously had a restaurant in it and use their improvements. You’ll probably get a deal from the previous failed one to buy the movable equipment.
The margins are way too small and staff is underpaid and overworked. Think paid for 7.5h, but working whole week of split shifts (morning, long lunch break, evening till closing) at close to minimum pay. Stockholm syndrome and "that's what working means" thinking is rampant. Abusive staff, back/front restaurant conflicts, etc. are standard. Rockstar developers are nothing compared to chef who makes the service staff cry and can leave with their kitchen staff to anther place when they want.
The lower management comes from people who survived enough of this to advance - they already know this is how it works, so not much gets changed.
Just recalling this makes me really angry. If you get a good service - appreciate it.
Hospitality as a whole preys on, young people needing money and older people, needing status.
(While I say our/we, I have left the industry after 17 years).
We hire the cheapest students to scrub dishes and carry food, for the lowest possible we can. If they argue, then we replace them with the ever available student market.
We will hire the lowest bidding chef's , from any region, as long as they can cook the dishes, and if they argue or want a raise, we will replace them with the ever available students/new visa holders.
I was lucky, I met people and got out of the direct cooking business. Despitr getting out of the business, I had my first stomach ulcers at 24, a friend of mine had a heart attack at 25, and too many friends to note have been driven to drug use.
I'm resisting the urge to be bitter here btw :-p
Oh for the record, I worked (at a high rank), for some of the top restaurants in Australia. Also it's not just aus, I see the same thing in Japan.
Abuse in hospitality, not sure I can actually say anything about this except : yes, constant.
I have seen it from the female chef's, walking behind people with a wooden spoon and trying to jam it in their arse, to kitchen hands having hot pans thrown at them for being too slow. It's not a one off, and it's not infrequent.
I just hope a few of you guys think about this, next time you order a meal.
When I visited US I once has a small chat with a Indian student studying in the US. From what I heard an entire range of restaurants and grocery stores in the US run on super cheap slave wage labor, who work without complain. There is no scope to complain actually because there is always the next batch of those ever available student labor that could replace you.
https://www.stilldrinking.org/5-reasons-waiting-tables-is-a-...
Id like to think if I met anyone that bitter in real life, that I would commit to their on their grave.
Yeah waiting on tables is hard work, often with very little positive feedback or money but shit, they make it sound like slugging through he damn fields of Normandy on dday.
No I'm sorry, but just fucking no.
It's a shit paying job, you get abused, it's looked down upon - which I think is a crime, it's a difficult job! - but it's not that bad as the author makes out.
The ones which I know personally who are successful all had LONG histories of working under-the-wing of a master, literally starting as a line cook and progressing to sous-chef. Along the way they get savvy to the business, make an enormous set of connections and learn their market intimately. When they break out, they start very small and later take calculated risks to expand as they're able to survive failures.
Other ways people have found success is by starting as food trucks or as catering services or as suppliers (eg bakery, patisserie) to restaurants.
You need enough capital to actually open the doors - that means not leasing the space with knob and tube wiring, residential drainage and a leaky roof. If that's all that's out there, you could simply not open yet and keep looking. In the OP, it sounded like that money was burning a hole in the owner's pocket and he had to open now. Patience.
Then once the doors are open, you need detailed, ongoing knowledge of your costs. There is no $29 chicken if it costs out to $31. If no one is going to pay $35 so that you can make a profit, it doesn't go on the menu. But you don't, as the author put it, sell $40 in cost for $29 simply because no one would pay $40. Then you get into ordering and spoilage, where even me as a total outsider, could tell you there's often money rotting in the walk-in. Point is, you must know your real operating costs before you ever even stand a chance.
Then you have to go out there and not suck. For a chef opening a restaurant, this is probably the part they're focused on. Problem is, you could be sunk before you even get to this stage. The guys that are successful and worked under successful people for a long time probably learned quite a bit about running the business, and is why they have better odds.
tl;dr - Under-capitalization is a leading cause of failure for many businesses. You can't make up your operating losses in volume. Don't open any business if you aren't prepared to live and breathe the minutiae of your costs.
So many businesses I went to, were not able to understand the basics.
Hospitality, while it can be profitable, is a game of small numbers.
The smallest overlooked number can be your downfall.
The margins are slight, but with the right team they can pay out well.
What I mean is: take for example a simple bistro style meal of beef steak, vegetables and salad.
Let's use for example the following costings: Beef: $3.00 Salad: $0.50 Vegetables: $0.40
So that gives you a base plate cost of $3.90, the standard practice is (at the lowest level) $15.60. (this - on a well run bistro will just cover your bills including staffing costs).
What a lot of first time restaurant owners don't realise is the side costs. I'm not talking staffing, rent or anything like that(which is a whole nother issue to keep an eye on), I'm talking the incendentals - broken objects, garnish, facility repairs and upkeep. These are just a few of the things that I have seen (many times) not accounted for.
Add on top of that a few weeks of unexpected less covers (clients basically), and you have a recipe for disaster.
While hospitality seems like an easy business to purchase (I have rescued/helped sell a lot of business whose owners thought it was), it is actually a massive investment in micromanagement.
If you don't micromanage, it will fail. If you overdo it (re pushing staff too much) you will lose your best staff, and fail.
As you stated, if you arnt willing to live and breathe your restaurant, don't do it.
Which is why I left the industry, why would I lose out on my time with my family, just to make less money than I could doing anything else?
The article doesn't really go into this part, but it does mention an extensive business plan. Was it that the labor costs were not foreseen, or that the revenue was much lower than expected? To be off by half is significant. It would be interesting to hear with hindsight what could have been done differently to avoid this (even if the calculation came out to "don't open a restaurant").
If doubling your sales wouldn't make next month's payroll, my first guess without any additional info is that margins are too thin (or possibly negative). Unless no one is coming in, it's not really a revenue issue, it's a cost issue.
Whatever your business is, know your costs and the drivers of those costs. You have to know whether the prices you can charge will cover the costs and provide enough profit to keep going. It's not even specific to restaurants.
Like other commenters, also wondering how his elaborate business plans (made w/ experienced restaurateur's input) could be so wildly inaccurate.
Maybe another lesson is, don't rush to the "hot spot." Maybe find a market that has no good scene instead. Be an early gentrifier. By the time newspapers are writing about "hot spots" "hot jobs" etc, it's almost always the high-water mark.
Multiple times I've spotted tops of commodity bubbles by noticing when news articles talk about the absurd wages being paid the labor force. Miners and crane-operators being paid $250k/year during the initial Western Australia mining boom. Low-level labor in North Dakota being paid crazily during the initial part of the Shale Boom, etc. The news coverage is always breathless and euphoric. Wonder if we could build some sentiment analysis that can detect these sorts of articles in a generalized way?
Another way I've heard it described, "whatever industry the current class of graduating MBA is racing to join--avoid it."
I think the author commented on this pretty clearly in the article when they described themselves as someone with "...more money than sense". I've had many friends who are pretty insistent they have what it takes to make a successful run with a restaurant business with some gimmick on the side to bring in audiences, and every time I hear their pitch I can't help but be let down by the lackidasical pitch. I think in general people just don't really understand what it takes to get a restaurant just to "stable", neverminding profitable.
I'm often reminded of the difference between producing something and production something at a production scale; my partner is a chemist, and she tells me how their applicants don't always understand why a 1% impurity in a product matters immensely when you're producing 1 metric tons of the stuff. It's the same with a restaurant, I imagine, and trying to produce the same quality dish rapidly and consistently without much waste or flubbing the process, and being able to also rapidly adjust the volume you produce on a day to day basis with no strong indicator as to which way the demand is going to swing.
But none of that really registers when you read advertisement pieces from cities about booming restaurant scenes and how largely demand can be overstated when a city just wants some fresh air in their night life, and it's really appealing to people to imagine themselves as successful restauranteurs when inundated with such material.
If you're wealthy in New York City, you will eventually be asked to fund a restaurant.
https://www.newyorker.com/business/currency/the-thrill-of-lo...
The food was not that good.
What would you do with the data?
The canonical example I always turn to is a friend of mine who realized one day that he was being paid $25/hour to sweep the floors in a factory (union job) and there was no way that was sustainable over the long term.
He started going to college at night and graduated and got a good job just before they shut the entire plant down!