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What do you know about Starting and operating a restaurant

 
 
Reply Sat 14 Feb, 2009 04:17 pm
What do you know about starting and operating a restaurant?

I know that restaurants have amongst the highest mortality rates of any business genre, but some restaurants are amazingly successful.

I'm talking single-location "mom & pop" type restaurants here, not franchises.

What makes a small restaurant succeed or fail?

Obviously, there will be combinations of things, but what, in your experience, are the most important factors?

Thanks.
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Type: Question • Score: 10 • Views: 3,285 • Replies: 28
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spendius
 
  1  
Reply Sat 14 Feb, 2009 04:35 pm
@GeneralTsao,
Being there at the right time when easy credit is available and money is flowing free and fast and everybody is feely jolly and up for giving themselves a treat.
0 Replies
 
Foxfyre
 
  1  
Reply Sat 14 Feb, 2009 04:53 pm
@GeneralTsao,
What Spendius said.

Timing is important. A severe recession when people are not spending money on non essentials (i.e. eating out) is probably not the time to start a new business with an optional product.

Location is critical. You can have the best restaurant in town, but if it isn't easily accessible and people don't feel safe going to it, and at same time the land cost/construction/and/or rent is not affordable, you have two strikes against you right away.

A good business plan is important and a vision of what you want to be. Low end casual? A nice but inexpensive place? Fine dining? And keep the menu limited to popular items that your chef and helpers can learn to prepare and serve competently.

An excellent business head is critical--being able to fully analyze the full cost against price, the cost of licenses and taxes, the cost of insurance, the cost of portions, the cost of 'freebies', the cost of waste, the cost of labor, the cost of overhead and knowing what price you can charge that people will pay and cover all your costs plus produce a reasonable profit for yourself.

An eye to visual aesthetics and appreciation/expectation of excellence in your product. Otherwise the requisite repeat business will be hard to come by.

A sufficient and competent labor supply is important. Unless your employees share your appreciation for cleanliness, aesthetics, quality, service, etc. you'll fight an uphill battle that you will likely lose.

Do all that and you should succeed, but its by no means a sure thing.

Skip any steps and the odds are strongly against your success.
jespah
 
  1  
Reply Sat 14 Feb, 2009 04:55 pm
Let's see if we can get Occom Bill here, as he did just that.
0 Replies
 
realjohnboy
 
  1  
Reply Sat 14 Feb, 2009 06:26 pm
@Foxfyre,
What Foxfyre said.
I think that covered just about everything. I would add that, as part of the business plan, you should have enough financial backing to get you through a year or so. Don't expect mobs of people at your door right away. There will be some lean times at the beginning, particularly in this economy.
The other big thing is controlling waste. Stuff that doesn't sell tonight might be useable in some form tomorrow, but then it goes in the dumpster along with a lot of potential profit.
I, like perhaps many of yall, did my term in the restaurant business as a server in my youth. It takes a special breed of person to run a place successfully.
What are you thinking of?
0 Replies
 
sullyfish6
 
  1  
Reply Sat 14 Feb, 2009 08:52 pm
Well, I USED to think it was location, but if you have a REALLY great, unique draw, then people will seek you out. You become a destination spot.

So . . . what will be your "specialty hook"? What dish will people pass other places to eat at your restaurant?

Oh . . . do catering and offer carry-out on the side, too.
sullyfish6
 
  1  
Reply Sat 14 Feb, 2009 08:56 pm
Example: in an upscale community in western Michigan, a woman had a nice coffe/sandwich/baked goods. Sold shakes and flavored ice in the summer.

She started making Beignets (French doughnuts) in the morning, covered with powdered suger and thrown in paper bags, out the door. Her lines are now around the block to get into her place!
0 Replies
 
realjohnboy
 
  1  
Reply Sat 14 Feb, 2009 08:59 pm
@sullyfish6,
Great comment re catering. No wasted food. They pay for 30 meals in advance. You prepare 30 meals. And the kicker is a bunch of folks might like your food and come to your place.
0 Replies
 
GeneralTsao
 
  1  
Reply Sun 15 Feb, 2009 01:00 am
Oh, I'm tumbling many ideas around. I am a good cook and a creative one to boot, but I'm also smart enough to know that a good cook does not a restauranteur make!

I live in a little town of about 2,000 persons. We have a DQ Brazier, a Pizza Hut and a Mr. Goodcents (subs). No home-cooked meals per se, unless you count the local grill and bar which is a part-time operation with mediocre food, and a pork processor that has a restaurant open about 16 hours a week.

Everyone in town loves to go out and eat because there's really not much else to do. We are 20 miles from the next bigger town.
One year ago, someone opened a "sit-down" restaurant and it operated for 30-45 days then shut down. I ate there three times and was disappointed each time so I quit going.

What baffles me, though, is that there are four mom & pop restaurants in smaller towns around here that are doing gangbusters.

One town has only 200-300 people. Another has maybe 1,000. Another maybe 500, and the last one is about 100. None of these places is closer than seven miles to a town of 2000 or more, and at least 30 miles from a town of 3000 or more.

So why can't this town of 2000 support a restaurant? We are even the county seat! I see no reason, so that's why I'm researching it.

Besides, I like food and deserve a better restaurant than DQ or, God forbid, Pizza Hut. Mr. GoodCents is better than Subway, though.

aidan
 
  1  
Reply Sun 15 Feb, 2009 01:34 am
@GeneralTsao,
Sully's right. For instance, I'll drive right past Subway to go to Jersey Mike's for a sub (even if it's another five/ten miles). It's the oil/vinegar/oregano mixture they have that no other chain has.
You gotta have a draw and you can't sacrifice quality for quantity.
So rjb's right - you have to be able to fund yourself for a certain amount of time, until you find your draw and audience.
You have to be willing to keep experimenting too - be open and creative. Don't get so attached to certain ideas that you refuse to ditch those and try others.
Ask the people in your town what they would like to see a restaurant be and serve.
I know I only go out for things I don't cook at home. So don't just make things you cook at home and think that other people are going to go out to get those same things.
And it could be really simple- like biscuits and gravy for instance.
I don't make biscuits and gravy because it's time consuming - but if I live near a Shoney's or Denny's I'll go out every Sunday and bypass really nice brunch places - just to get a side order of biscuits and gravy.
Same with eggs benedict. If I find a place with good eggs benedict - I'm a loyal customer for life- because I don't really make that - good hollandaise sauce is a pain to make- so if someone else does it just right - it's easier for me to pay six bucks to have it.

0 Replies
 
sullyfish6
 
  1  
Reply Sun 15 Feb, 2009 08:17 am
I'll drive extra for Mediterranean food. Love the spices used, the rice, the humus, etc. etc. What about Thai? Or a really good coney? Choclate shop?
Do you make awesome pies or meat pies? Different BBQ?

Don't think just because others are surviving, you will. Sounds like the last thing you should do is open a mom and Pops or a sandwich/pizza place.

People are hesitant to change their favorite places or favorite coffee shop.

Why don't you start out catering, then see if that warrants opening a restaurant? (The building in itself it a huge undertaking.)
0 Replies
 
BumbleBeeBoogie
 
  1  
Reply Sun 15 Feb, 2009 09:40 am
Occom Bill's whole story about starting a restaurant can be found here:

http://able2know.org/topic/48120-1
0 Replies
 
GeneralTsao
 
  1  
Reply Sun 15 Feb, 2009 09:02 pm
Wow, great info guys, thanks!

My appetite is whetted for more...Smile
Foxfyre
 
  1  
Reply Mon 16 Feb, 2009 10:44 am
@sullyfish6,
It is true that the destination itself can be a drawing card when choosing the location.

For instance, there was a little wide spot in the road called Brookville 15 miles west of Salina KS that I don't think was even incorporated any more, but it featured an old picturesque historic hotel called the Brookville Hotel. The unique atmosphere coupled with decent food and the mini advetnure of going out to it made it an extremely popular and successful place for years. It had one thing and one thing only on the menu: fried chicken, special Brookville cold slaw (you can get the recipe on line just by googling Brookville cold slaw), and other sides that never changed. It was served family style and all you can eat at a reasonable price--dinner only.

But eventually even the relatively short 15 miles on the two lane road coupled with rising maintenance and labor costs was too much and the hotel moved to Abilene, 20 miles east of Salina on I-70 where it was easier to get to and would be noticed by drive by clientele. It isn't the same of course, but the financial reality I suppose made it necessary.

Another memory from back in the late 1960's/early 1970's were two places called Chicken Mary's and Chicken Annie's located 15 or 20 miles out in the boonies among the coal strip pits near Pittsburg KS. These places also offered very limited but consistently good menus of specially seasoned fried chicken and sides at an affordable price and it was special driving out to them for the unique ambiance along with decent food. So far as I know both places are still there.

Both of these scenarios, however, depend on long history, word of mouth, and tradition to keep going. I would think the concept would require really carefully planning and teaming up with a master promoter to be a successful start up business now.

And as, MerryAndrew suggested, any new venture needs to be sufficiently capitalized until you can build your clientele. It all comes down to how much venture capital you can afford to gamble.
0 Replies
 
spendius
 
  1  
Reply Mon 16 Feb, 2009 12:02 pm
There is another technical problem General. If you are successful others will notice and come in and copy your routines which are merely stratagems for parting people from their money as with all business ventures.

When you begin your competition will not like it because every customer you get is a financial loss to them. If, say, there are 200 couples dining out on average per night @ $100 and there are five restaurants sharing this $20,000 and thus taking $4,ooo each then a sixth restaurant causes the take to become $3,333 each. That is not something they will accept with a gracious smile.

It's a dog eat dog type of thing and unless you think like a dog you won't make any sense out of it.

These nice ladies offering you advice are not dogs and their tendency to observe the business scene through rose-coloured spectacles is something you need to avoid or you will end up busted, disillusioned and fed up.
0 Replies
 
Foxfyre
 
  1  
Reply Mon 16 Feb, 2009 01:39 pm
@GeneralTsao,
If there is a real need/want in a small town, a small town setting does have its advantages. Loyalty. Folks knowing folks and feeling comfortable. It's easy to put your clientele on a first name basis and, if you offer food they really look forward to eating at a price that doesn't strain their budgets, make their dining out experience, however humble, enjoyable and they'll be back.

I would think a basic specialty place offering familiar foods cooked as the local folks like them would be your best bet. I suppose it is possible, but I've never seen a fancy, expensive kind of place survive in a really small town. Sure folks would enjoy going 'classy' now and then as a place to celebrate or whatever, but a small town just doesn't have a big enough trade base--not enough people are there who want to splurge often enough.

People's Cafe in Minneapolis KS, trade area including farmers roughly 2000, served breakfast and lunch, six days a week. Mom and Pop cooked, there were three entres and a choice of three or four sides on the menu and though these changed now and then, they were all local favorites--all the same price including beverage. Everybody was on a first name basis and the customers waited tables if it was really busy and the place was always busy--often standing room only every time I was there. You put the money for your meal in the wide open cash register and made your own change. (The owners told me they figure the very few customers who did not pay or who stole from the register were far less costly than paying somebody to be cashier. I'm not saying this would work for everybody, but it worked for them in that kind of setting.)

And then there was that restaurant in the movie "My Cousin Vinny" in which the three choices on the menu were "breakfast", "lunch", and "dinner" with no specifics about what was included in each. In a really small town, after a reputation is developed, that could even be possible. Smile

0 Replies
 
sullyfish6
 
  1  
Reply Mon 16 Feb, 2009 04:02 pm
You said: "When you begin your competition will not like it because every customer you get is a financial loss to them. If, say, there are 200 couples dining out on average per night @ $100 and there are five restaurants sharing this $20,000 and thus taking $4,ooo each then a sixth restaurant causes the take to become $3,333 each. That is not something they will accept with a gracious smile. "

Oh - so he should not open a restaurant because he might hurt other people's business? That's BS. If you knew anything about the food industry, you would know the best place to be is in a town offering several restaurants - BUT not all serving the same menu!
ossobuco
 
  1  
Reply Mon 16 Feb, 2009 05:32 pm
@sullyfish6,
I don't think it's bs, I think it's just trying to understand the dynamics.

You could also say that new business can bring more business. If you have a cafe to stop at, you may shop. And if you shop, you may stop at the cafe, or another cafe another day. I figure these relationships can get complex. But yes, some immediate impact can be a certain coolness from some other cafes.

What I know something about is art galleries in medium small towns, and there was a benefit to there being more than one or two holding opening nights. The whole interest in art proliferated.
0 Replies
 
realjohnboy
 
  1  
Reply Mon 16 Feb, 2009 06:07 pm
@GeneralTsao,
Do you listen to NPR, General? Tonight there was a sad story of the demise of a restaurant in SW MI and the affect it had on the small town. Go to npr.org and then click on programs right below the banner. Find All Things Considered and scroll down through the stories to the one that has a restaurant sounding title. It is about 7 minutes long, but well worth the time.
A little restaurant music please. When I was young I worked for one of the big CPA firms. Atlanta, but I spent a lot of time in small southern towns for a week or so at a stretch. It was the summer and fall when some guy named Jimmy Carter was running for governor of GA and I ran into him at county fairs over and over again. Anyway. I spent a week or two in, I think I recall, Cairo (K-row). I had breakfast each day at a little diner. I wanted cereal but the only thing they had was stuff with too much sugar. Frosted this or that. "Don't you have just plain Corn Flakes?" "No" was the response from the blue haired waitress.
The next day I came in and ordered 2 eggs and toast and Mildred said, her shoulders slumping a bit, "You don't want Corn Flakes? I bought a box on my way in this morning." So for the rest of the week I felt obligated to eat Corn Flakes. I think I pretty much ate the whole box.
There is a lesson there somewhere, but I don't know what it is.
0 Replies
 
hamburger
 
  1  
Reply Mon 16 Feb, 2009 06:24 pm
@GeneralTsao,
small university towns and cities - we live in one - seem to be a good place for a simple restaurant .
at some corners we have four restaurants and the competion is pretty fierce .

a friend of ours owned a chinese restaurant for many years - it had been passed down from hid grandfather - but sold the property about 5 years ago - when property prices were high .
i asked him the other day : "do you miss the reataurant business ? "
his simple answer : "NOOOO ! ".

btw you better don't count the hours when you operate a restaurant - if you leave before closing and before the staff leaves , they might clean you out - literally !
hbg

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