The more I travel, experience communities, and try their restaurants – the more I scratch my head and ask the question: “What are they thinking?” The restaurant business is one that is relatively simple in concept, yet enormously complicated to execute. Develop a product that people are willing to buy, prepare it consistently well, make sure hot food is hot and cold food is cold, serve it quickly and with a smile, and provide value for the money spent. Simple right? It would be if customers were not fickle, if vendors were always dependable, if raw materials were always consistent, if competent staff was easy to find and retain, if your equipment never broke down, if the weather always cooperated, and if the economy would stay consistently strong. Unfortunately, all of those factors seem to work against you.
With all of that uncertainty – why do restaurateurs make it all the more difficult by coming up with hair brained ideas without enough research, and without demonstrated feasibility, and why do they lose sight of the details?
Moving into an expensive rent district to sell a single – value product that you happen to like is asking for failure. That cupcake, cookie, soup, salad, or bagel palace will never pay the rent, attract enough volume, or inspire a staff that you are trying to retain. The Lebanese restaurant across from the Alamo in San Antonio, Texas may be located in the midst of heavy foot traffic, but no matter how great the food is, the concept doesn’t fit the environment. When you open the sixth pizzeria in a two-block radius you will struggle to survive on the slice of business pie that you are left with. And when that “authentic” tacqueria opens with two 16-year old white Anglo Saxon high schoolers assembling the “Best Tacos in Town”, some customers will question the use of the word “authentic”. What are they thinking?
There are many reasons why there are a million freestanding restaurants in the U.S. and why a large portion of them file for bankruptcy within 1-5 years – they just don’t think it through. They don’t know what they are getting into and they certainly are not prepared for the reality of executing a restaurant concept.
Now, I must admit – I don’t own a restaurant, nor have I ever owned a restaurant. Even though I have spent five decades in the restaurant business, and even though I have thought about owning a restaurant many more times than I can count – I had either enough intelligence or far too much fear to actually take the leap. I know that as smart as I might be with preparing others to make the right decisions, I could easily fall into the trap of making those decisions for myself on emotion rather than street smarts.
So, what are the problems and what are the solutions?
PROBLEMS:
[] WE LIKE WHAT WE LIKE, THUS EVERYONE ELSE WILL AGREE WITH US
Fortunately, or unfortunately to some – this is the service business. This means that those who choose to be restaurateurs need to design menus and concepts that address the needs and desires of potential customers, not simply stroke their own ego. The minute the restaurant becomes a vehicle for a chef’s self-expression is the minute that begins to stress the system and drive the train in the wrong direction. Sometimes it works, but more often than not this is the turning point towards failure. If you want the restaurant to be an expression of art, then make sure that your bank account is flush with cash.
[] EMOTIONAL EXCITEMENT TAKES HOLD
The thought of owning your own, driving the train, making all the decisions, expressing yourself in a manner that was limited when working for someone else, and the thought of your name on the marque is foremost in your mind, is the thought that clouds your realistic business decisions. Step back and do your research – put aside the emotion until this is done.
[] CHEFS ARE ALL ABOUT THE PRODUCT – OWNING A RESTAURANT IS BUSINESS
Chefs are technicians and artisans – they are rarely great business people. The most successful restaurants are ones where a partnership exists with both skill sets in place. Find a business partner willing to say “no”.
[] NOT EVERYONE WILL SHARE YOUR PASSION
In the end, whatever your culinary passion – don’t assume that your staff or your customers will be as passionate about your concept. You will need to either draw them in and win disciples, or invest an incredible amount of time and money looking for the right players. The same is true with customers – if your concept depends on rabid loyalists, then you will need to have patience and a big marketing budget to find and keep them.
[] COMPETITION IS A FACTOR – DON’T IGNORE IT
Every competitor, even the marginal ones, takes away from your business potential. Study them, watch them, respect them, and work like hell to demonstrate why you are better than them. The pie is only so big and the more competition, the smaller the slice.
[] MARKETING ONLY WORKS WHEN THE PRODUCT OR SERVICE CONNECTS WITH YOUR TARGET
Don’t expect to turn customers around to your way of thinking and cooking. All the marketing dollars in the world will never convert a carnivore into vegetarian or vice versa. Make sure your product connects to the audience available.
[] LOCATION, LOCATION, LOCATION – COSTS BIG BUCKS
Yes, without a doubt – Ellsworth Statler’s golden rule still applies – Location Rules! Keep in mind you can overcome this, but it takes time and money. On the other hand – great locations today demand very high rents. Do your research.
[] IF YOU ARE NOT PREPARED TO CHANGE – THEN DON’T TAKE THE LEAP
Some may say that it is important to stand your ground and stay true to your concept – great – as long as you have the wherewithal and iron stomach to hold your ground. The most successful companies embrace the need to change and do so before it’s too late.
[] AUTHENTICITY IS IMPORTANT
In the restaurant business it is critical to be true to form if, in fact, you are promoting an ethnic cuisine, style of cooking, or food philosophy. Research it, build a level of understanding, immerse yourself in a culture, hire people who feel it, and promote real authenticity. Don’t try to be farm to table unless you connect with farmers, believe in them, friend them, and work to help them. Don’t offer a Korean noodle shop unless you can spend time in Korea and learn about the culture, unless you are willing to hire Korean cooks and support them through a true understanding of ingredients, culture, and process. This is your investment in being true.
THE SOLUTIONS:
[] THE FIRST AND MOST IMPORTANT ADVICE HERE IS TO NOT OPEN A RESTAURANT
Sounds harsh – but IT IS A VERY, VERY, VERY difficult business with incredible demands placed on those involved, and a VERY high risk of failure. So, if you want to jump in – do so with open eyes and total commitment to making smart decisions.
[] BUT IF YOU MUST:
If you feel the draw that cannot be controlled – then enter it with the right attitude and a willingness to listen and act.
[] STUDY THE MARKET
Know the market for customers, know what they like, understand their lifestyle, research the characteristics of the demographic, talk with them, win them over, listen intently, and act accordingly.
[] FIND REAL ESTATE YOU CAN AFFORD – DO THE MATH
Yep – sometimes you need to walk away. The rent or lease SHOULD NEVER EXCEED 6% of your anticipated yearly sales. If it stretches beyond that – walk away! Rent is funny – it doesn’t care that you had a slow month, it is oblivious to your equipment breakdowns, and need to raise the pay scale for employees – rent needs to be paid on time or the landlord will pull the plug.
[] BE A PENNY PINCHER
Whatever the purchase- ask first: “Do we really need this now?” Look to see if you can buy something used, learn how to make basic repairs on your own. When it comes to menu – keep in mind that real talent is not in grilling a Kobe Steak – the real talent is braising a chicken leg that is exceptional in taste, and far less expensive to work with. Buy smaller garbage cans for the kitchen – control your waste and make it everyone’s job.
[] KEEP IT SIMPLE – DO IT WELL
Plan smaller menus, build great flavors, be consistent, change frequently, and be unique within the constraints of what people are willing to buy, offer an acceptable range of prices, and keep your inventory down to a minimum.
[] BE THERE
Sorry, if you want to own it – you need to be there – all of the time. Train your people well enough so that you could leave, but never assume that it will be the same without you. This is the price of admission.
[] HAVE ENOUGH MONEY IN THE BANK
YOU WILL NOT MAKE A PROFIT IMMEDIATELY – in fact, it may take you 2-3 years before one dollar of real profit sits on the table. Have enough back up in the bank, or the resources for those funds, to support you through those initial years.
[] BE FLEXIBLE
Study every day, change your plan of attack, don’t get depressed when it’s not working – be prepared to adjust. The best restaurateurs are able to audible on the line of scrimmage.
[] KEEP IT INTERESTING
You want guests to come back frequently. You want them to bring their friends. You want them to trust you, but at the same time it is always important to throw in a well thought out surprise.
[] INVEST IN THE EARLY ADOPTERS SO THAT YOU CAN GET TO THE EARLY MAJORITY
The early adopters are more likely to try something new, but they only represent about 12% of the population. They will get bored in a relatively short period of time and drift to the next new thing, but if you manage them well, then they can be used to entice the majority players who will stick with you for the long run.
[] PRICE IT RIGHT
The right price is not always the lowest price. Keep in mind that it is all about value. Is the price worth it? Whether it is food quality, service, ambience, or ways that you can customize a customers experience – make sure that they walk away feeling like it was money well spent.
[] TRAIN, TRAIN, TRAIN
No need to say too much about training – YOU CAN’T SAY ENOUGH ABOUT TRAINING. Everything else falls into place when you invest here – everything else falls apart when you don’t.
[] KEEP YOUR STAFF HAPPY
It was Richard Branson of Virgin Brands who said that happy employees make happy guests. Be a cheerleader, be a supporter, pay them fairly, and invest in training.
[] IF IT DOESN’T WORK – CHANGE; IF THAT DOESN’T WORK – THEN HANG IT UP BEFORE IT’S TOO LATE
Know when to pull the plug. Most long-term success comes from plenty of failure. Chalk it up to experience, but don’t hang on until you and your bank account are totally drained.
PLAN BETTER – TRAIN HARDER
Harvest America Ventures, LLC
Harvest America CUES BLOG 
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