Starting a Restaurant in NYC

[Pan]

Fully agreed, beans.

[Bond Girl]

NY Chef, Welcome to egullet!

I think I won't be happy unless I have a restaurant that serves food in quality of at least a 2 star equivalent. I know I'm being a brat but bad food is just an assult to the common senses, and I much prefer to serve something that I believe in.

Bean, you are right on the industry norm, but I can't help but try....

[JosephB]

Ya Roo,

Your internship idea seems critical at this point. How are you approaching it? Are there many internship opportunities out there for people who are not in cooking school?

[Msk]

Ya Roo,

You need to take into account the high (~100%) turnover of waitstaff/FOH employees. It is often a major reason why only certain positions ever get benefits (i.e. managers, if that)

Since you are a finance person, there are lots of clues in publicly traded restaurants. Look at their different business models and compare their returns to your template. This may help you tweak your ideas a bit.

Despite what you think of their food, look at Cheasecake factory, their restaurants literally open AT CAPACITY and only grow revenue based on price increases. (They also do no advertising). Compare their return figures to your template.

Succeed or fail, this will not be easy. But I wish you the best of luck.

Msk

[GG Mora]

I think I won't be happy unless I have a restaurant that serves food in quality of at least a 2 star equivalent. I know I'm being a brat but bad food is just an assult to the common senses, and I much prefer to serve something that I believe in.

Which means you'd better be prepared to search long and hard for exactly the chef who can deliver exactly the menu you have in mind, and make damn sure they have the talent and experience not just to prepare delicious food, but to order supplies and direct his/her staff such that YOUR bottom line is always protected, and then pay him/her at least double what you think you'll have to and be prepared to do some serious coddling when he/she is feeling prickly, because without any restaurant experience of your own, you'll be just plain hosed of he/she quits...

I think the biggest reason there are so many chef-owned restaurants these days is that it's the only way anyone with talent can really make money, unless they're good enough to work the seriously high-end places with impeccable reputations. A two-star chef is going to run you some serious green.

I applaud your chutzpah, and think you're just plain nuts to aim for Manhattan first time out.

[slkinsey]

I don't have anything substantial to add other than to thank Ya-Roo for one of the more interesting threads I've read for some time. Keep it coming.

[tomweir]

Amen to that, a very interesting thread.

Having worked as one small part of the design team for a restaurant on Park Avenue South, I can only commend your courage, the level of detail and the sheer amount of things the principals have to juggle and decide is quite something. They did a 2-3M restaurant and the core team was three players and they worked on nothing else between them flat out for well over a year just to get open. Would you think of other partners?

[Bond Girl]

Yes, I definitely want other partners. Ideally, I want a chef partner and someone else who has general day to day management and wine knowledge. May be it's my business school training, but I think if you tie people's bonus to the overall bottom line, everyone will try harder to make the whole thing work. It was how I ran a very successful finance team for many years. Then again, that may not be realistic in the restaurant world. In a worse case scenario, I can probably hack to day to day management job, and cram the wine knowledge.

Today, I am hopeing to get a meeting with potential chef number 2 and branch out to the lower east side where the rent is cheaper. NYC chef's suggestions make a lot of sense, but now I am stuck in a ditch since anything involving kitchen design/layout, equipment needs and general constructions costs will depend on a menu and the concept. I can somewhat put together a menu of fares I like to serve (based on the 10 app, 10 entrees 5 to 8 desserts and sides rule), but I'm not sure how realistic that is as well.

Still need to call around to see who can get me an internship somewheres.

[phaelon56]

KatieLoeb said

The beverage department is where you stand to make the most money. It's also where it's easiest to lose it!

Hear, hear.... truer words have rarely if ever been spoken. I only worked in the biz for a few years as a waiter and busboy and for another ten years or so served as a part time bartender at an entertainment venue and for some caterers. The potential for theft in the beverage operations is staggering and I've seen a few places here in Syracuse go under because of it while others limped along.... hardly able to guess at the source of their problems until it was too late.

I have a far less glamorous suggestion but one worth considering: start very small, see how you like "the biz" and then evolve as financing, your passion and the market allows. My reference point is Syracuse - a far smaller and less expensive market but still viable as a business case study.

Example 1: Alto Cinco

Started as a small take-out operation in a neighborhood where pizza, sandwiches and middle eastern food had long been the only available options. The owner had worked both front and back of house previously at another local restaurant called Pastabilities (which will serve as my second example). This space had previously housed, among other things, an Ethiopian take-out operation. Syracuse has a small African population but being adjacent to the University and being in a somewhat hip and enlightened neighborhood, the Ethiopian place could have been a success. The problem? Not knowing the neighborhood. They had no take-out offererings for under $10 - $12 and this was back in the early 90's. Syracuse in general and this neighborhood in particular requires that you have at least something on the take-out menu that sells for about $4 - $6 and will fill the budget conscious diner up enough to serve as some sort of meal.

Alto Cinco focused on lots of fresh ingredients, some good vegetarian burrito offerings (smart move in this neighborhood) and offered some $5 - $6 items that helped them develop a loyal following. After five years of slow and steady volume increases, they took over a small adjacent space and added a bistro style dining room. It's still tiny but overhead costs are very controllable, they serve only wine and beer (much easier and cheaper in NY state to get a wine and beer only license than to have a full bar), and I'll guess that they do three full turns on any busy night, not to mention that the takeout business that is still thriving.

The owner's initial investment was not all that high - good used restaurant equipment is available in abundance in most areas and the original space was very small.

Example 2: Pastabilities Restaurant

This was started over twenty years ago by a friend of mine who worked with me as a waiter. He spent a few years perfecting various key recipes at home and networking with folks in the local restaurant trade, the local dining community and the arts scene. He also researched locations exhaustively. His desired location was in an area that had not yet "taken off" and was a a very dicey choice. Instead, he found a cheaper and smaller location that was adjacent to the downtown office worker community, in an odd space that had been underutilized, had previously housed several unsuccessful restaurant operations and already had a rudimentary kitchen in place. They started serving lunches only with an open kitchen and a cafeteria style serving line but with an emphasis on fresh made pasta dishes and salad items. No waitstaff, just a bus person to clear tables - water and cutlery were self serve. It made for a quick in and out and they had a healthy, tasty set of lunch options when no one else in that neighborhood did.

The first step to growth was offering dinners on Friday and Saturday night only - it was all BYOB for alcohol and they developed a good word of mouth rep quickly. They networked in the arts community and had a DJ and dancing to some funky, inventive and non-mainstream music late at night when the dinners were over - the tables were just pushed back to make room for the dancing.

This first venture was funded by F & F only (no fools). After several years of consistent growth they opted to move to their original location of choice: Syracuse's Armory Square area, which has now become the "hot spot" of central NY (FWIW). There had been one ill-fated and poorly run restaurant in that nieghborhood previously but the real growth was just starting. There were additional investors involved this time and despite careful planning and experience - the budget quickly got out of hand. Breads of sweat were abundant and projections of a ten year payback period on the opening costs prompted sleepless nights.

The good news: they kept the same efficient and moderately priced lunch arrangement in place, opened for diners six nights per week, quickly developed an incredible bar trade and were going great guns for years, becoming one of the most popular and successful restaurants in the Syracuse area. Their lunch trade followed them to the new location and they developed an entirely new customer base for dinners.

Despite that, there was a point in time a few years back when they almost went under after years of success. One of the original owners (my friend Patrick) passed away (brain tumour in his late 30's) and due to the circumstances (young children at home and the illness), his wife and business partner Karen had been unable to keep as careful an eye on operations as was likely necessary. I'm not disclosing private info here - she publicly discussed this in a local newspaper profile. After close to fifteen years of profitable and successful operation, they were losing money despite appearing to be busy. She brought in some trusted restaurant pros and a financial auditor and ended up more or less cleaning house on the entire front end staff. The beverage operation turned out to be one of the areas where money and revenue was quietly being siphoned off.

The turnaround was highly successful. The artisinal bread operation they started at that time has grown to the point where it now occupies a separate storefront and may open a second location. The restaurant remains reasonably busy despite an abundance of competition.

I see some valuable lessons here.

1) Starting small and modest is a worthwhile and sensible path - do things the right way and investment capital and greater opportunities will follow.

2) Get some experience in the business before jumping into it. Either back of house or front of house or preferably both. Even peopl with good business plans and indutry experience find it a difficult road initially.

3) Find an investment partner who is already in the business , is highly compatible and will work doggedly to ensure successs. Be prepared to put in an incredibly inordinate number of hours yourself for the first few years and way more than you expect in the years to follow.

4) Expect everything to cost more than you can possibly imagine and then some. Also expect it to take longer.

5) Have a really soloid amount of capital on hand for working cash flow to keep the bills paid until you are turning a profit.

6) Recognize that no matter how successful your operation becomes, its continued success is ensured by your presence or that of other people who have "skin in the game" (i.e. investment partners who are actively working in the business).

7) Consider having an objective third party monitor things periodically. I know someone in the private security business who is regularly and discreetly employed by bar owners to come through their establishments on an intermittent basis. he works as a "spotter" - hanging at the bar for a few drinks over a period of a couple hours to see how the money and checks are handled and what goes where.

I think it's a great dream to have and one to pursue. There are so many folks with the artistic and culinary vision who lack the business sense - if you have or acquire some of both you're bound to be a successful restarauteur given time.

[jogoode]

I've heard PR for a restaurant can cost over 150K/year, and some restaurants will spend that much promoting its chef. Is this level of expense common even for a restaurant without a big-name chef? How much more does a WD-50 PR campaign cost than one for Sumile? How about Hearth? Does it depend on how successful the initial campaign is?

[Bond Girl]

The cost doesn't surprise me, but I'm not sure if its all that necessary. I think I will stop by Hearth one of these days and ask Marco about this.

[Rachel Perlow]

You can ask him advice publically as well. Marco Canora is doing an eGullet Q&A in February.

[Bond Girl]

cool Rachel!

[mikeycook]

BondGirl,

I know I am late for this thread, but congrats on giving it a try. I, too, have a business background and am looking into options in the food industry. I am taking the Culinary Management program at the Institute of Culinary Education as we speak. It was the only management-oriented program I could find among the major NY schools and I am taking it during the evenings (as I still need to work during the day.) It is oriented around building a business plan and many of the issues discussed here have been discussed in class. If you have the time in your schedule it might be worth a look. They have multiple schedule options (i.e. days, evenings, etc.)

[Bond Girl]

I almost sign up for the same course, except with my job I never know when 'm getting out of work. Also, as a person with two graduate degrees (in English Lit and in Business), I had enough of school. May be, it will be the biggest mistake that I make, but this one may just have to be learned on the job. Okay, anyone know how I can get a miracle.

[JosephB]

I almost sign up for the same course, except with my job I never know when 'm getting out of work. Also, as a person with two graduate degrees (in English Lit and in Business), I had enough of school. May be, it will be the biggest mistake that I make, but this one may just have to be learnt on the job. Okay, anyone know how I can get a miracle.

Miracle? I hope your determination isn't fading. What about the small scale idea?

[Bond Girl]

Of course not. Besides,. I am starting small scale, I think, 60 seats is not a big place even in New York City. I have no desire to have an empire.

[alacarte]

Go Bond Girl...Go Bond Girl...Go Bond Girl....

Since I don't have any practical experience to add, I though a little impromptu cheerleading might help.

Starting a restaurant is a tough business. I applaud your initiative and common-sense approach.

[Bond Girl]

Go Bond Girl...Go Bond Girl...Go Bond Girl....

Since I don't have any practical experience to add, I though a little impromptu cheerleading might help.

Starting a restaurant is a tough business. I applaud your initiative and common-sense approach.

You guys are so nice. I need all the encouragement I can get.

This week I am battling the concept issues. I am trying to estimate the kitchen budget, but I know that I may be totally off because I have no idea how to optimize a professional kitchen, and if there are certain equipments that I can get second hand. A quick skim through past issues of Food Arts told me that the kitchen alone can cost more than the entire initial funding.

Potential chef partner number 2 may just be too expensive for my budget. Okay, may be I should quantify that, I think he is too expensive given his experience. While he has worked for many years in a fine dining restaurant, he's never opened a place before. The insignificant other once told me that a high profile chef would make all the difference. I don't disagree with that, but so far I'm not having much luck. Back on the trail again.

[LESider]

Boy, there's a lot of negativity here.

I don't see the posts as negative , more realistic. I am currently persuing a culinary career and everyone I run into says it's a hard way to live. and they are right. Bond Girl has no experience in a restaurant , which is why many are giving her the facts. long days and hard work( and in the case of chefs , not much money initially). I would suggest getting a job somewhere you like( or where you think it's done right) for even three to six months. maybe as an assitant manager so you could see how much food costs,how table's turn and the other details of service. I currently work at a restaurant that serves New American Cuisine for a prix fix of $25. that's 25 bucks plus additional beverage making the check averages around 40-50 bucks. In that scenario it's all about portion control and smart buying. It can be done. There are a lot of pieces to the puzzle of running a restaurant and if your making good food and have good service in NYC then your already ahead of the other 85% of the places that exist in my opinion. Best of Luck.

[JosephB]

This week I am battling the concept issues.  I am trying to estimate the kitchen budget, but I know that I may be totally off because I have no idea how to optimize a professional kitchen, and if there are certain equipments that I can get second hand.  A quick skim through past issues of Food Arts told me that the kitchen alone can cost more than the entire initial funding. 

Yaroo,

Have you considered looking for a space formally occupied by a restaurant? It may have a lot of the basics in place, including grease traps, exhaust system, restrooms, appropriate HVAC, electrical and plumbing. Obviously, you still would have to do substantial work to open the place you want, but maybe you can benefit from a headstart. There are guys out there just waiting for restaurants in good locations to close; then they jump on it.

[herbacidal]

This week I am battling the concept issues.  I am trying to estimate the kitchen budget, but I know that I may be totally off because I have no idea how to optimize a professional kitchen, and if there are certain equipments that I can get second hand.  A quick skim through past issues of Food Arts told me that the kitchen alone can cost more than the entire initial funding. 

Yaroo,

Have you considered looking for a space formally occupied by a restaurant? It may have a lot of the basics in place, including grease traps, exhaust system, restrooms, appropriate HVAC, electrical and plumbing. Obviously, you still would ave to do substantial work to open the place you want, but maybe you can benefit from a head start. There are guys out there just waiting for restaurants in good locations to close; then they jump on it.

yup. very true. especially in NYC, with the number of places that emerge, then flame out.

best to flesh out the concept, estimate costs as best you can based on the numbers, (60 covers, need X sq. feet kitchen, etc.), then multiply by 1.4 to 2 to be safe.

plan out everything as much as possible. what you can't plan but still need numbers for assume upwards.

[Franky2Times]

Bond Girl, if I can help with anything regarding the BOH, I would love to. I worked for about 10 years as a chef in NY and I can get you internships and probably answer lots of questions but I'm not sure how to reach you.

[Pan]

You could either post things here or PM Bond Girl.

[JosephB]

Bond Girl, if I can help with anything regarding the BOH, I would love to. I worked for about 10 years as a chef in NY and I can get you internships and probably answer lots of questions but I'm not sure how to reach you.

Franky2Times,

Are there internships typically available in the front and the back of the house?